Deutsche Rohstoff : Quarterly Report Q3 2023

THIRD QUARTER

2023

THIRD QUARTER 2023

We are pleased to report an exceptionally successful third quarter to you. In nearly every aspect, the Deutsche Rohstoff Group has achieved new record highs.

BEST QUARTER IN COMPANY HISTORY

In the third quarter of 2023, we achieved a record-breaking consolidated revenue of EUR 57.5 million, surpassing the previous best quarter (Q4/2022: EUR 47.2 million) by over EUR 10 million. Our EBITDA of EUR 45.6 million also marks a significant new operational peak (previous record in Q2/2022: EUR

38.8 million). Cumulatively, the revenue for the first nine months stands at EUR 132.6 million, which is 12.2% higher than the previous year's value of EUR 118.2 million. The

EBITDA for the first nine months remains consistent with the previous year at EUR 101.6 million (previous year: EUR 102.3 million). The consolidated result for the first nine months amounted to EUR 43.3 million (previous year: EUR 52.6 milli- on).

In addition to the strong operating performance in the first nine months, other operating income of EUR 7.3 million (pre- vious year: EUR 15.1 million) also contributed to this result, of which EUR 6.3 million came from sales of equities. The costs of the bond issue had a one-time impact on the other operating expenses in the third quarter of EUR 1.4 million.

pital has risen to EUR 172.7 million, and the equity ratio has decreased to 36.5%. This decrease is primarily due to the temporary extension of the balance sheet between the issuance of the new bond in September and the redemption of the old bond by 50% in December.

SIGNIFICANT PRODUCTION GROWTH IN Q3

As planned, we were able to significantly increase production in the third quarter and achieved a preliminary record. Thanks to the new and highly satisfactory drilling activities in Wyo- ming, production volumes from 1 July to 30 September reached 1,343,326 Barrels of Oil Equivalent (BOE), with a production of 14,601 Barrels of Oil Equivalent per Day (BOEPD). Cumulatively, production after three quarters stands at 11,904 BOEPD, compared to 9,339 BOEPD in the previous year. This

equated to a total production of 3,249,848 BOE, with 1,683,802 barrels of oil (previous year: 1,351,255 barrels of oil) and the remainder being natural gas and condensates. All quantity figures represent the group's net share.

SUCCESSFUL PLACEMENT OF NEW BOND

In September, we successfully placed our new corporate bond 2023/2028 with a volume of EUR 100 million. The bond was significantly oversubscribed. The performance of the new bond to over 105% in the first weeks of trading underlines the strong interest and seamlessly continues the good performance of the past bonds. This development reflects the high level of confidence the capital market has in our company.

The successful placement provides us with a high level of planning security for the coming years. It allows us to further

Our balance sheet as of 30 September 2023, displays solid liquidity, further strengthened by the new bond issue, with cash and securities totaling EUR 76.1 million. The equity ca-

COMPLETION OF WELLS, WYOMING

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

expand our highly profitable oil and gas business in the United States.

REDUCED RISKS THROUGH HEDGING, EXPANDED OPPORTUNITIES THROUGH ACCELERATED DRILLING PROGRAMS

The oil price has seen a significant increase since June. We have taken advantage of the attractive price levels in recent weeks to further expand our hedging activities. Our hedge book also reached a new high. For the fourth quarter, the hedge book contains contracts for approximately 330,000 barrels at USD 77, for 2024 about 1.1 million barrels at USD 77, and for 2025 already 400,000 barrels at USD 71. The company has thus hedged a total of 1.8 million barrels. Our goal is to hedge around 50% of existing production on a rolling basis.

Based on the certainty of our capital budgeting and the attractive commodity price environment, we have also decided to accelerate completion of our ongoing drilling program in Wyoming. This measure also reflects our ability to respond to oil price changes, while our short investment cycles investment cycles help us maintain our operational and economic performance.

FORECAST SIGNIFICANTLY RAISED

In September, we were able to significantly raise our forecast for the current year. This upward revision is the result of strong operational performance, the robust development of the WTI oil price, the U.S. dollar, and the accelerated implementation of the ongoing drilling program. Following the com-

pletion of the bond financing, we moved forward with the completion of four drilling operations to bring them into production this year. At the same time, we drilled wells with higher working interests than originally planned.

We now anticipate revenue in the range of EUR 188 to 198 million (previously EUR 150 to 170 million) and EBITDA in the range of EUR 138 to 148 million (previously EUR 115 to 130 million).

Production is expected to remain above 13,000 BOEPD in the fourth quarter. For the full year 2023, we plan for production in the range of 12,000 to 12,500 BOEPD. The increased fore- cast, released on 27 September, is based on this expected production volume.

Operationally, there have been numerous exciting and successful developments. We look back at the highest level of activity and investments that we have ever managed in such a short period. In total, from mid-May to the end of October, we brought 32 drilling operations into production, both as operators and non-operators, with a total investment volume of approximately EUR 150 million. To illustrate the scale of these operations, some of which were self-drilled and others in partnership with companies like Oxy: 220 km of drilling; 300 km of steel pipe weighing around 7,700 tons - quite a remarkable achievement.

STOCK REACHES ALL-TIME HIGH

On 01 November, the share price reached a new all-time high of EUR 35.25. This represents a year-to-date increase of approximately 40%. In addition, shareholders received a divi-

dend of €1.30 per share at the beginning of July. Research updates in recent weeks continue to indicate significant potential for the increase in the value of our stock. We are confident that, with our clear focus, capital discipline, and against the backdrop of a globally growing demand for resources, the stock will eventually reach the current average price target of €47.88 as projected by analysts.

During the bond issue, we were able to intensify our exchange with institutional and private investors. We received very positive feedback during numerous discussions at conferences, roadshows, and also through the bond hotline. We would like to express our gratitude to all investors for their interest and trust in the work of the Deutsche Rohstoff AG team. We look forward to continuing the success story of Deutsche Rohstoff AG together.

With best regards from Mannheim

Jan-Philipp Weitz	Henning Döring
CEO	CFO

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

REVENUES (IN 1,000 EUR)

OIL REVENUES

GAS REVENUES

NGL REVENUES

PRODUCTION TAX

PROFIT(+)/LOSS(-) FROM HEDGING

TOTAL REVENUE

TOTAL REVENUE (IN 1,000 USD)

VOLUMES

OIL (BBL)

GAS (MCF)

NGLS (BBL)

BOE

BOEPD

OIL (IN USD/BBL)

AVERAGE WTI PRICE

REALIZED PRICE BEFORE HEDGES

PROFIT(+)/LOSS(-) FROM HEDGING

REALIZED PRICE AFTER HEDGES

GAS (IN USD/MMBTU)

AVERAGE HENRY HUB PRICE

REALIZED PRICE BEFORE HEDGES

PROFIT(+)/LOSS(-) FROM HEDGING1

REALIZED PRICE AFTER HEDGES

OPEX (USD/BOE)

DEPLETION (USD/BOE)

01.01.-30.09.2023

117,383

15,507

13,128 -13,299-83 132,637 143,191

1,683,802

5,751,780

607,416

3,249,848

11,904

77.27

75.11 -0.24 74.87

2.47

2.90

0.10

3.00

8.23

14.19

01.01.-30.09.2022

121,609

27,620

17,377 -13,217-35,197 118,192 124,608

1,351,255

4,512,836

446,114

2,549,508

9,339

98.98

96.26 -19.82 76.44

6.74

6.69 -1.50 5.19

8.21

12.72

						Revenues
						by product
						9M 2023
						9%
					11%	10%
					9M 2022
					17%
	Volumes					Revenues
	by product					73%
	9M 2023					80%
			Oil
19%				Gas
			NGL
17%	9M 2022
BOE					Volumes
		54% 52%				by Region
29%
29%						9M 2023
						12%
						9M 2022
		42%	10%	BOE	44%

Oil

Gas

NGL

CO

UT

WY

ND

1 Derivatives are typically based on a local trading hub and not on HenryHub (e.g. CIG)

77%

14%

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

GROUP BALANCE SHEET (UNAUDITED)

ASSETS

1. FIXED ASSETS

1. Intangible assets

1. Purchased franchises, industrial and similar rights and assets, and licenses in such rights and assets
2. Goodwill
3. Avanced payments

1. Property, plant and equipment

1. Petroleum extraction equipment
2. Exploration and evaluation
3. Plant and machinery
4. Other equipment, furniture and fixtures
5. Advance payments and assets under construction

1. Financial assets

1. Equity investments
2. Loans to other investees and investors
3. Securities classified as fixed assets

1. CURRENT ASSETS

1. Inventories
   Finished goods and merchandise

1. Receivables and other assets

1. Trade receivables
2. Receivables from other investees and investors
3. Other assets

1. Securities classified as current assets

IV. Bank balances

1. PREPAID EXPENSES
2. DEFERRED TAX ASSETS TOTAL ASSETS

30.09.2023

EUR

30,721,765

1,045,772

871,679

32,639,216

222,157,436

22,572,429

18,711,077

1,585,849

23,756,620

288,783,411

15,406,652

6,738,270

9,717,380

31,862,302

129,865

129,865

29,639,035

0

9,940,060

39,579,095

6,501,046

69,645,318

2,218,467

1,201,795

472,560,515

30.09.2022

EUR

32,874,081

0

0

32,874,081

152,462,384

9,492,785

100,025

114,391

47,055,231

209,224,816

17,829,285

5,224,903

9,657,207

32,711,395

174,500

174,500

28,242,694

1,445,221

3,084,337

32,772,252

8,404,786

25,878,544

2,441,751

2,597,404

347,079,529

31.12.2022

EUR

32,489,161

1,163,358

276,963

33,929,482

161,897,405

30,357,464

276,051

108,922

0

192,639,842

15,406,652

6,488,973

12,047,919

33,943,544

129,865

129,865

28,649,496

83,157

4,884,252

33,616,904

6,716,587

47,479,228

862,904

1,008,133

350,326,490

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

GROUP BALANCE SHEET (UNAUDITED)

EQUITY AND LIABILITIES

1. EQUITY

1. Subscribed Capital
   . / . less nominal value of treasury shares
   Conditional capital EUR 2,400,000 (previous year: EUR 2,200,000)

1. Capital reserves

1. Retained income

IV.	Equity differences from currency translation

1. Consolidated net retained profit
   VI. Non-controlling interests

1. PROVISIONS

1. Tax provisions
2. Other provisions

1. LIABILITIES

1. Bonds, thereof convertible EUR 0 (previous year: EUR 10,700,000)
2. Liabilities to banks
3. Trade payables
4. Other liabilities

1. ACCRUALS AND DEFERRALS
2. DEFFERED TAX LIABILITIES
   TOTAL EQUITY AND LIABILITIES

30.09.2023

EUR

5,003,438

0 5,003,438

31,259,894

0

10,702,976

120,266,410

5,436,373

172,669,091

1,488,165

39,101,692

40,589,858

141,033,000

30,843,576

13,674,872

28,281,638

213,833,087

106,556

45,361,923

472,560,515

	30.09.2022		31.12.2022
	EUR		EUR
5,125,891		5,003,081
-127,810	4,998,081	0	5,003,081
	21,611,901		31,250,251
	0		0
	25,476,436		8,533,708
	78,873,.707		84,174,402
	4,035,001		3,403,429
	134,995,126		132,364,871
	34,000		1,017,900
	34,611,272		31,634,932
	34,645,272		32,652,832
	109,815,000		109,815,000
	26,015		77,096
	4,979,339		11,375,562
	28,046,641		28,673,867
	142,866,995		149,941,526
	216,919		175,057
	34,355,217		35,192,203
	347,079,529		350,326,490

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

GROUP INCOME STATEMENT (UNAUDITED)

1. REVENUE
2. INCREASE OR DECREASE IN FINISHED GOODS AND WORK IN PROCESS
3. OTHER OPERATING INCOME
4. COST OF MATERIALS Cost of purchased services
5. PERSONNEL EXPENSES
6. 1. Wages and salaries
   2. Social security, pensions and other benefit costs
7. OTHER OPERATING EXPENSES
   EBITDA
8. AMORTIZATION, DEPRECIATION AND WRITE-DOWNS
9. 1. of intangible assets and property, plant and equipment
   2. of current assets
10. AMORTIZATION OF FINANCIAL ASSETS AND SECURITIES CLASSIFIED AS CURRENT ASSETS
    EBIT
11. OTHER INTEREST AND SIMILAR INCOME
12. INTEREST AND SIMILAR EXPENSES
13. INCOME TAXES
14. EARNINGS AFTER TAXES
15. OTHER TAXES
16. NET INCOME
17. PROFIT (-) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
18. PROFIT CARRYFORWARD
19. CONSOLIDATED NET RETAINED PROFIT

01.01.-30.09.2023

EUR

132,636,822

0

7,302,007

24,708,392

24,708,392

4,447,772

4,162,836

284,936

9,163,748

101,618,918

42,983,205

42,983,205

0

352,648

58,283,064

868,177

5,710,074

10,117,757

43,323,410

10

43,323,400

-726,923

77,669,933

120,266,410

01.01.-30.09.2022

EUR

118,192,391

0

15,068,808

19,899,510

19,899,510

3,897,101

3,661,797

235,304

7,134,958

102,329,630

30,605,406

30,605,406

0

2,446,334

69,277,890

1,033,079

5,303,283

12,411,078

52,596,608

0

52,596,608

-5,039,605

31,316,704

78,873,707

01.01.-31.12.2022

EUR

165,439,266

-44,635

25,855,321

30,443,435

30,443,435

6,458,333

6,104,252

354,081

15,260,516

139,087,668

42,167,564

41,796,800

370,764

5,488,660

91,431,444

1,384,502

6,877,926

19,752,414

66,185,605

0

66,185,605

-5,419,614

23,408,411

84,174,402

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

GROUP CASH FLOW STATEMENT (UNAUDITED)

	IN EUR
	NET INCOME FOR THE PERIOD (CONSOLIDATED NET INCOME / LOSS INCLUDING PROFIT SHARES ATTRIBUTABLE TO NON-CONTROLLING INTERESTS)
+/-	Write-downs / write-ups of fixed assets
+/-	Increase / decrease in provisions
+/-	Other non-cash expenses / income
-/+	Increase / decrease in inventories, trade receivables and other assets that cannot be allocated to investing or financing activities
+/-	Increase / decrease in trade payables and other liabilities that cannot be allocated to investing or financing activities
-/+	Proceeds from disposals of intangible assets
-/+	Gains / losses from the disposal of fixed assets
+/-	Interest expenses / income
+/-	Income taxes paid / received
-/+	Income tax payments
	CASHFLOW FROM OPERATING ACTIVITIES

• Cash received from disposals of intangible assets
  - Cash paid for investments in intangible assets
• Proceeds from disposals of intangible assets

• Cash paid for investments in property, plant and equipment
  + Cash received from disposals of fixed financial assets
• Cash paid for investments in fixed financial assets

• Cash received in connection with short-term financial management of cash investments

- Cash paid in connection with short-term financial management of cash investments

• Interest received
• Dividends received
  CASHFLOW FROM INVESTING ACTIVITIES
• Proceeds from contributions to equity by shareholders of the parent company
• Cash received from equity contributions by other shareholders

• Cash from decrease in equity

• Cash received from the issue of bonds and from loans
  - Cash repayments of bonds and loans

• Interest paid
• Dividends paid to shareholders of the parent company
• Dividends paid to other shareholders
  CASHFLOW FROM FINANCING ACTIVITIES

Change in cash and cash equivalents

+ / - Changes in cash and cash equivalents due to exchange rates and valuation

• Cash and cash equivalents at the beginning of the period
  CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

01.01.-30.09.2022

43,323,400

42,983,205

6,962,754

-258,659

-6,428,706

1,284,263

-2,469,175

-3,244,170

4,841,897

10,117,757

-1,110,730

96,001,836

325,868

-1,164,854

0

-132,897,587

4,964,483

0

12,890,778

-9,431,066

331,154

0

-124,981,224

0

1,570,839

-148,702

70,585,374

-9,805,000

-4,441,968

-6,504,469

-111,241

51,144,833

22,165,445

6,301

47,402,131

69,573,877

01.01.-30.09.2022	01.01.-31.12.2022
52,596,609	66,185,605
30,605,406	39,790,250
22,683,109	18,882,262
-4,170,256	267,630
-3,401,501	-6,679,737
-981,333	9,206,488
-6,704,463	-10,145,012
742,244	1,868,384
4,270,204	5,493,424
12,411,078	17,862,778
0	0
108,051,097	142,732,073
0	0
-2,063,381	-6,034,493

06,490,002

-72,286,636-82,915,052

10,677,70211,326,932

-3,720,994-3,720,994

14,265,62618,426,899

-12,620,793-16,368,259

536,350	630,721
0	0
-65,212,126	-72,164,244
316,986	97,800
88,382	88,382
-16,509,941	-16,358,904
12,939,000	21,334,379
-21,043,598	-29,438,977
-3,956,184	-6,725,238
-2,663,391	-2,665,791
-702,910	-1,063,318
-31,531,656	-34,731,666
11,307,315	35,836,159
2,934,505	-44,738
11,610,709	11,610,709
25,852,529	47,402,131

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

NOTES TO THE CONSOLIDATED CONSOLIDATED BALANCE SHEET AND THE

CONSOLIDATED INCOME STATEMENT

In the following, only items for which significant changes are to be recorded in the current period are listed. Otherwise, please refer to the comments in the Annual Report 2022 and the 2023 Half-Year Report.

1. OPERATING RESULTS

REVENUE

Revenues primarily relate to wells drilled in the Denver-Jules- berg Basin in Colorado by 1876 Resources (formerly Cub Creek Energy) and Elster Oil & Gas and in the Powder River Basin in Wyoming by Salt Creek Oil & Gas, 1876 Resources and Bright Rock Energy, as well as interests in wells drilled by Salt Creek Oil & Gas in the Uinta Basin in Utah. Revenues of EUR 132.6 million (previous year: EUR 118.2 million) are attributable to the individual subsidiaries as follows:

1876 Resources:	EUR 64.5 million
Elster Oil & Gas:	EUR 5.8 million
Salt Creek Oil & Gas:	EUR 56.5 million
Bright Rock Energy:	EUR 5.8 million

Production in the first 9 months amounted to 3,249,848 barrels of oil equivalent (BOE) or 11,904 BOE per day (previous year: 2,549,508 or 9,339 BOE per day). Revenues are stated in Euro less production tax of EUR 13.3 million (previous year: EUR 13.2 million) and include realized losses from hedging transactions of EUR 0.1 million (previous year: EUR 35.2 mil- lion).

OTHER OPERATING INCOME

15.1 million) mainly consists of income from the sale of secu- rities amounting to EUR 6.3 million (previous year: EUR 8.7 million), which arose at the level of Deutsche Rohstoff AG. This item also includes gains from the sale of Northern Oil & Gas shares amounting to EUR 2.3 million. In addition, this item also includes foreign exchange gains of EUR 0.2 million (pre- vious year: EUR 5.3 million).

COST OF MATERIALS

As of 30 September, expenses for services rendered amounting to EUR 24.7 million (previous year: EUR 19.9 million) are reported, which relate to current production costs, fees for processing gas and condensates, maintenance and work on the producing and new oil wells in the USA. Operating costs

Other operating income of EUR 7.3 million (previous year: EUR WATER STORAGE FOR COMPLETION, WYOMING.

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP

NOTES TO THE CONSOLIDATED CONSOLIDATED BALANCE SHEET AND THE

CONSOLIDATED INCOME STATEMENT

thus amount to approximately USD 8.23 (EUR 7.60) per BOE for the period 1 January to 30 September. In the previous year, these amounted to USD 8.21 (EUR 7.81) per BOE.

OTHER OPERATING EXPENSES

Other operating expenses amounted to EUR 9.2 million (pre- vious year: EUR 7.1 million). The largest items here are currency losses of EUR 0.3 million (previous year: EUR 0.3 million), the costs of bond placements of 1.4 million EUR (previous year: outplacement costs of the 2019/2024 bond: EUR 0.2 mil- lion), legal and consulting fees of EUR 1.3 million (previous year: EUR 1.1 million) and allocations for provisions of EUR 0.8 million (previous year: EUR 0.8 million). The provisions are recognized for the obligation to backfill wells at the oil production facilities in the USA. The currency losses are primarily unrealized currency losses incurred in connection with the reporting date valuation of bank accounts held in USD at the level of Deutsche Rohstoff AG.

Other operating expenses consist of other general and administrative expenses including office space costs in the amount of EUR 2.4 million, losses from the sale of marketable securities in the amount of EUR 1.2 million, exploration expenses and license work in the amount of EUR 0.4 million as well as other administrative expenses in the Group. Personnel expenses of all Group companies amount to EUR 4.4 million (previ- ous year: EUR 3.9 million).

AMORTIZATIONS

Amortization and depreciation amounted to EUR 43.0 million (previous year: EUR 30.6 million) and consisted exclusively of scheduled depreciation and amortization.

Depreciation and amortization mainly relate to write-downs of oil production assets in the property, plant and equipment of the subsidiaries 1876 Resources, Elster Oil & Gas, Bright Rock Energy and Salt Creek Oil & Gas, which are amortized in accordance with the barrels of oil equivalent (BOE) produced. For the period 1 January to 30 September 2023, the Group's depreciation rate is USD 14.19 (EUR 13.23) per barrel of oil equivalent produced. In the same period of the previous year from 1 January to 30 September 2022, these figures amounted to USD 12.72 (EUR 11.87).

No impairment losses were recognized in the Third quarter of 2023.

Amortization of financial assets and marketable securities amounted to EUR 0.4 million as of 30 September 2023 and includes unrealized price losses of marketable securities as of 30 September 2023.

2. FINANCIAL POSITION AND NET ASSETS

FIXED ASSETS

As of 30 September 2023, EUR 23.8 million (31 Dec. 2022: EUR 0 million) is reported under the item Advance payments and assets under construction. This item includes the further payments made by Salt Creek Oil & Gas in connection with the joint venture with the US oil and gas producer Occidental for participation in 15 well in the Powder River Basin/Wyoming.

Financial assets amount to EUR 31.9 million.

CURRENT ASSETS

Receivables of approximately EUR 39.6 million (31 Dec. 2022: EUR 33.6 million) are largely composed of trade receivables of EUR 29.6 million (31 Dec. 2022: EUR 28.6 million) resulting from outstanding revenues from oil and gas production.

Cash and marketable securities totaled EUR 76.1 million at the end of the third quarter (31 Dec. 2022: EUR 54.2 million).

LIABILITIES & EQUITY

Equity amounts to EUR 172.7 million as of 30 September 2023 (31 Dec 2022: EUR 132.4 million). The equity ratio amounts to 36.5% (31 Dec 2022: 37.8%). The reduction in the equity ratio is due to the balance sheet extension associated with the bond issuance. Without the additional liquidity from the issuance of the 2023/2028 bond amounting to EUR 41.0 million, the equity ratio would be 40.0%. Compared to 31 December 2022, the share capital increased by EUR 357.0 to EUR 5,003,438.00. This increase results from conversions in connection with the convertible bond 2018/2023 and the related share issue at EUR 28.00/share. The additional paid-in capital increased by EUR 9,643 compared to 31 December 2022 and is also based on the conversions in connection with the convertible bond 2018/2023.

The item "Equity differences from currency conversion" mainly includes the currency conversion differences of the asset and liability items of the financial statements prepared in US Dollars as of the reporting date and the currency conversion of the income statements prepared in US Dollars at the average exchange rate. Due to the lower US Dollar exchange rate, the item increased by EUR 2.2 million compared with 31 De-

THIRD QUARTER 2023 - DEUTSCHE ROHSTOFF GROUP