Deutsche Rohstoff - Production to increase by early 2021

Deutsche Rohstoff (DRAG) was quick to react to the COVID-19 pandemic, in cutting production from its operated Cub Creek Olander pad in mid-March 2020. This had been brought online at end 2019 and was producing c 6,000bbl/d when DRAG decided to halt production. It enabled DRAG to avoid selling oil production at historical uneconomic low oil prices and manage remaining production with its hedged portfolio. Revenues in H120 of €26.1m included €10.1m from hedging income. As oil prices are recovering from the March/April lows, management expects to restart production, beginning with Cub Creek legacy pads. This strategic flexibility is possible due to DRAG’s liquidity and healthy balance sheet. Management guides to FY20e sales at the higher end of €33–37m and EBITDA of c €15–18m, mainly due to the recent recovery and stabilisation of oil prices in the US.