Deutsche Rohstoff AG Maintains Strong Performance, Analysts Sustain Buy Recommendation

First Berlin Equity Research recently reiterated its buy rating on Deutsche Rohstoff AG, adjusting its price target slightly from €47.00 to €46.00. The decision follows the preliminary 2023 results showing a commendable financial and operational performance by the company, with sales reaching €196.5m and EBITDA hitting €158.2m, both figures aligning with the upper end of guidance.

Notably, Deutsche Rohstoff AG observed a 32.4% increase in production to 12,700 barrels of oil equivalent per day, surpassing the anticipated range. The fourth quarter of 2023 marked a historical high in production for the company, benefiting immensely from nine new wells in the Niobrara formation in Wyoming. Despite setting a new record in net CAPEX at €145m in 2023, the company managed to keep its net gearing stable at 42%.

The analysis by First Berlin also highlighted the promising results from DRAG’s drilling activities in Wyoming since acquiring its first acreage in the state in 2020. The performance of wells drilled alongside joint venture partner Occidental Petroleum (Oxy) has exceeded expectations, with output averaging 15% above type curve six months post-production. Supported by their extensive acreage in Wyoming, the company's success in the region is evident in the outperformance of the DRAG share by over 150% against the S&P500 Energy Index since July 2020.

Despite a minor adjustment in the price target due to a projected decrease in the 2024 natural gas futures strip, the overall outlook for Deutsche Rohstoff AG remains highly positive, with anticipation for continued outperformance shaped by its impressive achievements in Wyoming and solid financial health.