Deutsche Rohstoff AG: Update on oil and gas activities

EQS-News: Deutsche Rohstoff AG / Tag(s): Miscellaneous

Deutsche Rohstoff AG: Update on oil and gas activities

04.10.2022 / 08:37 CET/EST
The issuer is solely responsible for the content of this announcement.

Deutsche Rohstoff AG: Update on oil and gas activities

Current Development Highlights

  • Production is proceeding as planned in all subsidiaries
  • Salt Creek sells remaining acreage in North Dakota for $6.6 million
  • Oxy JV starts production
  • Deutsche Rohstoff increases its stake in Cub Creek to 98%
  • Cub Creek launches drilling program in Wyoming
  • USD 23 million of bank debt fully repaid in Q3

Mannheim. The oil and gas activities of Deutsche Rohstoff AG are progressing as planned. Existing production is delivering the expected results, while many wells will come into production according to plan and new drilling programs will be launched in the coming months. The strong operational development secures the forecast for 2022 and, based on the current status quo and development, secures the forecast for 2023.

Salt Creek Oil & Gas with a Focus on “Unoperated” Assets

Salt Creek successfully sold its remaining acreage in North Dakota to various buyers for a total of $6.6 million. The most recent production was around 70 BOEPDs. The acreage was acquired in various transactions since 2016 for a total of approximately $7.5 million and generated approximately $3 million in cash flow during the holding period. Salt Creek will focus on continued growth in Utah and Wyoming going forward. The company, 100% owned by Deutsche Rohstoff, will continue to hold only minority (non-operated) stakes in the wells.

As part of a reorganization within the Deutsche Rohstoff group, Salt Creek also acquired the entire Bright Rock Energy estate in Utah. Deutsche Rohstoff expects cash flows of more than USD 70 million from these acreages over the next five years (assumption: oil price USD 80/barrel). Not all Utah acreage is farmed, that is, farmed by other companies. During the second half of 2022 and the first quarter of 2023, approximately 46 wells in Utah will begin production as planned, with Salt Creek holding an average interest of approximately 5%.

During the fourth quarter, the first six wells of Salt Creek’s joint venture with Oxy will enter full commercial production. The wells are now completed and commissioned. Ten other wells are currently being drilled. The total investment volume under the joint venture amounts to approximately 75 million dollars.

Cub Creek Energy production on track; preparation of the drilling program in Wyoming

Production from Cub Creek Energy’s various wells in Colorado and Wyoming is progressing as planned. The Knight Pad, which accounts for the largest share of production, is on schedule and produced approximately 3,600 barrels of oil per day (crude) in the third quarter. At the same time, gas volumes are steadily increasing as expected.

In Wyoming, Cub Creek has begun preparations for drilling on the “Lost Springs” and “Netz” platforms. The first 3 wells are scheduled to be drilled at Lost Springs pad starting in November. Plans for a total of 5 gross wells (4 net wells) from the end of 2022 will eventually be expanded to 8 wells. A final decision is expected in the first quarter of 2023. Only the first five wells are included in the 2023 forecast.

Due to strong cash flow, Cub Creek Energy was able to repay all existing shareholder loans of approximately $33 million to Deutsche Rohstoff AG during the year. The company’s bank loan, which was still valued at $23 million as of June 30, 2022, was fully repaid during the third quarter.

Bright Rock Energy continues with strong Buster Pad production

After Bright Rock Energy transferred the Utah acreage to Salt Creek Oil & Gas, the company is focused on further developing the very large Wyoming acreage package. In total, Bright Rock holds approximately 32,500 acres where over 200 wells could be possible. For 2023, management is preparing a potential drilling program of four to six wells, which is not part of Deutsche Rohstoff’s forecast and a final decision will be made in early 2023. The first well drilled last year from the Well Buster’s platform continues to deliver very positive results well above expectations. To date, the well has produced approximately 160,000 BO and has thus repaid its investment volume of approximately 10.5 million USD after 11 months.

Increase in Cub Creek Energy shares and Utah acreage

Deutsche Rohstoff AG increased its shares held through Deutsche Rohstoff USA in Cub Creek Energy and in the Utah acreage held by Bright Rock. At Cub Creek Energy, the company acquired shares amounting to 9.5% from minority shareholders. These were primarily the interests of the American co-founders who had held interests since 2014. At Bright Rock Energy, management’s indirectly owned shares in the Utah land were acquired. In total, Deutsche Rohstoff AG invested approximately $15.5 million in the acquisition of minority interests in the second half of the year and significantly strengthened its ownership position. Deutsche Rohstoff now owns 97% or more in US subsidiaries with the exception of Elster Oil & Gas (93%).

Equity portfolio and hedges

In the hedge book, about 30% of Q4 production is hedged at $66. For 2023 the hedge book is constantly expanding, currently about 15% of the total production for 2023 is hedged at 74 USD. In the coming months, the coverage ratio is expected to be further increased, initially to around 30% by the end of 2022. A significant portion of production in 2023 is expected to come from new wells in Wyoming and the United States. ‘Utah. These wells will be successively covered with the start of production in the coming months.

Deutsche Rohstoff AG has reduced the majority of the equity portfolio from 2020 during 2021 and 2022. After further sales of Northern & Oil Gas, approximately 230,000 shares with a book value of €2.3 million were still being held at the end of September. The current market value is around 6.4 million euros. Sales generated a profit of approximately 0.9 million euros in the 3rd quarter. In the context of investments in shares of mining companies, in particular in gold and lithium shares, the portfolio currently amounts to approximately 10 million euros. Unrealized proceeds are approximately €1 million.

Mannheim, October 4, 2022

Deutsche Rohstoff identifies, develops and sells attractive raw material deposits in North America, Australia and Europe. The focus is on the development of oil and gas fields in the United States. Metals such as gold and tungsten complete the portfolio. Further information can be found at www.rohstoff.de

Contact
Deutsche Rohstoff AG
Jan-Philippe Weitz
Telephone +49 621 490 817 0
[email protected]

04.10.2022 CET/CEST Broadcast of a Corporate News, transmitted by EQS – a service of EQS Group AG.
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