First Berlin Equity Research has published a research update on Deutsche Rohstoff AG (ISIN: DE000A0XYG76). Analyst Simon Scholes reiterated his BUY rating and increased the price target from EUR 43.00 to EUR 48.00.

Abstract
DRAG’s Q1/25 report showed a 6.2% increase in revenue to €59.1m (Q1/24: €55.6m) despite a 1.3% boepd volume decline and a 7.4% fall in the oil price. The revenue increase stemmed from a shift in the product mix to oil, which in Q1/25 accounted for 65% of volume (Q1/24: 58%). EBITDA rose 3.8% to €43.2m (Q1/24: €41.7m). DRAG has already generated roughly a third of the sales and EBITDA required to reach the mid-point of 2025 sales and EBITDA guidance (€180m and €125m respectively). The futures strip indicates an average WTI oil price of USD60.50/bbl for April to December 2025 (Q1/25: USD71.78/bbl). However, 40% of the revenue required to reach 2025 guidance is locked in through the hedging of ca. 790k barrels of oil at ca. USD69.60. 2025 guidance (first given on 23 April) is based on oil at USD60/bbl. The current price is ca. USD61. Seven of the ten new wells DRAG plans for 2025 are to be drilled into the Niobrara Formation. Accumulated experience and falling service provider costs allowed DRAG to lower the cost of a two-mile horizontal Niobrara well from over USD12m in 2023 to under USD10m in 2024. This year DRAG is targeting USD9m which would allow generation of an IRR of 30% on a Niobrara well at an oil price of USD60/bbl. Previously, a 30% IRR on a Niobrara well was only possible at an oil price of USD75/bbl. The nine new wells which came online in Q4/24 helped DRAG generate free cash flow of €22.1m in Q1/25. We maintain our Buy recommendation and raise the price target to €48 (€43) to reflect the €22.7m reduction in net debt during Q1/25 to €134.3m (net gearing of 56.1%). Share price upside potential: 36%.