First Berlin Equity Research has published a research update on Deutsche Rohstoff AG (ISIN: DE000A0XYG76). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 38.00 to EUR 34.00.

In its preliminary Q3/22 results release on 14 October DRAG cautioned that FY/22 production would likely come in at the lower end of the guidance range of 9,300 to 10,000 boepd. However, better than expected output in October and November has prompted management to raise FY/22 sales and EBITDA guidance. Production after nine months was 9,339 boepd but in October and November averaged 11,000 boepd. The increase was attributable to a slower than expected decline in production at the Cub Creek subsidiary’s Knight pad as well as good results from new wells in Utah and Wyoming. We have raised our FY/22 production forecast by 5.6% to 9,848 boepd (previously: 9,328 boepd). The mid-point of new FY/22 sales guidance of €163m-€168m is 7.1% above previous guidance of €152m- €157m while the mid-point of new FY/22 EBITDA guidance of €138m-€143m is 7.7% above the previous numbers (€128m-€133m). Management has not changed guidance for FY/2023 and FY/2024. We have raised our FY/22 forecasts but have lowered our forecasts for FY/23 and FY/24 to reflect both a decline in the oil futures curve and USD depreciation since our last note of 11 November. For the three year period 2023-25 NYMEX oil futures are on average ca. 5% lower while the USDEUR rate is 3% lower than at the time of our November note. We maintain our Buy recommendation but have lowered the price target from €38 to €34.