Deutsche Rohstoff AG (DE:DR0G) multi-asset and resource strategy has been built around management’s ability to identify investment opportunities, development of prospects and ultimately monetisation. In 2017 the group delivered a 497% increase in revenue, and 472% in EBITDA driven by increased production, boosted by a full year contribution from DRAG’s 90% owned affiliate Salt Creek Oil & Gas. Subsequently, in April 2018 Salt Creek Oil & Gas signed a sale and purchase agreement with Northern Oil & Gas to divest most of its acreage in Williston Basin, generating a c 40% return on invested capital over 17 months. Management expects a strong increase in production over Q218 and Q318 as investment made in Elster Oil & Gas yields results.
Fast-track asset monetisation
Over a period of 17 months, DRAG successfully acquired, developed and monetised its Salt Creek acreage in North Dakota. This was purchased for a total consideration of $38.1m in December 2016 and the sale of most of the asset base was agreed in April 2018 for $59.6m, subject to normal due diligence, delivering an ROI of 1.6x. Management expects to realize a pre-tax profit on the transaction of c $12m in FY18 and will invest the cash in new projects in the US oil & gas sector.
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