background
Oil is being searched for in southern Hesse. The drilling company and the local press are spreading a lot of optimism. But is production in one of Germany’s smallest oil fields actually worth it?
Peter Appel enjoys reporting in detail about the technology, supervision and approvals of oil drilling. An exciting business that has become interesting due to increased prices and the desire for sources in the country. A new well in Riedstadt in southern Hesse, near Darmstadt, is said to have tapped particularly productive rock layers with exceptionally high-quality crude oil. Optimistic forecasts are being spread.
Is there any evidence?
The local press recorded the vivid descriptions of the managing director of Rhein Petroleum GmbH: “Dallas in southern Hesse”, “Black gold from the Rhine Graben”, “More high-quality petroleum than expected” could be read there. The mayor of Riedstadt speaks of “Texas in Ried”. When it comes to receipts and documents, there is little to learn. This is insider information, says managing director Appel. After all, its parent company is listed on the London Stock Exchange.
In any case, it is a very light oil that is physically far away from tar and bitumen and close to gasoline and kerosene. It is not used in engines and turbines, but rather for wind turbines, orthopedic prostheses, vaccination syringes and medication. “That means it can save lives,” the “Frankfurter Rundschau” quoted the spokesman for the local Green Party, which supports oil production.
Second smallest German oil field
According to the Federal Association of Natural Gas, Petroleum and Geoenergy (BVEG), 786 tons of oil were produced near Darmstadt last year. 786 tons is a multiple of the amount in previous years. But it is only half a per thousand of German oil production. The “Schwarzbach” field west of Darmstadt is the second smallest in the country.
Heidelberg Rhein Petroleum GmbH employs eleven people. It was founded 15 years ago by Deutsche Rohstoff AG, a medium-sized company from Mannheim. Using technically sophisticated methods, Rhein Petroleum examined long-exploited oil fields. Is there anything else to get there? So far this has resulted in a loss of more than 90 million euros. For five years, the company has been producing in the Ried near Darmstadt and – with a partner – from a source in the Allgäu.
Sobering numbers
The economic result is sobering. Year after year, the oil wells bring less money into the coffers: While “Rhein Petroleum” recorded sales of 2.4 million euros in 2018, it was 1.4 million in 2019 and one million in 2020. Managing director Appel says that it has largely remained that way. Documented new numbers cannot be determined.
In 2019, the then owners discovered that bookings worth 2 million euros had become worthless. Drilling and production licenses, which had previously been valued highly with optimistic prospects, had to be written down. In 2020, Rhein Petroleum booked out two thirds of its assets – a good 10 million euros. The low oil price was to blame, explains managing director Appel. Since it has risen significantly again, assets have slowly been valued higher again.
Share a “penny stock”
The founders quickly lost interest in Rhein Petroleum. In 2011 it was sold to a small Dutch company. Six months ago, Rhein Petroleum was sold to the even smaller Beacon Energy plc, based in the “tax haven” Isle of Man.
Two years ago the British had already bought into another oil field. It quickly became clear: There is no oil there. Beacon Energy’s share price on the London “Alternative Investment Market” plummeted from 5.30 pounds. Since then, Beacon shares have been a so-called “penny stock” and were quoted at 9 pence.
When the new subsidiary “Rhein Petroleum” told the press its “Dallas-im-Ried” story, the share price briefly tripled. It is currently down to 14p.