Trillion Energy (CSE:TCF) - Presses Ahead with Turnaround Strategy to Double Monthly Cashflow

Nov 8, 2024

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Interview with Dr. Arthur Halleran, President & CEO of Trillion Energy International Inc.

Our previous interview: https://www.cruxinvestor.com/posts/trillion-energy-csetcf-gas-production-growth-exploration-upside-5333

Recording date: 6th November 2024

Trillion Energy, a junior E&P company focused on Turkey, is emerging from a challenging period marked by collapsing gas production and a plunging share price. However, after implementing a technical solution to well instability, the company is now generating revenue and eyeing a path back to growth.

Trillion's key asset is the SASB gas field offshore Turkey in the Black Sea. After acquiring the aging field, Trillion drilled new wells that initially produced at high rates of 2-2.5 MMcf/d before abruptly watering out. The root cause was determined to be water loading associated with the 4.5" tubing size used in the recompletions. To solve this, Trillion has gone back to the original 2 3/8" tubing size and is using a snubbing unit to swap the velocity strings without killing the wells. The program is working - Akcakoca-3 stabilized at 2.6 MMcf/d after the workover. Two more wells are being recompleted currently.

At $9.94/mcf gas pricing in Turkey, Trillion generated over $1M/month in revenue the past three months from just two producing wells. Once the additional recompletions are finished, the company expects that to grow to $2M monthly revenue. This cashflow is key to Trillion's turnaround plans. It will allow the company to pay down some of its past-due payables, ending a period of financial distress. More importantly, the funds will be reinvested into new well work to boost production.

Trillion is aiming to exit 2025 at 10-14 MMcf/d of gas production, which would represent a revenue run-rate of around $25M/year. To get there, the company is pursuing low-cost rigless options like sidetracks of existing wellbores and barge-based drilling. A reprocessed 3D seismic survey shows additional gas prospects that could be exploited.

Management estimates the value of SASB could be $0.50-1.00/share based on the known well inventory alone. With Trillion trading under 10c, that represents substantial potential upside if the company delivers. The other arrow in Trillion's quiver is its 12% interest in the million-barrel potential west exploration blocks. Through an initial two-well program, this provides Trillion with exposure to the prolific SE Turkey basin near the Iraq border which has seen a string of recent major discoveries.

Overall, Trillion offers investors a combination of low-cost, quick-payback gas development in the Black Sea along with high-impact exploration onshore SE Turkey. The shares are underpinned by growing cashflow at SASB, limiting downside, while success at its other prospect blocks could be a gamechanger. The key risks are a still-stretched balance sheet and dependence on a single producing field with a mixed track record. But if Trillion can continue to steadily grow gas production and revenue over the coming quarters, there is ample room for the stock to re-rate higher.

View Trillion Energy's company profile: https://www.cruxinvestor.com/companies/trillion-energy