- Eastern Europe-focused producer of natural gas from portfolio of assets in Turkey and Bulgaria
- Flagship SASB offshore gas project in Turkey poised for ambitious development program
- Overall petroleum reserves of 4.9 million barrels of oil equivalent with a net present value of US$133 million
What Trillion Energy does:
Trillion Energy International Inc (CSE:TCF) (OTCMKTS:TCFF) is building an integrated oil and gas portfolio along the Black Sea.
The Canadian energy junior has a 49% interest in the SASB natural gas development project in Turkey, one of the Black Sea region’s largest undeveloped natural gas projects with 23 shallow water wells and four offshore platforms, as well as pipeline infrastructure and a gas processing plant. The gas field produced around 42 billion cubic feet of gas between 2007 and 2011.
Proven and probable undeveloped reserves come in at 17.7 billion cubic feet of gas, a value of US$74.7 million, according to a December 2019 report by GLJ Petroleum.
In addition to its flagship asset, SASB, Trillion has a 19.6% interest the Cendere oil play in Turkey, a profitable operation with 135 barrels of oil per day that brings in around US$234,000 per month in net revenue to the firm.
Trillion also has a 100% interest in the Derecik licenses in Turkey, which cover just over 42,800 hectares near prolific oil fields such as the Atrush Field located 65 kilometres away that produces around 41,700 barrels of oil per day (bopd) and boasts an estimated resource of around 2 billion barrels of oil.
Another asset is the early stage Vranino play in Bulgaria, a 38,663 hectares property with potentially 1 trillion cubic feet of gas in place.
Led by a team of veteran oil and gas executives based in Canada and Turkey, Trillion is poised for substantial growth over the near term. With new development projects in the works and more oil wells expected to come online in the next two years at SASB alone, Trillion could see its potential revenue stream exceed $1 billion very soon.
How is it doing:
Earlier this summer Trillion revealed an exponential increase in its overall petroleum reserves.
Proven and Probable and Possible (P3) reserves grew from 342,000 barrels of oil equivalent (BOE) to 4.9 million BOE, a 1,433% increase that translates into a net present value of nearly US$133 million using gas contract pricing of between US$6/MCF (1,000 cubic feet) and $7.80/MCF.
The company is embarking on an ambitious phased development plan at SASB, with 14 new wells, subsea tie-ins to existing platforms and recompletions of existing producing wells planned for Phase III and IV.
Another evaluation of six of its gas prospects at SASB added significant upside value to the oiler's existing reserves and resources. The report by GLJ on six prospects put the Undiscovered Petroleum Initially in Place at a best-case estimate of 65.9 billion cubic feet with an unrisked best estimate of 37.5 billion cubic feet and 23 billion cubic feet risked. That puts the net present value before tax (with a 10% discount) for SASB at US$136 million.
The company was also celebrating a new discovery near SASB that could have significant upside for the project. The discovery of the Tuna-1 field, which was formally announced on August 21, was made in the western portion of the Black Sea by the Turkish national petroleum company (TPAO), Trillion's partner in the SASB field.
The Tuna-1 well, which lies around 100 kilometres south of SASB, encountered 100 metres of pay at a total depth of 3,520 meters and Turkish officials estimated 9 trillion cubic feet of gas based on the current drilling.
Trillion plans to evaluate the geological trends in deeper zones of SASB to identify prospects to drill and test for gas.
On October 22, Trillion Energy told investors that it plans to evaluate geological trends in its SASB gas field in the Black Sea to identify additional prospects to test for gas.
This follows an announcement from the Turkish national petroleum company (TPAO) on October 17 in which it said it had further increased the size of the Sakarya field by encountering an additional 30 meters (m) of gas pay in the Tuna-1 well. The achievement has reportedly added 3 trillion cubic feet (TCF) to the discovery size for a total of 14 TCF in the field so far.
What the broker says:
In a report dated December 3, 2020, Fundamental Research Corp analyst Sid Rajeev initiated coverage of Trillion Energy with a Speculative Buy rating and a fair value of C$0.24 per share.
“TCF’s current market capitalization is $9M, implying an EV/NPV (2P reserves) ratio of just 14% vs the comparables’ average of 40%. In addition to reserves, the company has resource estimates on certain undrilled prospects, which have a BT-NPV10% of $83M. TCF’s partner recently made a major offshore discovery, approximately 150 km from the South Akcakoca Sub-Basin (SASB), at a depth of 3,520 m. This discovery is encouraging for TCF, as it indicates potential for additional gas reserves at depth on their project,” Rajeev wrote.
“Trillion Energy has the potential to significantly ramp up production and cash flows, if management is able to raise funds for SASB’s development,” he added.
The Fundamental Research analyst noted that Trillion has 17 additional production wells planned during 2021/2022.
“In this scenario, annual production net to TCF is expected to peak at 11.3 bcf (implying a potential to generate $68M in revenue at $6 per mcf gas), with average annual production of 4-5 bcf ($24-$30M in annual revenue) over the first 10 years,” the analyst said.
Rajeev noted that Trillion Energy is evaluating options to raise $10M-$20M to fund its portion for the first three well workovers and four new wells. The remaining CAPEX is expected to be paid through operating cash flows.
- Potentially acquiring 100% ownership of SASB; secure debt financing for expansion program and finalize development program
- Recomplete three existing producing wells to recover 15.5 BCF Gas and redrill undeveloped discoveries at SASB
- Production from Phase III expected to start in 2020, yielding substantial cash-flow to fund Phase IV development and drillings
- Drill exploration well at the Derecik license in Turkey in 2021
What the boss says:
“We look forward to bringing SASB gas production to new highs as redevelopment occurs after we complete our development plan,” Trillion CEO Arthur Halleran told investors recently.
“Natural gas sales in Turkey have maintained consistent strength of between US$6 and US$7.60 per million cubic feet, a substantial premium to North American markets,” he added.
Contact Sean at [email protected]