Trillion Energy Advances Natural Gas Production & Exploration in the Black Sea & Turkey

• Trillion Energy successfully ran velocity string tubing in four existing wells at its SASB gas field in Turkey, enhancing production and recovery.
• Two wells, Guluc-2 and West Akcakoca-1, have resumed production with steady improvements after velocity string installation.
• The company plans further well stimulation and adjustments to maximize gas production and is confident these measures will increase well production.
• Trillion Energy restated its 2023 financial statements to correct a foreign exchange error, reducing the net loss for the year to $43,842 from $1,102,194. The company considers the financial restatement changes to have negligible impact as no cash items were affected.

Trillion Energy International Inc. (CSE:TCF) is a Canadian-based natural gas and oil production company focused on the development of its SASB gas field in the Black Sea, offshore Turkey. The company also has oil exploration blocks in southeastern Turkey. Trillion aims to significantly ramp up its natural gas production to supply Turkey's growing domestic market.

Successful Well Completions at SASB Gas Field

Trillion Energy announced that it successfully performed well recompletions using velocity string tubing in four existing wells at its SASB gas field. Three of these were long reach wells on the Akcakoca Platform. The velocity string tubing was installed to mitigate water loading issues, enhance production rates, and increase overall recovery from the wells. With the new tubing, the wells are expected to produce at lower wellhead pressures for longer periods.

Following the velocity string installations, the Guluc-2 and West Akcakoca-1 wells, which previously faced production challenges due to water loading, have resumed production. Both wells are showing steady improvements, demonstrating initial success from the velocity string program. The Akcakoca-3 well continues producing with reduced daily water production.

Restated 2023 Financial Statements

Trillion Energy restated its consolidated financial statements for the year ended December 31, 2023 to correct an identified foreign exchange error. The restatement resulted in a reduction of the company's net loss for 2023 to $43,842 from the previously reported $1,102,194.

The error stemmed from a foreign exchange loss on intercompany accounts that was incorrectly recorded in net loss instead of other comprehensive loss. Under IAS 21 accounting standards, foreign exchange gains and losses on items that form part of a company's net investment in a foreign operation should be recognized in other comprehensive income or loss.

The restatement impacted certain line items in the consolidated statements of financial position, income, comprehensive income, stockholders' equity, and cash flows. However, there were no changes to the reported totals of cash flows from operating, investing and financing activities. Trillion Energy considers these changes to have negligible impact on its financial position as no cash items were affected, according to CFO David Thompson.

Further Production Enhancements Planned

Trillion Energy is planning the next phase of operations, which includes running velocity strings in two tripod wells and stimulating all the wells. The stimulation program aims to clean up the producing reservoirs, build pressure, and further increase production rates. The company is adjusting choke sizes to minimize water production while maximizing gas output. Nitrogen injection is being used to flush out any water build up in the wells as needed.

While winter weather conditions and equipment requirements caused some delays, Trillion Energy is confident that these measures will result in increased production from the wells. The successful recompletions and ongoing optimization demonstrate the company's focus on enhancing recovery and production from its existing assets.

Trillion Energy is pursuing a multi-well development program at the SASB gas field to ramp up production and take advantage of the field's sizable reserves and existing infrastructure. In 2023, five new wells were drilled. For 2024, the company planned to perform four or more well recompletions and workovers, install artificial lift systems, and implement a velocity string sidetrack program. These activities are expected to significantly boost production to a targeted exit rate of 10-14 MMcf/d (100% gross) by Q1 2025.

SASB Gas Field Reserves & Valuation

Trillion Energy's 49% interest in the SASB gas field had proved plus probable (2P) reserves of 55.8 Bcf, with a net present value discounted at 10% (NPV10) of $420.5 million before tax. This represents a significant increase from the 42.5 Bcf of 2P reserves and $431.5 million NPV10 reported at year-end 2022. The company plans to further grow its reserves and production through the ongoing redevelopment program at SASB.

The SASB field has extensive infrastructure in place, including four offshore production platforms, onshore gas processing facilities, and pipelines. Over $600 million has been historically invested in the field's wells and infrastructure, providing a solid foundation for cost-effective development. With an onshore gas processing capacity of 75 MMcf/day, expandable to 150 MMcf/day, SASB is well-positioned for future growth.

Exploration Upside in Southeastern Turkey

In addition to its producing asset, Trillion Energy has a promising oil exploration opportunity in the Cudi-Gabar region of southeastern Turkey. The company's exploration block is in proximity to several recent high-impact oil discoveries. A 10-well exploration program is planned, targeting the discovery of oil fields with potential production of 10,000 to 100,000 barrels per day.

2D seismic data acquisition has been completed on Trillion's block, and processing is underway. Two exploration wells are planned for 2024 and beyond. The Cudi-Gabar region has seen significant exploration success, with notable discoveries like the 250 million barrel Sehit Esma Cevik oil field and the 1 billion barrel Sehit Aybuke Yalcin oil field made by Turkish state oil company TPAO. Trillion Energy sees substantial upside potential from its exploration acreage in this prolific oil fairway.

Trillion Energy offers investors exposure to a growing natural gas production base in the Black Sea region, coupled with meaningful oil exploration upside in southeastern Turkey. The company's successful well recompletions at the SASB gas field demonstrate its ability to optimize existing assets and boost production. With a large reserve base and extensive infrastructure in place, Trillion is well-positioned to execute its development plans and significantly increase gas output.

The recent financial restatement, which reduced the company's net loss, underscores Trillion's commitment to accurate financial reporting and transparency. Although the restatement had negligible cash impact, it is a positive sign for investors.

Looking ahead, Trillion Energy's gas development activities in the Black Sea and oil exploration program in southeastern Turkey provide multiple avenues for value creation. As the company continues to ramp up production and pursue high-impact exploration, with a clear strategy, prospective assets, and a focus on operational execution, Trillion Energy presents a compelling growth opportunity in the energy sector.