Trillion Energy: Commencement of Velocity String Program Amid Record Gas Production

• Trillion Energy International Inc. achieved record production in August 2024, generating over US$1 million in gross production revenue from its SASB gas field and Cendere oil field.
• The company is implementing a velocity string program to optimize gas production, potentially mirroring the success of legacy wells that averaged 4.2 Bcf per well.
• Trillion Energy has been assigned operatorship for the velocity string program at SASB, demonstrating its technical capabilities and strategic positioning.
• The company continues to pursue opportunities in oil exploration blocks within the Cudi-Gabar petroleum province in Southeastern Turkey.
• With a focus on European and Turkish markets, Trillion Energy is capitalizing on high gas prices, selling at US$10.94/mcf compared to the Henry Hub spot price of US$1.91.

Trillion Energy International Inc. (CSE:TCF) is emerging as a significant player in the European and Turkish energy markets. The company focuses on oil and natural gas production, with key assets including a 49% ownership of the SASB natural gas field in the Black Sea and a 19.6% interest in the Cendere oil field. Trillion Energy's strategic positioning in these resource-rich areas has allowed it to capitalize on the growing energy demand in the region.

As an oil and gas development company, Trillion Energy has demonstrated its ability to navigate the complex energy landscape, leveraging its technical expertise and strategic assets to drive production and revenue growth. The company's recent performance and ongoing initiatives present a compelling case for investors looking for exposure to the European energy sector.

Record-Breaking Production and Revenue

August 2024 marked a significant milestone for Trillion Energy as the company reported record production figures that translated into substantial revenue, clearly demonstrating its operational capabilities and asset potential. The SASB Gas Field performed exceptionally well, producing approximately 133.13 MMcf of gas and generating a gross revenue of US$1,456,400, of which Trillion's 49% share amounted to US$713,640. Notably, the company realized a natural gas price of US$10.94/mcf.

Additionally, Trillion Energy's Cendere Oil Field contributed a gross oil revenue of US$342,700, bringing the company's total gross production revenue for August 2024 to an impressive US$1,056,340. These figures underscore Trillion Energy's ability to generate significant cash flow from its operations. The company's strategic advantage lies in its exposure to high European gas prices, which substantially exceed global benchmarks like the Henry Hub spot price, positioning Trillion Energy favorably in terms of revenue generation potential.

Key Points of the Velocity String Program

Trillion Energy is not resting on its laurels and is actively pursuing production optimization strategies. The company has initiated a velocity string program at the SASB gas field, which represents a significant step towards enhancing production efficiency and output.

1. Operatorship Assignment: On September 2024, Trillion Energy was assigned operatorship for conducting the velocity string program, highlighting the company's technical capabilities and trust from its partners.
2. Service Agreement: The company has signed an agreement with "Snub Co" to install the velocity strings, with mobilization of the snubbing unit from Romania already underway.
3. Objective: The primary purpose of this operation is to increase or stabilize production rates in producing wells by reducing water loading, a common challenge in gas production.
4. Innovative Approach: Initially thought to require a drilling rig, Trillion Energy has demonstrated that a snubbing unit can accomplish the velocity string installation, marking a significant operational advancement.
5. Potential Impact: The installation of 2 3/8" velocity strings, replacing the current 4 ½" tubing, is expected to substantially increase gas flow rates. This upgrade could mirror the success of legacy wells that averaged 4.2 Bcf per well using 2 3/8" production tubing.

CEO Arthur Halleran emphasized the significance of this program, stating,

"This strategic move underscores our commitment to maximizing shareholder value through operational excellence and innovative solutions in the dynamic European energy market."

Current Production Analysis

An examination of Trillion Energy's current production dynamics offers valuable insights into the potential impact of the planned velocity string program. The company's well portfolio demonstrates varying performance levels, with some wells showing promising output while others face challenges. The Akcakoca-3 well, recently brought into production on September 6, 2024, has shown encouraging results, with initial production of 4.28 MMcf/d increasing to 4.66 MMcf/d, accompanied by a rise in well head pressure from 616 psi to 645 psi.

South Akcakoca-2 has maintained a steady average production of 2.3 MMcf/d over the past month. Guluc-2, despite facing intermittent production due to water loading, has managed to average 1.7 MMcf/d over the last two months, highlighting its potential under improved conditions. West Akcakoca-1 is currently producing intermittently, also due to water loading issues. Alapli-2, while successfully flow tested and showing gas presence, awaits significant production pending the installation of velocity strings. These varied performance levels across the well portfolio underscore the potential benefits of the velocity string program, which aims to address water loading issues and optimize production across all wells.

The current production figures, particularly from wells facing water loading issues, highlight the significant potential for improvement through the velocity string program.

CEO Arthur Halleran noted, "Even with the 4 ½" production tubing, we have produced 2.71 Bcf of gas from our 2022/23 wells. We can expect the same with our wells once we put in the 2 3/8."

Oil Block Exploration Update

While Trillion Energy's current revenue is primarily driven by its gas assets, the company continues to pursue oil exploration opportunities:

• Oil Block Focus: M46 and M47 oil exploration blocks within the Cudi-Gabar petroleum province, Southeastern Turkey
• Progress: The company initiated seismic work in 2023 and planned four exploration wells for 2024
• Challenges: Drilling plans were adjusted as the company focused on its SASB workover program
• Current Status: A third party has been secured to drill two wells on the Oil Blocks
• Trillion's Position: Committed to earning an interest in the Oil Blocks, subject to financing and finalizing participation terms

This diversification into oil exploration presents potential upside for investors, although it remains a developing aspect of Trillion Energy's portfolio.

Market Dynamics and Pricing Advantage

A crucial factor in Trillion Energy's financial performance is its exposure to favorable pricing dynamics in the European gas market with a realized gas price of US$10.94/mcf (Benchmark Comparison: Henry Hub Gas spot price at US$1.91/mcf)

This substantial price differential underscores the strategic advantage of Trillion Energy's asset location and market focus. The company's ability to sell its gas production at prices significantly above global benchmarks provides a robust foundation for revenue generation and potential profitability.

As Trillion Energy continues to execute its strategic plans, several factors merit investor attention:

1. Production Growth Potential: The implementation of the velocity string program could lead to substantial increases in gas production, potentially mirroring or exceeding the 4.2 Bcf per well average seen in legacy wells.
2. Revenue Scalability: With August's gross revenue of US$1.46 Million primarily from two gas wells, the potential for increased monthly revenue as more wells come online is significant.
3. Operational Efficiency: The company's innovative approach to velocity string installation demonstrates its commitment to cost-effective solutions and operational excellence.
4. Market Positioning: Trillion Energy's focus on the European energy market, characterized by high gas prices, provides a favorable environment for revenue growth.
5. Diversification: While currently gas-focused, the company's ongoing oil exploration efforts offer potential for portfolio diversification and additional revenue streams.
6. Technical Expertise: The assignment of operatorship for the velocity string program highlights the company's recognized technical capabilities.
7. Cash Flow Generation: Strong production figures and favorable pricing contribute to robust cash flow, which could support future development and shareholder returns.

Conclusion for Investors

Trillion Energy International Inc. presents an intriguing opportunity for investors seeking exposure to the European energy sector. The company's recent record production, strategic initiatives to optimize output, and favorable market positioning paint a picture of a company on the cusp of potential significant growth.

The successful implementation of the velocity string program could be a game-changer, potentially unlocking substantial production increases across Trillion Energy's well portfolio. Combined with the company's ability to capitalize on high European gas prices, this could translate into impressive revenue growth and enhanced shareholder value.

However, investors should also consider the inherent risks associated with the oil and gas sector, including market price volatility, regulatory changes, and the technical challenges of resource extraction. The company's oil exploration ambitions, while offering diversification, also introduce additional elements of risk and uncertainty.

In conclusion, Trillion Energy's strategic positioning, operational initiatives, and market advantages make it a company worth watching for investors interested in the energy sector. As always, potential investors should conduct thorough due diligence and consider their risk tolerance when evaluating any investment opportunity.