Trillion Energy Ramps Up Gas Production in Black Sea with Successful Completion of 4 Workovers

• Trillion Energy achieves payback on recent SASB gas field investments in just 35 days on the recent perforation, indicating a great start of the SASB revitalization program.
• Gas production from Akcakoca Platform is averaging 4.6 MMcf/d since the perforation program completion.
• The company plans to increase production to 8.5 MMcf/d by end of 2024 through workovers and new wells on high-potential oil assets in Turkey.
• Trillion Energy holds 49% interest in SASB gas field with 55.8 BCF of 2P reserves and NPV10 of $421 million.
• High-impact oil exploration is planned in Cudi-Gabar region of Turkey which is near recent major discoveries.

Trillion Energy International Inc. (CSE:TCF) is an oil and gas company focused on natural gas production in Turkey and oil exploration opportunities in the region. The company holds a 49% interest in the SASB gas field in the Black Sea, which has seen significant development and production growth in recent years. Trillion Energy is also pursuing high-impact oil exploration projects in southeastern Turkey, positioning itself to capitalize on the country's growing energy needs and strategic location between Europe and Asia.

Rapid Payback & Production Growth at SASB Gas Field

Trillion Energy has reported impressive results from its recent perforation program at the SASB gas field in the Black Sea. The company announced that it has achieved payback on its recent investments in just 35 days, demonstrating the field's strong production potential and economic viability.

The perforation program, which targeted four wells on the Akcakoca platform, has led to a significant increase in gas production. Since the program's completion, the Akcakoca Platform has been averaging 4.6 MMcf/d of gas production. This marks a substantial improvement in the field's output and underscores the success of Trillion Energy's revitalization efforts.

Key wells that have contributed to this production growth include:

• South Akcakoca-2: Producing for 36 days and stabilizing at approximately 2.75 MMcf/d.
• Guluc-2: Producing for over three weeks with an average of 2.0 MMcf/d, now stabilized at about 1.25 MMcf/d.
• West Akcakoca-1: Producing an average of 0.60 MMcf/d for over two weeks, though still stabilizing.
• Akcakoca-3: Recently perforated with wellhead pressure increasing from 100 psi to 478 psi, indicating potential production in the near future.

CEO Arthur Halleran expressed optimism about the results, stating,

"The wells on the Akcakoca Platform have been completed successfully with gas production and WHP continuing to increase. This early return on our investment is a clear indicator of the field's robust production potential."

Ambitious Production Growth Plans

Trillion Energy is not resting on its laurels and has outlined ambitious plans to further increase production at the SASB gas field. The company aims to reach an exit production rate of 8.5 MMcf/d by the end of 2024 through a combination of workovers and new well developments.

The 2024 work program includes:

• Increasing production on 8-9 existing wells by installing artificial lift (water pumps) at a cost of $2.7 million.
• Adding at least one new sidetrack well in Q4 2024, with each sidetrack costing approximately $4 million (49% interest).
• Planning for 6-7 additional sidetrack wells in 2025 to further boost production.

This aggressive growth strategy is supported by the field's substantial reserves. As of December 31, 2023, Trillion Energy's 49% interest in the SASB gas field represents Total Proved + Probable + Possible (3P) reserves of 96.6 BCF where Total Proved (1P) reserves of 18.0 BCF, and Total Proved + Probable (2P) reserves of 55.8 BCF.

The economic value of these reserves is significant, with the company reporting a Net Present Value (NPV10) for 2P reserves of $420.5 million as of December 31, 2023.

Strategic Importance of SASB Gas Field

The SASB gas field holds strategic importance for both Trillion Energy and Turkey's energy landscape. Located in the Black Sea, the field is well-positioned to supply natural gas to Turkey, which is the 7th largest gas consumer globally, consuming over 48 BCM annually.

Turkey's heavy reliance on imported gas (98% of consumption) makes domestic production particularly valuable. The SASB field benefits from:

• Excellent fiscal regime with a low 12.5% royalty rate and 22% corporate tax rate.
• Direct connection to Turkey's national natural gas pipeline grid.
• Existing infrastructure including four offshore production platforms, an onshore gas processing facility, and 18km of subsea pipeline.

The field's infrastructure, developed with over $600 million in historical investments, provides Trillion Energy with a solid foundation for future growth and cost-effective production expansion.

High-Impact Oil Exploration Opportunities

While the SASB gas field represents Trillion Energy's core producing asset, the company is also pursuing high-potential oil exploration opportunities in southeastern Turkey. The company has acquired rights to explore in the Cudi-Gabar region, an area that has seen recent significant oil discoveries.

Key aspects of Trillion's oil exploration program include:

• Exploration block M47c3,c4 located near recent high-impact discoveries and oil fields.
• A 10-well program targeting the discovery of a 10,000 – 100,000 bbl/day oil field.
• Completed 2D seismic data collection for the block, currently in the processing stage.
• Proximity to major discoveries such as the Sehit Esma Cevik Oil Field (250 million barrels OOIP) and Sehit Aybuke Yalcin Oil Field (1 billion barrels OOIP).

The potential for a significant oil discovery in this region could be transformative for Trillion Energy, providing a complementary revenue stream to its gas production and significantly enhancing shareholder value.

Financial Position & Market Valuation

As of August 8, 2024, Trillion Energy reported a market capitalization of approximately CND$ 17.92 million, with a share price of CND$ 0.115. It's worth noting that the company's market capitalization appears to be significantly lower than the reported NPV10 of its 2P reserves ($420.5 million), suggesting potential undervaluation based on its existing asset base.

While Trillion Energy presents an intriguing investment opportunity, investors should consider several risks:

• Commodity price volatility: The company's revenues are heavily dependent on natural gas prices, which can be volatile.
• Geopolitical risks: Operations in Turkey may be subject to geopolitical uncertainties and regulatory changes.
• Exploration risks: Oil exploration activities carry inherent risks of dry holes or commercially unviable discoveries.
• Capital requirements: Ongoing development and exploration activities may require additional financing, potentially diluting existing shareholders.

Key Takeaways

Trillion Energy International Inc. offers investors exposure to a growing natural gas producer with significant upside potential from both its existing SASB gas field and high-impact oil exploration opportunities in Turkey. The company's recent success in rapidly paying back investments and increasing production at SASB demonstrates its ability to execute on operational goals.

Key investment considerations include:

• Strong production growth potential at SASB, with plans to reach 8.5 MMcf/d by end of 2024.
• Substantial 2P reserves of 55.8 BCF with an NPV10 of $420.5 million, significantly higher than the current market capitalization.
• Strategic position in Turkey's energy market, benefiting from high gas prices and favorable fiscal terms.
• High-impact oil exploration potential in the Cudi-Gabar region, offering transformative growth opportunities.
• Experienced management team with a track record of success in the oil and gas industry.

For investors seeking exposure to the energy sector, particularly in the strategically important Turkish market, Trillion Energy presents an interesting opportunity to invest in a company with both near-term production growth and long-term exploration upside. However, as with any small-cap energy company, investors should carefully consider the risks and conduct thorough due diligence before making an investment decision.

The company's ability to continue executing on its SASB development plans and make progress on its oil exploration program will be key factors to watch in the coming months. If successful, Trillion Energy could see significant value creation for shareholders as it capitalizes on the growing energy demands of Turkey and the broader European market.