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Trillion Energy International has fair value of $0.24 per share, says Fundamental Research analyst

Published: 16:20 09 Dec 2020 EST

Trillion Energy International Inc. -
Fundamental Research Corp analyst Sid Rajeev says Trillion Energy has the potential to significantly ramp up production and cash flows

Trillion Energy International Inc (CSE:TCF) (OTCMKTS:TCFF) has a fair value of C$0.24 per share, said Fundamental Research Corp analyst Sid Rajeev, as he initiated coverage of the gas producer with operations in Turkey with a Speculative Buy rating.

“Trillion Energy has the potential to significantly ramp up production and cash flows, if management is able to raise funds for SASB’s development, ” Rajeev said.

READ: Trillion Energy International is quickly becoming an energy powerhouse in Eastern Europe 

Trillion holds two oil and gas producing assets in Turkey, which includes a 49% interest in the South Akcakoca Sub-Basin (SASB) shallow-water offshore gas field, as well as a minority interest in the Cendere oil field, with both projects producing 183 boepd (net) in the first nine months of 2020 for $1.8 million in revenue.

“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 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.

The analyst noted, in his report dated December 3, that Trillion Energy has a strong partner in both projects, that being a state-owned oil and gas company, which is also the country’s largest producer.

He said gas prices in Turkey are currently $6/mcf, compared with $2.9/mcf in North America, with Turkey importing 99% of its gas consumption. The company stated that it has received an average price of $7+ over the past decade.  

The Fundamental Research analyst also wrote that Trillion Energy is focused on ramping up production at SASB, with 17 additional production wells planned for 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,” he said.

Rajeev added that Trillion Energy is evaluating options to raise $10 million to $20 million 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.

Shares of Trillion Energy ended Wednesday's trading session unchanged at $0.10. 

---Updates for share price---

Contact Sean at sean@proactiveinvestors.com

Trillion Energy begin drilling operations at Alapli-2 natural gas well in Turkey

  Trillion Energy CEO Arthur Halleran joined Steve Darling from Proactive to share news the company has announced the spudding of the Alapli-2 natural gas well at the SASB gas field, offshore of Turkey. Halleran telling Proactive this is the company’s sixth well and is a long-reach...

on 14/6/23