Analysts at Eight Capital hit the road with Trillion Energy International Inc. (CSE:TCF, OTCQB:TRLEF) to see the company’s marketing tour in person and came away impressed.
The firm reiterated a ’Buy’ rating and C$1.50 price target in a note to clients published Thursday.
“Investors are largely keen to see an acceleration of growth,” analysts said of the tour. “[Trillion] was able to demonstrate the optionality that comes with the free cash flow generation from its current portfolio of reserves and resources that can be put towards on-block and offblock exploration.”
Specifically, Trillion can add a second rig to its natural gas drilling program in Turkey in order to accelerate the reserve and resource development, as well as on-block exploration, which can take 6-9 months to secure and start drilling, analysts said. Putting cash towards obtaining off-block licenses and shooting/interpreting seismic to delineate future prospects will help too.
“We estimate this optionality opens up when the company reaches eight wells on production with Q4/23 as the cash inflection point with an estimated balance of US$18 million,” the analysts said.
For now, Trillion’s current 24-well drilling program is targeting 64 billion cubic feet (bcf) of reserves and prospective resources with line-of-sight to another 29 bcf of recoverable resources with on-block exploration.
Eight Capital estimates a net asset value of nearly $490 million, which can increase to about $C680 million when factoring in the upside from the 29 Bcf of on-block exploration.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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