Canadian oil producer Trillion Energy International Inc. (CSE:TCF, OTCQB:TRLEF) holds substantial upside potential for investors with its assets in Türkiye, according to analysts at Echelon Wealth Partners.
In a recent analyst report, Echelon pinned a Speculative Buy recommendation on the stock, setting a target price of C$0.75.
Trillion's focus on Türkiye, with its primary asset being the South Akcakoca Sub-Basin (SASB) offshore Black Sea gas field and a promising oil exploration opportunity in the Cudi-Gabar region.
“Overall, we believe that if the team can deliver on volumes at SASB, which have been challenged but resolutions are being implemented, the stock will look deeply discounted on valuation with substantial upside for potential for investors today,” Echelon analysts wrote.
Led by seasoned oilman Dr. Arthur Halleran, the company has faced challenges in SASB volumes, but a resolution program is underway, Echelon noted.
Trillion has successfully drilled wells in the SASB field, increasing volumes by 42% this year. However, production constraints on new wells led to volumes falling below expectations.
In response, the company initiated a resolution program in 3Q 2023, addressing water loading issues and achieving a significant production increase to 14.4 MMcf/d. Plans to install pumping could further boost production to ~15 MMcf/d, expected in 1Q 2024.
The company's flexibility in the program, coupled with exploration opportunities in the Cudi-Gabar region, contributes to a solid financial position. Echelon forecasts a funds flow of $30.1M in 2024.
That has led analysts to believe Trillion is in “solid position” to execute on a forecasted $29M capital program.
“That said, we do believe that continued success on ramping up production from the current wells will be key to making this funding go around but given the recent success we believe management is on track to deliver,” analysts noted.
Echelon is eyeing key milestones from Trillion, such as hitting 15 MMcf/d at SASB and a strong Q124, as catalysts for market confidence and potential valuation recovery over the remaining portion of 2023.