Video summary
Trillion Energy is currently experiencing a significant market opportunity driven by a recent light oil discovery in the M47 block located in Turkey's Zagros basin. An independent resource evaluation has placed the net present value of this discovery at over 733 million dollars, yet the company's current market capitalization remains roughly 120 times lower than that intrinsic value. This substantial gap represents a clear arbitrage opportunity for investors, as the stock is trading well below its peers despite possessing a confirmed resource base of approximately 27 million net barrels. The management team attributes this undervaluation to the recent nature of the discovery and the fact that it has not yet been fully appreciated by the broader market, suggesting that significant value will be unlocked once the information spreads.
The technical characteristics of the M47 asset further enhance its commercial appeal, particularly due to the quality of the oil found. The discovery consists of light oil with an API gravity of 32.4, which falls into a highly desirable category between medium and heavy grades. Lighter oils are significantly easier to extract from the ground compared to heavier varieties like tar sands, resulting in lower production costs and higher recovery rates. Specifically, the estimated production costs for this asset are about one-fifth of those associated with North American shale oil or oil sands operations. Additionally, the drilling process revealed a high-quality carbonate reservoir with excellent porosity and permeability, evidenced by the loss of drilling mud, which indicates that the formation can naturally draw in fluids effectively. Although drilling was halted early at 2,450 meters due to hitting these productive zones, the company plans to re-enter the well to drill through the remaining 150 meters of the reservoir, potentially accessing even more oil-producing sections.
Beyond the primary discovery, Trillion Energy has taken strategic steps to strengthen its financial position and focus on shareholder value by divesting non-core legacy assets. This move eliminated over 20 million dollars in liabilities and allowed the company to retain a 7% royalty on future production from the sold fields while concentrating all resources on the M47 block. The asset is an onshore conventional play, meaning it does not require complex infrastructure; instead, oil can be pumped into tank farms and trucked to a depot located roughly 120 kilometers away. This existing logistical framework enables a rapid ramp-up to production, with revenue generation expected within months of commencing economic operations. Looking ahead, the company aims to drill two new wells on prospective leads in the north, south, and mid sections over the next 12 to 18 months, hoping to secure additional discoveries that will further drive value for shareholders.
Read the full video transcript
Now, an independent resource evaluation,
this blew my mind, just placed the value
of Trillion share of the M47 discovery
at over 733
million on an NPV10 basis. The company's
market cap [clears throat] is roughly
120 times lower than that today. How do
you explain that gap to investors?
Well, it's it's a recent discovery. Um
it's a very recent discovery. Nobody
knows about it yet. It's only recently
being put out there.
And
so it's just really an arbitrage
opportunity. Uh the number the 730
million is is the unrisked even when you
risk it down uh the risk number is
closer to 500 million uh dollars just on
the the C2 contingent uh resource which
has been characterized as uh
it's a oil discovery um and that we have
to then go out and prove economics in
order to upgrade it to a reserve. And so
that gives us um a significant amount of
upside through future work.
>> [music]
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>> Welcome to the Rich TV show. I'm your
host Richard De Souza and I'm here with
our very special guest, the president of
Trillion Energy, Scott Lauer. How you
doing today, Scott? Great. How you
doing, Rich? Thanks for having me today.
Hey, my pleasure. Very excited to have
you here. You guys just had some really
nice news and we're going to talk about
that today. So my first question, Scott,
is Trillion has just put out two major
press releases back-to-back for
investors that are just tuning in, can
you set the scene? What is happening
with this company right now and why
should investors take notice? Okay, so
Trillion Energy it's um it trades under
um TCF the symbol on the CSE. Uh we're
an an international oil and gas
exploration and and development company.
And uh you know, recently oil prices
have gone up and the oil market has been
performing tremendously. And uh so will
have the oil stocks. And uh Trillion has
an interest in a block it's called M47.
It's in the southeast of Turkey in the
Zagros basin uh area
and proximate to some very very
significant oil recent oil discoveries.
And Trillion has made a light oil
discovery
uh on trend with some of the bigger
producing fields to the east. And uh
it's it's a very exciting discovery and
I'm here to tell everybody about it
today.
Congratulations on that discovery and
yes, the oil prices have been absolutely
on fire. So my next question is you
confirmed a light oil discovery at C1
well. For investors watching this, what
does 32.4
API oil mean and why does that grade
matter commercially?
Yeah, good question. The uh oil is
graded into, you know, light medium,
heavy oil. Anything under 30 is uh
between 20 and 30 is uh medium grade
oil. Uh light oil is uh anything between
30 and and 40 API. And anything below 20
is like uh
tar sands, very very heavy very heavy
oil. And it it impacts uh the a few
things. One is the production cost and
the second thing is the amount of oil
you can extract from a formation, right?
You know, the tighter it is, the heavier
it is, the harder it is to get out and
the less recovery you have.
The lighter the oil is, the easier it is
to get out, the less production costs
you have and the greater your recovery
of your oil in place is. So with with uh
light oil discoveries uh in this area
you you've got production costs that
are, you know, 1/5 of what you have in
North America um which is typically your
shale oil or your uh oil sands.
Thank you for that explanation. And the
well had to stop early, meaning you only
got through a fraction of a reservoir
that could run 250 to 350 m deep. What
does that tell you about what is still
down there?
You know, the this is a a very famous
carbonate system um
in that runs for the Zagros basin. And
so what happens is when you're drilling
your well when you hit a very good
reservoir, you've got two types of uh
permeability. You've got uh
fracture permeability and then you get
matrix porosity perme- um uh
permeability. And um together
um when you have a great amount of of
porosity and permeability in your
reservoir
and it's an under-pressured reservoir,
you can lose drilling mud. And when
you're losing drilling mud in drilling
in this area, it means that you have a
very good reservoir uh because what the
reservoir can suck in in terms of your
drilling mud is the same sort of
fracture porosity matrix that allows the
light oil to migrate to your wellbore
and then come up and produce it. And so
it's it's uh a confirmation of a very
good reservoir when you're lose losing
mud in in these sort of they're called
thief zones. And so the challenge then
becomes uh how to manage your um
your drilling pressure so that you're
able to produce the oil without losing
your mud or incomplete your well. So
this well uh they stopped drilling
because they hit these zones were you
have a lot a huge amount of uh fractured
uh uh fracture um created porosity and
perme- permeability. And so what has to
happen is
they have to re- side track this well
and and re-drill to total depth. The
total depth was supposed to be 2600 m.
Uh they got down to 2450
m uh before they stopped drilling. So
we're going to go back in at some point
and drill the remaining section of the
reservoir. Uh and these are the the pay
zones. There's a 150 m in, you know,
reservoir that could potentially have
grosser some more oil producing zones.
You know, at the time that uh we stopped
drilling you know, we were hitting some
of the best uh the best pay zones in the
well right right at the
point uh that we stopped drilling with
uh decent oil saturation, good oil
saturation you know, good potential uh
uh production characteristics because of
the um dual matrix porosity there. And
uh so we're really eager to get back in
and and complete the well.
That's exciting. I can't wait to see the
results.
We love it when companies are focusing
on shareholder value. That's a key
component of what investors are looking
for. So we love to hear that from you.
Now, once Trillion starts producing, how
quickly can that oil get to market and
start generating revenue for the
company?
Yeah, because it's um an onshore asset
and it's a conventional oil
there's not a lot of infrastructure. You
just put up a tank farm which is
essentially large barrels you can pump
your uh conventional oil into.
And um
we we learned from the fields of five
discoveries right next door to us uh
that you can truck a huge amount of oil
uh to the depot which is about 120 km
away. So it's a very quick ramp up to
production. It's it's uh you can be in
production after after economic um
production starts, you can be in
production within months
and earning revenue within months.
And uh so that is that is going to be
you know, we're hoping to have one or
two wells into production subject to uh
uh proof of commerciality
um based on our reserve report. We we we
know we have the discovery uh we know we
have the oil um we've got to get it out
of the ground and that's not that
shouldn't be that difficult in an
onshore uh conventional light oil play
like this one. Scott, Trillion also
announced the sale of its legacy assets
eliminating over 20 million liabilities.
What does a clean balance sheet and
singular focus on M47 mean for the
company going forward? Yeah, what it
what it means for the company is we had
to look take a hard look at our our
assets. We had three three assets. We
streamlined down to our core asset. And
the reason was is it's just got more
leverage uh for investors. You know, the
payback periods are much much less um in
the current environment and with oil
going up to where it is right now it was
undoubtedly the core asset to focus on.
And so we we spun off our our non-core
assets um
our our legacy mature fields. And we
kept a royalty a 7% royalty on future uh
production from both of those assets.
And this this has allowed us to now
focus on the upside on the oil block. Uh
you know, as as you've seen here from
the recent press releases, there's a
tremendous potential in the oil block.
And uh that that is where the
shareholder value lies, and that's where
we have our our sole focus right now.
Scott, what are the key milestones
investors should be watching over the
next 12 to 18 months?
Uh investors should be watching our uh
the the next couple wells drilled.
They're drill They're going to be
drilled on uh two new prospective leads,
uh the north or the south and the mid
lead, which are currently prospective
resources. We're hoping to get another
discovery in these leads.
And uh that if we did that, well,
definitely be a giant value driver for
the shareholders.
Very excited to see the results from
those three wells. And Scott, for
investors who are watching this and
considering Trillion, what is the single
most important thing you want them to
understand about where this company is
headed?
Well, right now uh the stock is um we
just put out the news on the discovery,
and we just put out the uh resource
report. And uh the stock is tremendously
unknown at this point in the market on
this play.
And so there's a lot of value to be
added not only uh from the work program,
but also and just um
there's a value gap. And as people know
about it, it the value gap will be
filled in. We're trading significantly
below our peers in the same uh
circumstance with our 2C resource of 27
uh million barrels net to us.
Um
we're trading well below peers. So
there's an opportunity for investors to
get in before the whole market knows
about it.
Yeah, I totally agree, Scott. We feel
that this is a company that is very
undervalued, underappreciated, and
underexposed. With the assets you have,
once we pull those out of the ground,
with the price of oil where it is, and
with all the volatility in the oil
markets, we think this is a great
opportunity for investors to take a look
at Trillion Energy. Thank you for
joining us today, Scott, and we look
forward to see you again in the future.
All right, thanks a lot, Rich.
Always a pleasure. Thank you for
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