SEC Filing Summary: Tengasco, Inc. (Form 10-K)
Business Context and Reporting Period
Company: Tengasco, Inc. (Note: Input metadata referenced "Riley Exploration Permian, Inc.", but the filing text identifies the registrant as Tengasco, Inc.)
Period: Fiscal year ended December 31, 2001.
Operations: Exploration, production, and transportation of oil and natural gas in Tennessee (Swan Creek Field) and Kansas. The company operates a 65-mile intrastate pipeline delivering gas to major industrial customers, including Eastman Chemical Company and BAE Systems.
Key Financial Metrics (Year Ended Dec 31, 2001)
- Revenue: Total revenues were $6,996,686, comprising $6,656,758 in oil and gas revenues and $296,331 in pipeline transportation revenues.
- Profitability: Net loss was $(2,262,787). Net loss available to common stockholders was $(2,653,970), or $(0.26) per share.
- Cash Flow: Net cash used in operating activities was $(221,176). Net cash used in investing activities was $(9,408,684), primarily for oil and gas property additions and pipeline completion. Net cash provided by financing activities was $8,419,336.
- Debt: Total long-term debt was $10,302,588. This includes a revolving line of credit with Bank One (balance $9,101,777) and other notes.
- Liquidity: The company reported a working capital deficit of $(6,326,204) and cash and cash equivalents of $393,451.
- Reserves: Proved reserves were significantly revised downward to 25,880,202 Mcf of gas and 1,056,675 barrels of oil, largely due to lower commodity prices and production issues.
Material Changes vs. Prior Period
- Revenue Increase: Oil and gas revenues increased 27% from 2000 ($5.24M) to 2001 ($6.66M), driven by the commencement of gas sales from the Swan Creek Field ($2.56M). However, oil revenues declined due to lower volumes and prices.
- Expense Increases: Production costs rose to $2.95M. Depreciation, depletion, and amortization (DD&A) surged to $1.85M (from $371k in 2000) due to pipeline depreciation and increased depletion rates from reserve reductions. General and administrative expenses increased to $2.96M, partly due to higher insurance costs.
- Production Issues: Gas production in the Swan Creek Field failed to meet targets (approx. 3 MMcf/day vs. projected 10 MMcf/day) due to unexpected fluid influx in wells, requiring workovers and temporary suspension of drilling.
- Reserve Valuation: The discounted present value of proved reserves dropped significantly from the prior year due to lower year-end oil and gas prices and reduced reserve estimates.
Outlook, Risks, and Contingencies
- Going Concern Uncertainty: Auditors have raised substantial doubt about the company's ability to continue as a going concern due to recurring losses, an accumulated deficit of $24.1M, and a working capital deficit.
- Bank Dispute: In April 2002, Bank One reduced the company's borrowing base from $10M to approximately $3.1M, demanding immediate repayment of the excess ($6M). The company disputes this reduction, citing contract terms and updated reserve potential, but faces potential default if not resolved.
- Capital Needs: The company plans to raise capital through a private placement of convertible preferred stock to repay the bank loan excess and fund well re-work and drilling programs.
- Legal Proceedings: Pending litigation includes a dispute with an engineering firm (Fenstermaker) regarding pipeline construction costs (counterclaim filed for $1.25M) and an arbitration award against the company regarding pipeline contractor fees (approx. $266k) which the company is attempting to vacate.
- Operational Outlook: Management expects production to increase by the end of 2002 following the completion of well repairs and the drilling of new wells in the Knox formation.
Investor Verification Checklist
- Bank One Dispute Resolution: Verify the status of the dispute regarding the $6M borrowing base reduction and whether the company has secured alternative financing to avoid default.
- Production Recovery: Confirm if the fluid issues in the Swan Creek Field have been resolved and if production has stabilized or increased as projected for 2002.
- Capital Raise Success: Monitor the success of the planned private placement of convertible preferred stock to fund operations and debt repayment.
- Reserve Estimates: Review updated reserve reports to see if the downward revisions in proved reserves are permanent or if they will be adjusted upward with new drilling data.
- Legal Outcomes: Track the resolution of the arbitration with King Pipeline and the lawsuit with Fenstermaker, as these could impact cash flow.