UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
FORM 10-SB
Registration Statement of Small Business Issuer pursunt to
Section 12(g) of the Securities Exchange Act of 1934
TENGASCO, INC.
 Name of Registrant as specified in its charter

              TENNESSEE                             87-0267438
        State of Incorporation               I.R.S. Employer I.D. No.

      603 Main Avenue, Suite 500
          Knoxville, Tennessee                        37902
Address of principal executive offices               Zip Code

Issuer's Telephone Number                        (423) 523 - 1124

Issuer's Facsimile Number                        (423) 523 - 9894	

Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
$0.001 par value Common Voting Stock

                        TABLE OF CONTENTS

PART I ....................................................................    3

Item 1. Description of Business............................................    3

        Glossary of Terms .................................................    3
        Business Development ..............................................    4
        General ...........................................................   10
        Special Risk Factors ..............................................   13
        Limited History ...................................................   13
        Limited Market for Common Stock ...................................   14
        General Economic Risks/Potential ..................................   14
        Future Acquisitions ...............................................   15
        Future Capital Requirements; Uncertainty of Future
        Funding; Replacement of Reserves...................................   15
        Uncertainty of Reserve Estimates ..................................   16
        Operating Hazards .................................................   16
        Future Sales of Common Stock ......................................   17
        Voting Control ....................................................   18
        Competition .......................................................   18
        Dependence on Technical Personnel .................................   18
        Governmental Regulations ..........................................   19
        Indemnification of Directors, Officers and Employees ..............   19
        Going Concern .....................................................   19
        Principal Products or Services and Markets ........................   19
        Reserve Analyses ..................................................   20
        Distribution Methods of Products or Services ......................   21
        Status of Any Publicly Announced New Product or Service ...........   21
        Competitive Business Conditions, Competitive Position
        in the Industry and Methods of Competition ........................   21
        Sources and Availability of Raw Materials and Names of
        Principal Suppliers ...............................................   22
        Dependence on One or a Few Major Customers ........................   23
        Patents, Trademarks, Licenses, Franchises,
        Concessions, Royalty Agreements, Labor Contracts ..................   23
        Need for Governmental Approval of Principal
        Products or Services ..............................................   23
        Effect of Existing or Probable Governmental
        Regulations on Business ...........................................   23
        Research and Development ..........................................   25
        Cost and Effects of Compliance with Environmental Laws ............   25
        Number of Total Employees and
        Number of Full-Time Employees .....................................   25

Item 2. Management's Discussion and Analysis or Plan of

                                       1	

        Operation .........................................................  25
        Plan of Operation for Existing Leases .............................  25
        Other Significant Plans ...........................................  27
        Results of Operations .............................................  27
        Liquidity .........................................................  28

Item 3. Description of Property ...........................................  29

        Property Location, Facilities, Size and Nature
          of Ownership ....................................................  29
        Disclosure of Oil and Gas Operations ..............................  30

Item 4. Security Ownership of Certain Beneficial Owners and
        Management ........................................................  31

        Security Ownership of Certain Beneficial Owners ...................  31
        Five Percent Stockholders .........................................  32
        Directors and Executive Officers ..................................  32
        Changes in Control ................................................  33

Item 5. Directors, Executive Officers. Promoters and Control
        Persons ...........................................................  33

        Identification of Directors and Officers ..........................  33
        Business Experience ...............................................  35
        Committees ........................................................  36

        Family Relationships ..............................................  36
        Certain Legal Proceedings .........................................  36

Item 6. Executive Compensation ............................................  37

        Cash Compensation .................................................  37
        Bonuses and Deferred Compensation .................................  40
        Compensation Pursuant to Plans ....................................  40
        Pension Table .....................................................  40
        Other Compensation ................................................  41
        Compensation of Directors .........................................  44
        Employment Contracts ..............................................  44
        Termination of Employment and Change of Control
        Arrangement .......................................................  44

Item 7. Certain Relationships and Related Transactions
        Transactions with Management and Others ...........................  44

        Certain Business Relationships ....................................  44
        Indebtedness of Management ........................................  45
        Parents of the Issuer .............................................  45
        Transactions with Promoters .......................................  45

Item 8. Description of Securities .........................................

                                       2	

        Authorized Capital Stock ..........................................  45
        Common Stock ......................................................  45

PART II ...................................................................  47

Item 1. Market Price of and Dividends on the Common Stock and
        Other Stockholder Matters .........................................  47

        Market Information ................................................  47
        Holders ...........................................................  48
        Dividends .........................................................  48

Item 2. Legal Proceedings .................................................  49

Item 3. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure ..........................................  49

        Change from David T. Thomson, CPA to
        Charles M. Stivers, CPA ...........................................  49
        Change from Charles M. Stivers, CPA,
        to Price-Bednar, LLP, CPA .........................................  51
        Change from Price-Bednar, LLP, CPA
        to Charles M. Stivers, CPA ........................................  52
        Change from Charles M. Stivers, CPA
        to BDO Seidman, LLP ...............................................  53

Item 4. Recent Sales of Unregistered Securities ...........................  55

Item 5. Indemnification of Directors and Officers .........................  57

PART F/S ..................................................................  57

PART III ..................................................................  60

Item 1. Index to Exhibits .................................................  66	

PART I
Item 1. Description of Business.
Glossary of Terms
Confirmed Structure: A structure that is defined due to actual geological testing and information.
Farmout Agreement: A form of agreement between oil and gas operators whereby the owner of a lease who is not interested in drilling at the time, agrees to assign the lease or a portion of it to another operator who wishes to drill the acreage. The assignor may or may not retain an interest (royalty or production payment) in the production.
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Hydrocarbons: Organic chemical compounds of hydrogen and carbon atoms. There are a vast number of these compounds, and they form the basis of all petroleum products. They may exist as gases, liquids or solids. An example of each is methane, hexane and asphalt.
Verified Structure: A structure that is verified by actual geological testing and/or penetration.
Wildcat: A term applied to a mining company organized, or to a mine or well dug, in an attempt to develop unproven ground far from previous production. Any risky venture in the mining or petroleum industry.
Shut-in Well: A well that is not in production because of a lack of a market or a pipeline connection.
Shut-in Royalty: Payment to royalty owners under the terms of a mineral lease that allows the operator or lessee to defer production from a shut-in well.
Business Development.
The Company was initially organized under the laws of the State of Utah on April 18, 1916, under the name "Gold Deposit Mining & Milling Company." The Company was formed for the purpose of mining, reducing and smelting mineral ores. Copies of the initial Articles of Incorporation and the current Bylaws of the Company are attached hereto and incorporated herein by reference. See the Exhibit Index.
At the Company's inception, the Board of Directors authorized the issuance of 600,000 shares of its then $0.10 par value common voting stock to directors, executive officers and persons who may be deemed to have been promoters or founders of the Company in consideration of the conveyance to the Company of approximately 10 lode mining claims located in the Battle Mountain Mining District, State of Nevada. The Company conducted limited mining operations following its organization.
The Company's Articles of Incorporation were amended on April 12, 1966, by unanimous vote of the shareholders, to provide that the Company shall have a perpetual existence. A copy of the Articles of Amendment effecting this change is attached hereto and incorporated herein by reference. See the Exhibit Index.
On November 10, 1972, the Company conveyed to an unaffiliated entity substantially all of the Company's assets at that time, and the Company ceased all business operations.
In connection with a change in control of the Company, in January, 1983, the Board of Directors of the Company authorized the issuance of 1,500,000 "unregistered" and "restricted" shares of its
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common stock to certain directors and executive officers in consideration of cash and services rendered of an aggregate value of $7,500.
On July 12, 1984, the Company's Articles of Incorporation were again amended to: (i) authorize it to engage in any business or enterprise deemed to be beneficial to the Company; (ii) increase the authorized capital of the Company from 1,000,000 shares to 50,000,000 shares of common stock (which allowed the Company to issue the "unregistered" and "restricted" shares referred to in the preceding paragraph); (iii) reduce the par value of its common stock from $0.10 to $0.001; (iv) provide that fully-paid stock shall not be liable for any further call or assessment; and (v) provide that stockholders shall not have preemptive rights to acquire unissued shares. There were 980,778 outstanding voting securities of the Company on the date of the adoption of this amendment by the stockholders of the Company, and 696,146 shares were voted in favor of these amendments with none opposing and none abstaining. A copy of the Articles of Amendment effecting these changes is attached hereto and incorporated herein by reference. See the Exhibit Index.
From approximately 1983 to 1991, the operations of the Company were limited to seeking out the acquisition of assets, property or businesses.
In contemplation of completing a "reverse" reorganization with Onasco Biotechnologies, Inc. (" Onasco Texas"), the stockholders of the Company adopted, ratified and approved the following amendments to the Company's Articles of Incorporation: (i) a forward split of the then outstanding 2,480,778 shares of common stock of the Company on a basis of 2.015496 for one, resulting in 5,000,000 post-split shares being outstanding, and retaining the par value at $0.001 per share, with the appropriate adjustments being made in the additional paid in capital and stated capital accounts of the Company; and (ii) a change of the Company's name to "Onasco Companies, Inc." These amendments were subject to the completion of the contemplated reorganization.
The Company entered into an Agreement and Plan of Reorganization with Onasco Texas and all of its stockholders on December 17, 1991 (the "Onasco Plan"). Pursuant to the Onasco Plan, the Company acquired all of the issued and outstanding shares of common stock of Onasco Texas in consideration of the Company's issuance of an aggregate total of 15,000,000 post-split "unregistered" and "restricted" shares of its $0.001 par value common stock to the stockholders of Onasco Texas, pro rata, in accordance with their respective interests in Onasco Texas.
The Onasco Plan was effective as of December 18, 1991, the date on which the aforesaid Articles of Amendment respecting the reorganization with Onasco Texas were filed with the Department of Commerce of the State of Utah. There were 2,480,778 outstanding voting securities of the Company on the date of the adoption of this
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amendment by the stockholders of the Company, and 1,339,146 shares
were voted in favor of these amendments with none opposing and none abstaining. A copy of the Articles of Amendment effecting these changes is attached hereto and incorporated herein by reference. See the Exhibit Index.
Onasco Texas, which became a wholly owned subsidiary of the Company following the completion of the Onasco Plan, was organized under the laws of the State of Texas on October 17, 1991. The Company carried on the business operations previously conducted by Onasco Texas, which consisted of the development of diagnostic kits to screen for the presence of Type D retrovirus in humans and monkeys and a putative, synthetic vaccine against such viruses. These operations, which primarily involved research and development activities, proved unsuccessful and were discontinued in June, 1994, and Onasco Texas was dissolved by resolution of the Board of Directors on or about April 10, 1995. The dissolution did not involve any bankruptcy or similar proceeding.
In accordance with the Utah Revised Business Corporation Law, which became effective in 1991, on September 11, 1992, the Company's Articles of Incorporation were further amended (i) to authorize the stockholders of the Company to take any action without a meeting, that could have been taken at a meeting of the stockholders, if consents are signed by stockholders holding at least the number of shares that would be necessary to take the action at a meeting (this action was not possible under prior law); and (ii) to provide for the reclassification of each outstanding share of its common stock to become one-twentieth of one share of new common stock (designated "Reconstituted Common Stock"), effective September 15, 1992, with no fractional shares being created and no stockholder to hold less than one share, and with no change in the par value or the authorized capital. The net effect of this reclassification was a one share for twenty reverse split of the outstanding shares of common stock. There were 20,259,987 outstanding voting securities of the Company on the date of the adoption of this amendment by the stockholders of the Company, and 14,800,000 shares were voted in favor of these amendments with none opposing and none abstaining; the outstanding voting securities of the Company were reduced to 1,012,999 shares as a result of the reverse split. A copy of the Articles of Amendment effecting these changes is attached hereto and incorporated herein by reference. See the Exhibit Index.
In connection with a change in control of the Company in the summer of 1994, Duane S. Jenson and his son, Jeffrey D. Jenson, purchased 697,500 shares of the Company's common stock, constituting approximately 67% of the then outstanding voting securities of the Company, from Dr. Robert C. Bohannon, Ph.D. and his family, in consideration of the sum of $10,000. Dr. Bohannon was formerly the principal stockholder of Onasco Texas, and had served as the President, CEO, Vice President and a director of the Company since the completion of the Onasco Plan. Dr. Bohannon resigned these positions
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with the Company, effective June 13, 1994, compromised a debt of the Company to him for past services rendered to the Company prior to the change in control, and designated Jeffrey D. Jenson to serve as President, CEO, Secretary/Treasurer
and a director of the Company. At the time of the change of control, Dr. Bohannon was the sole director and executive officer of the Company. The remaining 33% of the Company's stock was held by original public shareholders. Subsequent to the change in control, Dr. Bohannon did not perform any services for the Company. Prior to the change in control, no director of the Company received compensation in excess of $100,000 per annum.
At a special meeting of the Board of Directors held April 11, 1995, the Board of Directors adopted resolutions providing for the granting of options to purchase "unregistered" and "restricted" shares of common stock of the Company to certain directors, executive officers and consultants whose service was to commence on the closing of a Purchase Agreement then being negotiated with Industrial Resources Corporation, a Kentucky corporation ("IRC"). See the heading "Other Compensation" under the caption "Executive Compensation," Part I, Item 6, and the "Restricted Stock Options Table," below.
At a special meeting of stockholders held on April 28, 1995, the Company's stockholders voted;
(i) to approve the execution of the Purchase Agreement pursuant to which the Company would acquire certain oil and gas leases, equipment, securities and vehicles owned by IRC, in consideration of the issuance of 4,000,000 post-split (as described below) "unregistered" and "restricted" shares of the Company's common stock:
(ii) to amend the Articles of Incorporation of the Company to effect a reverse split of the Company's outstanding $0.001 par value common stock on a basis of one share for two, retaining the par value at $0.001 per share, with appropriate adjustments being made in the additional paid in capital and stated capital accounts of the Company;
(iii) to change the name of the Company to "Tengasco, Inc."; and
(iv) to change the domicile of the Company from the State of Utah to the State of Tennessee by merging the Company into Tengasco, Inc., a Tennessee corporation, formed by the Company solely for this purpose.
The Purchase Agreement was duly executed by the Company and IRC, effective May 2, 1995. The reverse split, name change and change of domicile became effective on May 4, 1995, the date on which duly executed Articles of Merger effecting these changes were filed with the Secretary of State of the State of Tennessee; a certified copy of the Articles of Merger from the State of Tennessee was filed with the
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Department of Commerce of the State of Utah on May 5, 1995. Unless otherwise noted, all subsequent computations in this Registration Statement retroactively reflect this one for two reverse split and all other reverse splits outlined above under this caption. There were 1,037,650 outstanding voting securities of the Company on the date of the adoption of the amendments by the stockholders of
the Company, and 801,383 shares were voted in favor of the amendments with none opposing and none abstaining. Copies of the Articles of Merger and Plan of Merger to effect the change of domicile, change the name of the Company to "Tengasco, Inc." and to effect the one for two reverse split; the Purchase Agreement with IRC; and the Tennessee Articles of Incorporation of the wholly-owned subsidiary formed for the purpose of changing the Company's domicile are attached hereto and incorporated herein by reference. See the Exhibit Index.
Thereafter, the Purchase Agreement was amended to provide for the sale of certain additional assets for a price of $450,000 paid by the execution by the Company of a promissory note in that amount.
The assets acquired by the Company pursuant to the Purchase Agreement, as amended, consisted of machinery and equipment, vehicles, computer equipment, furniture and fixtures, well equipment, land leases, intangible drilling costs and stock of United Petroleum Corp., a public company. The book value of these assets was $1,752,000 at the time of the acquisition. The 4,000,000 shares of the Company's stock given as consideration for those assets had a market value, at that time, of $1,000,000 based upon a bid price of $.25 as reported by the National Quotation Bureau. The total cost of these assets to the Company, including the $450,000 note, was $1,450,000. Copies of the Amendment, General Bill of Sale and Promissory Note are attached hereto and incorporated herein by reference. See the Exhibit Index.
On May 2, 1995, in connection with the execution of the Purchase Agreement, Jeffrey D. Jenson, Kathleen L. Morrison and Travis T. Jenson resigned as directors and executive officers of the Company and the following individuals were appointed to serve as directors in their stead: George E. Walter, Jr.; Raymond E. Johnson; Jack E. Earnest; Edgar G. Baugh; Walter C. Arzonetti; Charles N. Manhoff; Joe B. Mattei; William A. Moffett; John O'Hagan; and Benton L. Becker. George E. Walter, Jr. was also appointed President/CEO of the Company, and James C. Walter was appointed Vice President and Secretary/Treasurer. None of the retiring directors had received compensation in excess of $100,000 prior to May 2, 1995.
As compensation for services rendered and to be rendered to the Company, including services relating to the Purchase Agreement, on May 2, 1995, the Company also executed written compensation agreements (the "Compensation Agreements") providing for the issuance of a total of 505,000 "unregistered" and "restricted" shares of common stock to the following individuals: M. E. Ratliff, Jeffrey D. Jenson; and Leonard W. Burningham, Esq. Copies of these Compensation Agreements are attached hereto and incorporated herein by reference.
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See the Exhibit Index.
The Compensation Agreements of Messrs. Ratliff and Jenson provided for the issuance of 215,000 and 240,000 "unregistered" and "restricted"
post-split shares (the one for two reverse split was not effected until May 4, 1995), respectively, to these individuals as compensation for services valued by the Company at $21,500 each. Initially, Mr. Ratliff was to receive the same number of shares as Mr. Jenson; however, he agreed to reduce the number of shares he was to receive by 25,000 shares, with the additional shares being allocated as part of the shares of common stock to be issued to Mr. Burningham under one of the Compensation Agreements, as outlined below. The shares issued to Mr. Jenson who is a non-affiliate, may be sold without restriction at any time after May 4, 1997. The shares issued to Mr. Ratliff, who may be deemed an affiliate, may not be sold until such time as the Company becomes a reporting company in accordance with the Rules of the Securities and Exchange Commission. See the caption "Recent Sales of Unregistered Securities," Part II, Item 4, below, and the Exhibit Index.
The Compensation Agreement of Mr. Burningham provided for the issuance of 50,000 "unregistered" and "restricted" post-split shares of common stock as compensation for legal services rendered and to be rendered to the Company, exclusive of costs. These services were valued by the Company at $5,000. See the caption "Recent Sales of Unregistered Securities," Part II, Item 4, below, and the Exhibit Index. The shares owned by Mr. Burningham, who is not an affiliate, became free trading on May 4, 1997 pursuant to Rule 144 of the Rules of the Securities and Exchange Commission.
Effective December 31, 1995, IRC agreed to accept 164,266 "unregistered" and "restricted" shares of the Company's common stock, with a market value of $5.37 per share on such date, as full payment for debt of approximately $882,112.25 of the Company to IRC together with interest. This debt included the note for $450,000 plus advances of $403,613 made by IRC in 1995, for use as working capital; for payment of salaries; for the acquisition of leases (approximately 100 leases at a cost of $4 per acre); for expert evaluations; and for legal services. These shares represented approximately 3% of the outstanding shares of the Company. The price was determined based upon the average trading price for shares of common stock of the Company on the OTC Bulletin Board as of December 31, 1995. See the caption "Security Ownership of Certain Beneficial Owners and Management," Part I Item 4, below, for information regarding the voting securities of the Company owned by IRC.
At the annual meeting of stockholders held January 30, 1996, the following persons were elected as directors of the Company, to serve until the next annual meeting of the stockholders of the Company or until their successors are elected and qualified, or their prior resignations or terminations: Walter C. Arzonetti; Benton L. Becker; Charles N. Manhoff, William A. Moffett, and Lyle G. Stockstill. At
9

the annual meeting, 4,047,550 shares of the 5,239,300 outstanding voting securities were voted in favor of the election, with none opposing and none abstaining.
At the annual meeting of the directors held January 30, 1996,
immediately following the annual meeting of the stockholders, the following persons were elected as executive officers of the Company, to serve until the next annual meeting of the Board of Directors of the Company or until their successors are elected and qualified, or their prior resignations or terminations: Ted P. Scallan, President and CEO; Kelley S. Grabill, Secretary; and Jeffrey D. DeMunnik, Treasurer. At its annual meeting, the Board of Directors also adopted resolutions pursuant to which options to purchase "unregistered" and "restricted" shares of common stock of the Company were granted to Messrs. Jeffrey D. DeMunnik, Kelley S. Grabill, Ted P. Scallan and Lyle G. Stockstill, directors or executive officers of the Company, and to certain other persons, who were consultants or employees. See the "Restricted Stock Options Table" under the caption "Executive Compensation," Part I, Item 6, below.
Mr. Stocksill and Mr. Manhoff resigned on November February 7,1997. Mr. Valliant resigned on January 27, 1997. Mr. Becker resigned on January 30, 1997. Mr. Arzonetti resigned on February 7, 1997. Mr. Fetter and Mr. Wright resigned on March 13, 1997. On March 13, 1997, Joseph Armstrong, James B. Kreamer, Shigemi Morita and Allen Sweeney were elected by the Board of Directors to serve as directors to replace resigned directors until the next annual meeting of shareholders.
Theodore P. Scallan resigned as President and CEO on November 26, 1996 and was replaced by James E. Kaiser who served until January 24, 1997 and was then replaced as President by Daniel G. Follmer and as CEO by Michael E. Ratliff. Mr. Follmer has also served as Chief Financial Officer since March 13, 1997.
Jeffrey DeMunnik resigned as Secretary on December 4, 1996 and as Treasurer on January 17, 1997. He was replaced as Secretary by Elizabeth Wendelken and as Treasurer by Sheila F. Sloan.
Robert C. Carter was elected a Vice-President on December 4, 1996 and served until March 13, 1997 when he was elected Executive Vice-President.
General.
In connection with the Purchase Agreement, the Company acquired from IRC the following properties:
(i) a 100% working interest in 41 oil and gas leases on a total of 8,058 acres, more or less, and a 25% working interest on one lease of 462 acres, more or less, located in Clay County, Kentucky (collectively, the "Beech Creek Leases"). Each of these
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leases provides for a landowner royalty of 12.5% of the oil produced and saved from the leased premises or, at the lessee's option, to pay the market price for such 12.5% royalty. The leases also provide for a landowner royalty equal to 12.5% of the market price at the well of the gas sold or used off the premises,
except for injection for secondary recovery of oil. The lessors are also entitled to free gas for all stoves and inside lights in the principal dwelling house on the leased properties by making connection to the well or wells at their own expense and risk. The Beech Creek Leases are also subject to overriding royalties ranging from 1.25% to 5%. A true and correct copy of the Beech Creek Lease Schedule is attached hereto and incorporated herein by reference. See the Exhibit Index.
(ii) a 100% working interest in 5 oil and gas leases on a total of 741 acres, more or less, located in Clay County, Kentucky (collectively, the "Wildcat Leases"). Each of these leases is subject to a 12.5% landowner royalty, on the same terms as the Beech Creek Leases, and a 3.125% overriding royalty. A true and correct copy of the Wildcat Lease Schedule is attached hereto and incorporated herein by reference. See the Exhibit Index.
(iii) a 100% working interest in six oil and gas leases on a total of 744 acres, more or less, located in Clay County, Kentucky (collectively, the "Burning Springs Leases"). Each of these leases is subject to a 12.5% landowner royalty, on the same terms as the Beech Creek Leases and the Wildcat Leases, and overriding royalties ranging from 3.125% to 7.5%. A true and correct copy of the
Burning Springs Lease Schedule is attached hereto and incorporated herein by reference. See the Exhibit Index.
(iv) a 100% working interest in nine oil and gas leases on a total of 2,121 acres, more or less, located in Fentress County, Tennessee (collectively, the "Fentress County Leases"). Each of these leases is subject to a 12.5% landowner royalty, on the same terms as the above referenced leases, and a 19% overriding royalty; and a 25% overriding royalty on one existing well. Section 60-1-301 of the Tennessee Code provides for a severance tax of 3% on all gas and oil removed from the ground in Tennessee. A true and correct copy of the Fentress County Lease Schedule is attached hereto and incorporated herein by reference. See the Exhibit Index.
The initial term of each of the above referenced leases ranges from one year to four years, with each lease to remain in effect thereafter for as long as (i) oil, gas, casing-head gas or casing-head gasoline is being produced on the leased premises, (ii) the Company has drilled a producing well and shut-in royalty is paid for the right to inject, store and remove gas, or
(iii) the Company commences drilling another well or paying rentals within one year of drilling a dry hole on the leased premises.
For those leases that are subject to a rental requirement, the date of the Company's next rent payment is shown on the applicable
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lease schedules attached hereto as Exhibits. The obligation to pay rent becomes applicable only when no well has been commenced on the leased premises by that date. Rent may be paid annually or quarterly, and once it has been paid, the Company has the right to defer the commencement of a well for the period for
which the rent was paid. Rent amounts vary from $1 to $5 per acre per year, with certain leases providing for a flat rental payment of $1500.
The Beech Creek Leases contain four wells. These four wells have been tested and management believes they are capable of producing gas in paying quantities. Flow lines have been laid to connect these wells to the gas transmission system of Wiser Oil Co., however, the wells are not presently in production.
The Wildcat Leases have no wells at this time. The Company intends to evaluate the potential of this lease block in 1997 and to schedule promising locations for future drilling. Wiser Oil Company and Somerset Gas, two of the oil purchasers in the area, have lines running on or adjacent to the lease block.
The Burning Springs Leases contain a total of 11 gas wells, all of which are shut-in. Several of the wells were in production in 1996 and were hooked up to a nearby Southern Gas Company transport line. At present, the wells are not producing since the compressors and related equipment have been moved to the Swan Creek leases where, it is anticipated, the wells will be more profitable. The Company intends to evaluate the wells that are listed as shut-in for possible workover or deepening potential; after the evaluation, they will be either reworked or plugged.
The Fentress County Leases currently have one well, which is shut-in. The well will require additional work to initiate production.
Following the completion of the Purchase Agreement, the Company acquired a 100% working interest in 210 oil and gas leases on a total of 30,367 acres more or less, located in Hancock, Claiborn County, Tennessee (collectively, the "Swan Creek Leases"). Each of these leases provides for a landowner royalty of 12.5%, leaving the Company a net royalty interest of 87.5% in each lease.
The term of these leases is similar to the terms set forth above with respect to the leases acquired from IRC.
There are five existing wells on the Swan Creek Leases. All of these wells have been completed and will be available for production as soon as the pipeline is completed. The first two wells have recently tested at 4.8 million cubic feet and 1.2 million cubic feet, respectively, of gas per day.
A true and correct copy of the Swan Creek Lease Schedule is attached hereto and incorporated herein by reference. See the Exhibit
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Index.
The Company also acquired a 100% working interest in four oil and gas leases on a total of 1,003.19 acres, more or less, located in Lauderdale County, Alabama (collectively, the "Alabama Leases"). Each of these leases
provides for a landowner royalty of 12.5%, leaving the Company a net royalty interest of 87.5% in each lease.
The Alabama Leases have no existing wells. These leases will be designated for wildcat purposes and there is no immediate plan to acquire additional leases in the area or to begin an exploration program.
The term of these leases is similar to the terms described above with respect to the leases acquired from IRC.
For those leases that are subject to a rental requirement, the date of the Company's next rent payment is shown on the applicable lease schedule attached hereto as an Exhibit. The obligation to pay rent becomes applicable only when no well has been commenced on the leased premises by that date. Rent may be paid annually or quarterly, and once it has been paid, the Company has the right to defer the commencement of a well for the period for which the rent was paid. Rent amounts are $1 per acre per year.
A true and correct copy of the Alabama Lease Schedule is attached hereto and incorporated herein by reference. See the Exhibit Index.
Substantial additional evaluation and remedial work will be necessary in order to determine whether most of the Company's wells will be able to produce oil and gas in paying quantities and to make them produce in such quantities. The Company's ability to perform these operations will depend to a great degree on its ability to raise sufficient funding to develop its leases, as to which no assurance can be given. Nor can any assurance be given that if the Company is able to obtain such funding, it will be able to produce oil and gas in profitable quantities.
Special Risk Factors.
The present and intended business operations of the Company must be considered to be highly speculative and involve substantial risks, and an investment in securities of the Company should only be considered by those persons who can bear the economic risk of loss of their entire investment. Among the risk factors to be considered are the following:
Limited History. Although the Company was organized in 1916, it must be regarded as being in a formative stage due to its lack of significant business operations during recent years and the fact that it did not acquire any oil or gas leases until 1995. Prior
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to its acquisition of these leases, the Company had never been involved in the oil and gas business. Its future success depends upon its ability to profitably operate its existing wells and to expand its operations through the acquisition of additional oil and gas producing properties and/or the acquisition of additional oil and gas leases. No assurance can be given that the Company will be successful in making such acquisitions. If the Company is successful in
acquiring additional leases, it faces the risk that the geology reports on which it relies are inaccurate, that the oil and/or gas reserves are less than anticipated, that it will not have sufficient funds to drill on the property, that it will not be able to market the oil and/or gas due to a lack of a market or the lack of pipelines, and that fluctuations in the prices of oil and/or gas will make development of those leases uneconomical. The Company is also subject to all of the risks inherent in attempting to expand a relatively new business venture. These risks include, but are not limited to, possible inability to profitably operate its existing properties or properties to be acquired in the future, the existence of undisclosed actual or contingent liabilities, the inability to find the working capital requirements of such properties and the inability to acquire additional properties that will have a positive effect on the Company's operations. There can be no assurance that the Company will achieve a level of profitability that will provide a return on invested capital or that will result in an increase in the market value of the Company's securities. See the caption "Market Price of and Dividends on the Company's Common Stock and Other Stockholder Matters," Part II, Item 1, below.
Limited Market for Common Stock. Although the Company's common stock is listed on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. (the "NASD"), the market for such shares only commenced in May, 1995, following the completion of the Purchase Agreement with IRC; and there can be no assurance that it will continue or be maintained. Any market price for shares of common stock of the Company is likely to be very volatile, and factors such as success or lack thereof in drilling, the ability or inability to acquire additional oil and gas producing properties, competition, governmental regulation and fluctuations in operating results may all have a significant effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many small capital companies and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may adversely affect the market price of the Company's common stock. See the caption "Market Price of and Dividends on the Company's Common Stock and Other Stockholder Matters," Part II, Item 1, below.
General Economic Risks/Potential Volatility of Stock Price. The Company's current and future business plans are dependent, in large part, on the state of the general economy. Adverse changes in general and local economic conditions may cause high volatility in the
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market price of the Company's securities and may adversely affect an investment in these securities. Oil and gas prices are extremely volatile and are subject to substantial seasonal, political, world wide supply of oil and gas and other fluctuations and risks, all of which are beyond the Company's control.
Future Acquisitions. The Company intends to develop and expand its business, principally by developing its existing oil and gas leases and acquiring additional oil and gas-producing properties and/or leases. See the caption "Management's Discussion and Analysis or Plan of Operation," Part I,
Item 2, below. The Company has not selected any particular properties in
connection with its expansion plans and may not be able to locate desirable property and/or it may not be able to provide the funds necessary to acquire additional property.
Future Capital Requirements; Uncertainty of Future Funding. The Company presently has limited operating capital. It will require substantial additional funding in order to realize its goals of conducting oil and gas exploration operations and acquiring additional oil and gas properties. The Company is currently negotiating with investment banking and brokerage firms to raise these funds through equity or debt financing, which may be very difficult for such a highly speculative enterprise. There can be no assurance that such additional funding will be made available to the Company, or if made available, that the terms thereof will be satisfactory to the Company. Furthermore, any equity funding will cause a substantial decrease in the proportional ownership interests of existing stockholders. If such funding is not made available to the Company, it is doubtful that the Company will be able to conduct its planned business operations. See this caption "Management's Discussion and Analysis or Plan of Operation," Part I, Item 2, below.
Replacement of Reserves. The Company's future success will depend upon its ability to find, acquire and develop additional oil and gas reserves that are economically recoverable. The proven reserves of the Company will generally decline as they are produced, except to the extent that the Company conducts revitalization activities, or acquires properties containing proven reserves, or both. To increase reserves and production, the Company must continue its development and drilling programs, identify and produce previously overlooked or by-passed zones and shut-in wells, acquire additional properties or undertake other replacement activities. The Company's current strategy is to increase its reserve base, production and cash flow through the development of its existing oil and gas fields and selective acquisitions of other promising properties where the Company can utilize new and existing technology. The Company can give no assurance that its planned revitalization, development and acquisition activities will result in significant additional reserves or that the Company will have success in discovering and producing reserves at economical exploration and development costs. The Company may not be able to locate geologically satisfactory property, particularly since
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it will be competing for such property with other oil and gas companies, many of which have much greater financial resources than the Company. Moreover, even if desirable properties are available to the Company, it may not have sufficient funds with which to acquire additional leases. Furthermore, while the Company's revenues may increase if prevailing oil and gas prices increase significantly, the Company's exploration costs for additional reserves may also increase.
Uncertainty of Reserve Estimates. Oil and gas reserve estimates and the present value estimates associated therewith are based upon numerous engineering, geological and operational assumptions that generally are derived from limited data. Common assumptions include such matters as the extent and average thickness of a particular reservoir, the average porosity and
permeability of the reservoir, the anticipated future production from existing and future wells, future development and production costs and the ultimate hydrocarbon recovery percentage. As a result, oil and gas reserve estimates and present value estimates are frequently revised in subsequent periods to reflect production data obtained after the date of the original estimates. If reserve estimates are inaccurate, production rates may decline more rapidly than anticipated, and future production and revenues may be less than estimated. Moreover, significant downward revisions of reserve estimates may adversely affect the Company's ability to borrow funds in the future or have an adverse impact on other financing arrangements.
In addition, any estimates of future net revenues and the present value thereof are based upon period ending prices and on cost assumptions made by the Company which only represent its best estimate. If these estimates of quantities, prices and costs prove inaccurate and the Company is unsuccessful in expanding its oil and gas reserves base, and/or declines in and instability of oil and gas prices occur, write-downs in the capitalized costs associated with the Company's oil and gas assets may be required. The Company will also rely to a substantial degree on reserve estimates in connection with the acquisition of producing properties. If the Company overestimates the potential oil and gas reserves of a property to be acquired, or if its subsequent operations on the property are not successful, the acquisition of the property could result in substantial losses to the Company. See the Reports of Coburn Petroleum Engineering, copies of which are attached hereto and incorporated herein by reference, and all of which are modified by the foregoing unknown factors. See the Exhibit Index. Also, see the heading "General" of this caption, above, and the caption "Description of Property," Part I, Item 3.
Operating Hazards. Oil and gas operations involve a high degree of risk. Natural hazards, such as excessive underground pressures, may cause costly and dangerous blowouts or make further operations on wells financially or physically impractical. Similarly, the testing and recompletion of oil and gas wells involves a high degree of risk arising from operational failures, such as blowouts, fires, pollution, collapsed casing, loss of equipment and numerous
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other mechanical and technical problems. Any of the foregoing hazards may result in substantial losses or liabilities to third parties, including claims for bodily injuries, reservoir damage, loss of reserves, environmental damage and other damage to persons or property.
Future Sales of Common Stock. IRC currently beneficially owns approximately 2,771,671 shares of the common stock of the Company or approximately 45.3% of its outstanding voting securities. This amount is based upon 6,124,216 shares being outstanding or beneficially owned, and assumes the exercise of 497,097 shares vested under options granted by the Company as of May 31, 1996. Effective June 30, 1997, 2,698,101 shares of the common stock owned by IRC will have been beneficially owned for two years, and subject to compliance with the applicable provisions of Rule 144 of the Securities and Exchange Commission, IRC may then commence to sell these "restricted securities" in an
amount equal to up to 1% of the then outstanding securities of the Company, or the average weekly trading volume in the securities of the Company on any recognized automated system during the four weeks preceding any Notice of Sale pursuant to Rule 144, in any three month period, provided the Company satisfies the "current public information available" requirements of Rule 144 at that time. In such event, such sales could have a substantial adverse effect on any public market that may then exist in the Company's common stock. Sales of any of these shares by IRC could severely affect the ability of the Company to secure the necessary debt or equity funding for the Company's proposed business operations. For additional information concerning the present market for shares of common stock of the Company, see the caption "Market Price of and Dividends on the Company's Common Stock and Other Stockholder Matters," Part II, Item 1, below. For information regarding common stock ownership of IRC and the Ratliff family, see the caption "Security Ownership of Certain Beneficial Owners and Management," Part I, Item 4; below. The additional 164,266 shares of common stock of the Company acquired by IRC in exchange for debt of the Company as outlined under the heading "Business Development" of this caption, above (76,557 shares were issued in March, 1996, and 87,709 shares were issued in April, 1996), will have satisfied the present two year Rule 144 holding period in March and April, 1998, respectively, and will also then be available for resale pursuant to Rule 144.
A total of 505,000 "unregistered" and "restricted" shares of the Company's common stock were issued to Jeffrey D. Jenson, M. E. Ratliff and Leonard W. Burningham, Esq., pursuant to the Compensation Agreements that were executed on May 2, 1995. Pursuant to Rule 144 of the Securities and Exchange Commission the shares owned by Messrs. Jenson and Burningham, who are non-affiliates, may now be sold without restriction. The shares owned by M. E. Ratliff, who is an affiliate, may not be sold until the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934 Act, as amended (the "1934 Act"). The resale of these securities may also have a substantial adverse impact on any
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then-existing public market for the Company's common stock. See the caption "Recent Sales of Unregistered Securities," Part II, Item 4, below.
The availability of Rule 144 for resales of "restricted securities" by affiliates is primarily conditioned upon the Company being a "reporting company" under the 1934 Act, and being current" in all reports required to be filed, or having "currently publicly available" the type of information usually provided to broker-dealers effecting transactions in securities of a company as required by Rule l5c2-1 1 (a)(5) of the Securities and Exchange Commission. If the Company was not a "reporting company" at the time any holder of "restricted securities" had held such securities for one year (two years in the case of an affiliate), this type of information would have had to have been provided to stockholders of the Company on a periodic basis over the previous two years, and the Company's balance sheet and income statement at such time should be not less than six months old. Further, this type of information should also have been provided to nationally recognized manuals,
broker-dealers effecting transactions in the securities of the Company and newspapers of general circulation, where possible, in order for the Company to satisfy the requirements of having the required information "currently publicly available." Assuming this Registration Statement becomes effective, and the Company thereafter files all reports required to be filed by it with the Securities and Exchange Commission, the Company would have the required information "currently publicly available" concerning it as required by subparagraph (c)(l) of Rule 144. Shares held by non-affiliates may be sold without restriction after a holding period of two years and may be sold in limited quantities after a holding period of one year.
Voting Control. By virtue of IRC's present ownership of approximately 45.3% of the Company's outstanding voting securities, the management of IRC has the ability to effect significantly the election of the Company's directors, who in turn elect all executive officers. The management of IRC may be deemed to have substantial control over the management and affairs of the Company. See the caption "Security Ownership of Certain Beneficial Owners and Management," Part I, Item 4, below.
Competition. The Company's oil and gas exploration activities are centered in a highly competitive field. In seeking any other suitable oil and gas properties for acquisition, or drilling rig operators and related personnel and equipment, the Company will be competing with a number of other companies, including large oil and gas companies and other independent operators with greater financial resources. Management does not believe that the Company's initial competitive position in the oil and gas industry will be significant. See the heading "Competition" under this caption.
Dependence on Technical Personnel. Certain members of present management have substantial expertise in the areas of endeavor
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presently conducted and to be engaged in by the Company. To the extent that their services become unavailable, the Company will be required to retain other qualified personnel. There can be no assurance that it will be able to recruit and hire qualified persons upon acceptable terms. See the caption "Directors, Executive Officers, Promoters and Control Persons," Part I Item 5, below.
Similarly, the oil and gas exploration industry requires the use of personnel with substantial technical expertise. In the event that the services of its current technical personnel become unavailable, the Company will need to hire qualified personnel to take their place; no assurance can be given that it will be able to recruit and hire such persons on mutually acceptable terms.
Governmental Regulations. The Company is subject to numerous state and federal regulations, environmental and otherwise, that may have a substantial negative effect on its ability to operate at a profit. For a discussion of the risks involved as a result of such regulations, see the headings "Effect of Existing or Probable Governmental Regulations on Business" and "Costs and Effects of Compliance with Environmental Laws," of this caption.
Indemnification of Directors, Officers, Employees and Agents.
Section 48-18-502 of the Tennessee Business Corporation Act allows a corporation to indemnify any director in any civil or criminal proceeding (other than a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or any other proceeding in which he or she was adjudged liable on the basis that he or she improperly received a personal benefit) by reason of service as a director if the person to be indemnified conducted himself or herself in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. Section 48-18-507 extends certain indemnification rights to officers, employees and agents of a corporation as well. The foregoing is only a brief summary of the right of indemnification allowed a corporation under the Tennessee Business Corporation Act, and is modified in its entirety by this reference. The Board of Directors of the Company has adopted these provisions to indemnify its directors, executive officers and agents. See the caption "Indemnification of Directors and Executive Officers," Part II Item 5, below.
Going Concern The Company's accountants have expressed doubts about the ability of the Company to function as a going concern in view of its substantial losses and its lack of sufficient funding.
Principal Products or Services and Markets
The Company will conduct exploration and production
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activities to produce crude oil and natural gas. The principal markets for these commodities are local refining companies, major natural gas transmission pipeline companies, local utilities and private industry end users, which purchase the crude oil, and natural gas pipeline companies, which purchase the gas. There are currently two gas transmission lines that run through the Beech Creek Leases; these lines can be accessed to sell gas produced from the leases. There are two more transmission lines within approximately two miles of these leases.
In Hancock County, gas production from the Swan Creek Leases will be delivered into the major transmission line of East Tennessee Natural Gas. At the present time, there is no completed pipeline from these leases to the East Tennessee Natural Gas pipeline. The Company is in the process of constructing such a pipeline which is approximately 70% completed and is expected to be completed during the last quarter of 1997. The pipeline will be approximately 23 miles long and is made of 8 inch steel pipe. The cost to date has been approximately $1,500,000. Completion is expected to cost approximately an additional $700,000. The Company has acquired all necessary regulatory approvals and 99% of necessary property rights to complete this pipeline. It anticipates having the remaining property rights within two months. The Company's pipeline will not only service the Company's wells, but, will provide transportation of gas for small independent producers in the local area as well.
It is anticipated that direct sales could also be made to some local towns and industries. No assurance can be given that the Company will be able to produce a sufficient quantity of crude oil or natural gas to make these operations profitable.
Reserve Analyses
Coburn Petroleum Engineering of Tulsa, Oklahoma, has performed reserve analyses of all the Company's productive leases. R. W. Coburn, a registered petroleum engineer, and the owner of Coburn Petroleum Engineering, has no interest in the Company or IRC, and performed these services at his standard rate ($90 per hour was billed and paid for these reports). The net reserve values used hereafter were obtained from a report dated June 18, 1997 prepared by Coburn Petroleum Engineering. A copy of that report is annexed hereto and incorporated herein by reference. See the Exhibit Index. In substance, the report, used estimates of oil and gas reserves based upon standard petroleum engineering methods which include decline curve analysis, volumetric calculations, pressure history, analogy, various correlations and technical judgment. Information for this purpose was obtained from owners of interests in the areas involved, state regulatory agencies, commercial services, outside operators and files of Coburn Petroleum Engineering.
Discounting the net reserve values by 10%, before taxes, results in a present value of $33,874,577 for the Swan Creek Field,
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$5,929,992 for the Beech Creek Leases, $996,280 for the Fentress County Leases and $547,248 for the Burning Springs Leases. Reserve analyses are at best speculative, especially when based upon limited production; no assurance can be given that the reserves attributed to these leases exist or will be economically recoverable. See the heading "Special Risk Factors" specifically the risk factor entitled "Uncertainty of Reserve Estimates," of this caption.
It is standard in the industry for reserve analyses such as these to be used as a basis for financing of drilling costs. Thus, based upon the reserve analyses for the Swan Creek leases, Enserch has agreed to provide funds for drilling in that field.
Distribution Methods of Products or Services
Crude oil is normally distributed in this area by tank truck and natural gas is distributed and transported via pipeline. Gas purchasers in the area include Delta Natural Gas Company, Inc., Wiser Oil Company, Southern Gas Company of Delaware, Inc., Somerset Gas and East Tennessee Natural Gas. Delta and Wiser operate a gas gathering system that runs through the center of the Company's Beech Creek leases. The existing Beech Creek wells have been tied into the Wiser Oil Company system in anticipation of future production. The Burning Springs wells are connected to Southern Gas Company's gathering system.
Should the Company decide to use transmission lines owned by other businesses, it will have to negotiate the prices to be paid with the owner
of that transmission line, provided capacity is available. There can be no assurance that prices can be negotiated which will enable the Company to sell its products profitably.
Oil from the Fentress County Leases will be stored in a tank battery consisting of two 210 barrel tanks while awaiting shipment by tank truck.
Gas production from the Swan Creek Leases will go into the East Tennessee Natural Gas transmission system through use of the pipeline presently under construction by the Company, as described above.
The Company has no farmout agreements with any entity.
Status of Any Publicly Announced New Product or Service
The Company does not have any publicly announced new product or service.
Competitive Business Conditions, Competitive Position in the Industry and Methods of Competition
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The Company's contemplated oil and gas exploration activities in the States of Kentucky and Tennessee will be undertaken in a highly competitive and speculative business atmosphere. In seeking any other suitable oil and gas properties for acquisition, the Company will be competing with a number of other companies located in the State of Kentucky and elsewhere, including large oil and gas companies and other independent operators with greater financial resources. Management does not believe that the Company's initial competitive position in the oil and gas industry will be significant.
At the local level, the Company has only two competitors in the area of its acreage blocks in the State of Kentucky, who are: Equitable Resources and Ashland Oil. Its principal competitors in the State of Tennessee are Ashland Oil and Miller Services; and in the State of Alabama are Engineering Development Corp. and Torch Operating Co. In the area of the Company's pipeline, the Company is in a favorable position since it will own the only pipeline within a 20 mile radius. Within that area, the Company owns leases on approximately 30,367 acres. In addition, remaining landowners will find it difficult to deal with any other oil and gas companies since such companies will not have access to a pipeline. Geological studies indicate the existence of many possible productive fields in the area of the Company's pipeline.
Management does not foresee any difficulties in procuring drilling rigs or the manpower to run them in the area of its operations. The experience of management has been that in most instances, drilling rigs have only a one or two day waiting period; however, several factors, including increased competition in the area, may limit the availability of drilling rigs, rig operators and related personnel and/or equipment; such an event may have a significant adverse impact on the profitability of the Company's operations.
The Company anticipates no difficulty in procuring well drilling permits which are obtained from the Tennessee Oil and Gas Board. They are usually issued within one week of application. The Company generally does not apply for a permit until it is actually ready to commence drilling operations. The Company presently has five well drilling permits for use anywhere in Tennessee.
The prices of the Company's products are controlled by the world oil market and the United States natural gas market; thus, competitive pricing behaviors are considered unlikely; however, competition in the oil and gas exploration industry exists in the form of competition to acquire the most promising acreage blocks and obtaining the most favorable prices for transporting the product. Management believes that the Company is well-positioned in these areas because of the transmission lines that run through and adjacent to the properties it leases and because it holds relatively large acreage blocks in what management believes are promising areas.
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Sources and Availability of Raw Materials and Names of Principal Suppliers
Excluding the development of oil and gas reserves and the production of oil and gas, the Company's operations are not dependent on the acquisition of any raw materials. See the headings "Competitive Business Conditions, Competitive Position in the Industry and Methods of Competition," of this caption.
Dependence on One or a Few Major Customers
The Company will be dependent on local purchasers of hydrocarbons in the areas where its properties are located for sales of its products. The five purchasers in the areas of the Company's operations are Wiser, Southern, Delta, Somerset and East Tennessee Natural Gas. The only customers with which the Company has a written contract are Hawkins County Utilities and Powell Valley Electric Cooperative. Copies of those contracts are annexed hereto and incorporated herein by reference. See the Exhibit Index. Those entities have agreed to purchase gas from the Company's Hancock County fields upon completion of the pipeline. It is anticipated that sales to Hawkins County Utilities will amount to approximately 4,000 MCF per day. Sales to Powell Valley Electric Cooperative are to be determined at a future date.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, including Duration
Royalty agreements relating to oil and gas production are standard in the industry. The amount of the Company's royalty payments varies from lease to lease. See the heading "General" under this caption. The amounts of the royalties on each of the Company's leases are listed on the attached lease schedules. See the Exhibit Index.
Need for Governmental Approval of Principal Products or Services
None of the principal products or services offered by the Company require governmental approval; however, permits are required for drilling oil or gas wells. See the heading "Effect of Existing or Probable Governmental Regulations on Business, " of this caption.
Effect of Existing or Probable Governmental Regulations on Business
Exploration and production activities relating to oil and gas leases are subject to numerous environmental laws, rules and regulations. The Federal Clean Water Act requires the Company to construct a fresh water containment barrier between the surface of each drilling site and the underlying water table. This involves the insertion of a seven-inch diameter steel casing into each well, with cement on the outside of the casing. The cost of compliance with this environmental regulation is approximately $10,000 per well.
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The State of Kentucky also requires oil and gas drillers to obtain a permit for their activities and to post with the Division of Oil and Gas of the Kentucky Department of Minerals and Mines (the "Kentucky Division") a bond to ensure that each well is properly plugged when it is abandoned. These bonds are based on $1 per foot, Each of the Kentucky wells has a $5,000 bond which was originally posted by IRC and remains in place. The Kentucky Division will retain the bond until the subject wells are plugged.
The State of Tennessee also requires the posting of a bond to ensure that the Company's wells are properly plugged when abandoned. A separate $2,000 bond is required for each well drilled. The Company currently has a $10,000 bond on deposit with the State of Tennessee. See the heading "Disclosure of Oil and Gas Operations" of the caption "Description of Property," Part I, Item 3, below.
The State of Alabama also requires the posting of a bond to ensure that the Company's wells are properly plugged when abandoned. A single-well bond, which varies between $5,000 and $50,000, depending upon well depth, or a blanket bond of $100,000, may be obtained for wells drilled on-shore. At the present time, the Company does not have plans to drill any wells in the State of Alabama.
The Company's operations are also subject to laws and regulations requiring removal and cleanup of environmental damages under certain circumstances. Laws and regulations protecting the environment have generally become more stringent in recent years, and may in certain circumstances impose "strict liability," rendering a corporation liable for environmental damages without regard to negligence or fault on the part of such corporation. Such laws and regulations may expose the Company to liability for the conduct of operations or conditions caused by others, or for acts of the Company which were in compliance with all applicable laws at the time such acts were performed. The
modification of existing laws or regulations or the adoption of new laws or regulations relating to environmental matters could have a material adverse effect on the Company's operations. In addition, the Company's existing and proposed operations could result in liability for fires, blowouts, oil spills, discharge of hazardous materials into surface and subsurface aquifers and other environmental damage, any one of which could result in personal injury, loss of life, property damage or destruction or suspension of operations.
The Company believes it is presently in compliance with all applicable federal, state or local environmental laws, rules or regulations; however, continued compliance (or failure to comply) and future legislation may have an adverse impact on the Company's present and contemplated business operations.
At Board of Directors' meetings held June 6 and 7, 1995, the Board of Directors adopted resolutions to form an Environmental Response Policy and Emergency Action Response Policy Program; this
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program has not yet been implemented, and will entail an analysis of specific operations.
The foregoing is only a brief summary of some of the existing environmental laws, rules and regulations to which the Company's business operations are subject, and there are many others, the effects of which could have an adverse impact on the Company. Future legislation in this area will no doubt be enacted and revisions will be made in current laws. No assurance can be given as to what effect these present and future laws, rules and regulations will have on the Company's current and future operations.
Research and Development
The Company has not expended any material amount in research and development activities during the last two fiscal years. Research done in conjunction with its exploration activities will consist primarily of running radiometric surveys on the lease blocks and conducting geological research on the surface. This work will fall under the job description of the geologist to be hired for these activities and will not have a material cost of anything more than his or her standard salary. See the heading "Number of Total Employees and Number of Full-Time Employees," of this caption.
Cost and Effects of Compliance With Environmental Laws
See the heading "Effect of Existing or Probable Governmental Regulations on Business," of this caption.
Number of Total Employees and Number of Full-Time Employees
The Company presently has ten full-time employees and eight part-time employees. When it commences its full-scale oil and gas operations, the Company plans to add additional full-time employees, exclusive of executive
officers.
The Company has hired a full-time geologist at a salary of $40,000 per year. His duties for the Company include: surface and sub-surface geology, log correlation, surface and sub-surface mapping, field--research (i.e., radiometric, gravity, magnetic and geochemical research) and well-site geology.
Item 2. Management's Discussion and Analysis of Plan of Operation.
Plan of Operation for Existing Leases
The Company intends to commence full scale development of its Swan Creek Leases. The Swan Creek structure is confirmed at the surface on geologic quadrangle maps showing the Clinchport thrust fault controlling the structure. Additionally, the structure is verified at depth by the successful drilling of the Reed #1 and Sutton #1, completed in the early 1980s. The Reed #1 and Sutton #1 could be
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expected to cumulatively produce approximately six billion cubic feet of gas at an initial rate of approximately 3,500,000 cubic feet per day. The Reed #1 tested at 4,800,000 cubic feet per day of gas in the Knox Formation on a 32/64 inch choke. The well exhibited a flowing pressure of 800 psi during the test. The Sutton #1 well is two miles to the northeast of the Reed well. This well tested 1,200,00 cubic feet per day on a 32/64 inch choke, with a flowing pressure of 150 psi. Management's assertions with respect to the capacity of these wells is based upon engineering reports and confirmation of estimates based upon the results from the completed wells. Copies of the reports are annexed hereto and incorporated herein by reference. See the Exhibit Index.
The Company's present plans call for the drilling of approximately fifty additional wells on the Swan Creek leases over a two to three year period at a cost of approximately $225,000 per well. Completion of the pipeline presently being constructed by the Company and which is necessary in order for the Company to be able to sell its gas is anticipated by the end of 1997 at an additional cost of approximately $750,000.
Thereafter, the Company plans to construct two extensions to its pipelines so as to enable it to exploit other leases which are part of the Swan Creek leases. These extensions which will be approximately 40 miles in length will cost approximately $4,000,000. The Company's ability to expand its operations in this manner is dependent upon the success of the Company's drilling program. Moreover, no assurance can be given that the Company will be able to obtain the required rights of way to construct any such pipeline, and the pipeline currently under construction will only serve production from a portion of the Swan Creek Field.
It is presently expected to fund these activities by means of financing to be provided by Enserch as well as by the use of revenues derived from the sale of gas produced by the wells.
Exploitation of the other leases held by the Company is being placed on hold at the present time.
The sales price for gas is determined on the basis of an index used by all suppliers and users of gas. The price fluctuates between $2.50 per MCF and $4.50 per MCF, usually higher during the cold weather months. The cost of production from the well averages approximately $.22 per MCF. Transportation costs are approximately $.40 per MCF which includes amortization of the pipeline. In addition, the Company anticipates receiving revenue from third parties who desire to use the pipeline.
To date, the Company has not drilled any dry wells.
There can be no assurance, of course, that all of the funding necessary for the completion of the wells will become
26

available by reason of the agreement with Enserch since Enserch has the option of discontinuing funding after providing funds for completion of the pipeline and the drilling of two more wells. The continued involvement of Enserch will be directly related to the success of the drilling program in producing marketable quantities of gas in view of the speculative nature of "reserve analyses" relied upon by the Company. Reference is also made to the heading "Special Risk Factors" of the caption "Description of Business," Part I, Item 1, above. In the event the required funds are not made available by Enserch, the Company will still have a completed pipeline and several wells which will be producing which will provide revenue to enable the Company to drill additional wells, albeit on a much slower timetable. In such event, the Company will seek funding elsewhere. It has no present plans for attempts to obtain other funding.
It is anticipated that the Company will implement development programs on the Beech Creek and Fentress County Leases sometime in the future The Swan Creek Leases are being given first priority because of their higher economic attractiveness.
Management anticipates both short term and long term increases in oil and gas prices which should have a positive effect on the Company's income and profits.
The Company has no plans, at present, to increase the number of its employees significantly.
Other Significant Plans
The Company also intends to actively pursue the gas marketing business on the Eastern seaboard. The Eastern seaboard, and Tennessee in particular, has numerous industrial end users of natural gas that are currently exposed to a limited number of gas suppliers. The Company has entered into an agreement with Enserch Energy Services, Inc., ("Enserch") pursuant to which the Company and Enserch will market each other's product in Tennessee. A copy of
that agreement is annexed hereto and incorporated herein by reference. See the Exhibit Index.
In addition to an active drilling program the Company intends to continue strategically acquiring leases in promising areas in the States of Kentucky and Tennessee. No assurance can be given that the Company will be able to identify or acquire any such leases or that if it does acquire any such leases, they will be profitable.
This plan of operation is based upon many variables and estimates, all of which may change or prove to be other than or different from information relied upon.
Results of Operations
Effective May 2, 1995, and pursuant to a Purchase
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Agreement, the Company acquired certain oil and gas-leases, equipment, marketable securities and vehicles, from IRC. Following the completion of this transaction, the Company changed its domicile to the State of Tennessee on May 5, 1995. Prior to the completion of this Purchase Agreement, the Company had been inactive from 1993, and had little or no assets or operations. The assets reflected as being owned on December 31, 1995, were all primarily acquired from IRC.
During the year ended December 31, 1996, the Company had revenues of $26,253 as compared with revenues of $28,526 for the year ended December 31, 1995. The Company has shut in the wells which produced that gas, transferring some of the equipment to the Swan Creek lease in anticipation of the completion of the pipeline.
Depletion, depreciation and amortization expense increased from $89,528 for 1995 to $133,187 for 1996 as a result of the fact that the Company did not acquire its assets from IRC until May, 1995 so that there were only seven months of depreciation during 1995.
Unrealized holding losses on marketable equity securities ($593,792) in 1995) were a one-time event and were not incurred in 1996.
General and administrative expense also increased substantially during the same periods as the result of the addition of four full time employees and salaried executive officers, and increased rental for new executive offices which were leased in January, 1996.
Interest expense increased from $32,594 to $145,302 in 1996 due to the amortization of long-term debt discounts associated with certain stock warrants granted in connection with such debt.
The increase in net loss from operations during the year ended December 31, 1996 as compared with the year ended December 31, 1995 was due to
the increased general and administrative expense, offset somewhat by the non-recurrence of losses on marketable securities.
The Company had no revenues during the six month period ending June 30, 1997 since it shut in the wells which it had been operating in 1996 in order to concentrate on the pipeline and the Swan Creek leases.
Liquidity
Loans in the aggregate total of $882,112 were advanced by IRC, a related party and an "affiliate" of the Company during the year ended December 31, 1995, and 164,266 "unregistered" and "restricted" shares of the Company's common stock were issued as of December 31, 1995, in full payment of this indebtedness.
28

Revenues from operations during the year ended December 31, 1996 and the six months ended June 30, 1997 were insufficient to fund the Company's operations. The Company has relied upon loans of $1,000,000 from third parties in 1996 and a loan of $750,000 from a third party in 1997 to fund its activities. In addition, during 1996, loans of approximately $941,000 were advanced by IRC and $110,350 by M.E.Ratliff. These loans plus accrued interest were satisfied by the issuance of 101,146 shares of the Company's common stock to IRC and 13,320 shares to M.E. Ratliff.
In 1997, IRC advanced $323,005 to the Company, M.E. Ratliff advanced $12,000 and Tracmark, Inc., a subsidiary of IRC, advanced $133,420. These loans, plus accrued interest, were satisfied by the issuance of 59,328 shares of the Company's common stock to IRC, 2,204 shares to M.E. Ratliff and 24,552 shares to Tracmark, Inc. The Company anticipates meeting its operating needs for 1997 by means of its agreement with Enserch.
During 1996, the Company sold 166,667 shares of stock it had acquired from IRC pursuant to the Purchase Agreement for $250,000; received $91,119 from the exercise of options; $280,690 from a private placement of its stock.
These revenues and loans accounted for substantially all of the Company's liquidity during this year.
Item 3. Description of Property
Property Location, Facilities, Size and Nature of Ownership
The Company holds oil and gas leases on the following properties located near Manchester, Kentucky: (i) 8,058 acres in the Beech Creek Leases; (ii) 744 acres in the Wildcat Leases; and (iii) 741 acres in the Burning Springs Leases. The Company also holds leases on 2,121 acres in Fentress County, Tennessee, near Jamestown. There are currently two producing wells on the Tennessee acreage, only one of which is owned by the Company. Additionally, the Company holds leases on 30,363 acres in Hancock County, Tennessee, and 1,003.19
acres in Lauderdale County, Alabama. The initial terms of these leases varies from one to four years. Many of them can be extended at the option of the Company by payment of annual rent. Some of them will terminate unless the Company has commenced drilling. However, the Company does not anticipate any difficulty in continuing those leases, particularly in Hancock County, since the Company's pipeline will be the only means available to landowners in that area to sell any gas produced from wells on their property. See the heading "General" under the caption "Description of Business," Part I, Item 1, above.
The Beech Creek Leases provide for a landowner royalty of 12.5% of the oil produced and saved from the leased premises or, at the lessee's option, to pay the market price for such 12.5% royalty.
29

The leases also provide for a landowner royalty equal to 12.5% of the market price at the well of the gas sold or used off the premises, except for injection for secondary recovery of oil. The lessors are also entitled to free gas for all stoves and inside lights in the principal dwelling house on the leased properties by making connection to the well or wells at their own expense and risk. The Beech Creek Leases are also subject to overriding royalties ranging from 1.25% to 5%.
The Wildcat Leases provide for a 12.5% landowner royalty, on the same terms as the Beech Creek Leases, and a 3.125% overriding royalty.
The Burning Springs Leases are subject to a 12.5% landowner royalty, on the same terms as the Beech Creek Leases and the Wildcat Leases, and overriding royalties ranging from 3.125% to 7.5%.
The Fentress County Leases are subject to a 12.5% landowner royalty, on the same terms as the above referenced leases, and a 19% overriding royalty; and a 25% overriding royalty on one existing well. Section 60-1-301 of the Tennessee Code provides for a severance tax of 3% on all gas and oil removed from the ground in Tennessee.
The Company leases its principal executive offices, consisting of approximately 4,731 square feet located at 603 Main Avenue, Suite 500, Knoxville, Tennessee, at a monthly rent of $3,942.50.
In addition, the Company has drilling equipment and vehicles which it acquired from IRC. All of this equipment is in satisfactory operating condition. The securities which the Company acquired from IRC were sold during 1996 for $250,000.
Disclosure of Oil and Gas Operations
On May 2, 1995, upon the execution of the Purchase Agreement with IRC, the Company acquired the rights to certain oil and gas leases in the State of Kentucky (the "Beech Creek Leases," "Wildcat Leases" and "Burning Springs Leases") and the State of Tennessee (then "Fentress County Leases"). Subsequently, the Company also acquired additional acreage in Tennessee (the
"Swan Creek Leases") and in Alabama (the "Alabama Leases"). Copies of the lease schedules listing these leases are attached hereto and are incorporated herein by reference. See the headings "Business Development" and "General" under the caption "Description of Business," Part I, Item 1, above, and the Exhibit Index.
The Company was not engaged in the business of oil and gas exploration and development prior to the date of the IRC Purchase Agreement. IRC, the entity from which the Company acquired certain of these properties, drilled four wells on the Beech Creek Leases in the past three years. All of these wells are capable of producing gas in
30

paying quantities, according to tests run on the wells. IRC also drilled a well on one of the Fentress County Leases; this well is currently shut in and awaiting a workover.
Eleven wells on the Burning Springs leases are currently shut-in. There are two completed wells on the Swan Creek leases, the Reed #1 and the Sutton #1, which discovered and proved the structure in the early 1980s. These wells have recently tested at 4,800,000 and 1,200,000 cubic feet of gas per day. The Company has drilled three additional wells in 1996. Development of the Swan Creek Field will require the completion of the pipeline to deliver gas to a transmission company with the tie-in point being located approximately 23 miles away from the field. The pipeline is approximately two-thirds completed and is expected to be complete by the end of the year.
Tests to date on the completed wells on the Swan Creek leases indicate substantial potential for future deliverability. Based upon engineering reports, management believes that the wells drilled to date have a life expectancy of approximately 37 years on a declining basis.
The Company does not pay any taxes on its leased property and does not carry any insurance on the vacant land.
The Alabama Leases have no existing wells. These leases are "wildcat" explorations and there is no immediate plan to acquire additional leases in the area or to begin an exploration program.
No estimate of total, proved net oil or gas reserves has been filed with or included in reports to any federal authority since the beginning of the Company's last fiscal year.
The Company is currently not a party to any contract or agreement obligating it to provide a fixed and determinable quantity of oil or gas in the future, but anticipates entering into such contracts for delivery of gas commencing as early as December, 1997.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
The following tables set forth the share holdings of the Company's directors and executive officers and those persons who own more than 5% of the Company's common stock as of June 30, 1997 with these computations being based upon 6,124,216 shares of common stock being outstanding and assumes the exercise of 281,376 shares vested under options granted by the Company as of June 30, 1997. (See the heading "Other Compensation" and the "Restricted Stock Options Table," under the caption "Executive Compensation," Part I, Item 6, below).
31

                           Five Percent Stockholders
                           -------------------------

                                                  Number of Shares      Percent
Name and Address              Title               Beneficially Owned    of Class
-----------------             -----               ------------------    --------

Industrial Resources        Stockholder               2,777,671           45.3%
Corporation (1)
Ste. 500-600 Main Ave.
Knoxville, TN 37902

M. E. Ratliff               Stockholder                 252,485            4.1%
12608 Avallon Place
Knoxville, Tennessee 37922	

Directors and Executive Officers

                                               Shares Beneficially      Percent
Name and Address              Title                  Owned              of Class
-----------------             -----            -------------------      --------

Joseph Earl Armstrong        Director                      0              0
2624 Selma Avenue
Knoxville, TN 37914

Robert M. Carter             Exec. Vice               23,000              0 .4%
317 Heathermoor Drive        President
Knoxville, TN 37922

Daniel G. Follmer            President                     0              0
8219 Mecklenburg Ct.         & CFO
Knoxville, TN 37923

James B. Kreamer             Director                      0              0
3621 Cabin Creek Rd.

London, KY 40741

--------	

(1) James Ratliff is the sole owner of the outstanding securities of IRC, and, accordingly, he may be deemed to be an affiliate of the Company. He is also the father of M.E. Ratliff, who received 215,000 shares of common stock of the Company pursuant to one of the compensation Agreements. See the heading "Business development" of the caption "Description of Business", Part I, Item 1.
32

William A. Moffett           Director                37,397                0.6%
1073 Encantado Drive
Santa Fe, NM 87501

Shigemi Morita               Director               114,300                1.9%
80 Park Avenue
New York, N.Y. 10016

Michael E. Ratliff(2)        CEO                    252,485               4.12%
12008 Avallon Place
Knoxville, TN

Sheila F. Sloan              Treasurer                2,000                  0
121 Oostanali Way
Loudon, TN 37774

Allen H. Sweeney             Chairman of            100,500                1.6%
1400 Oak Tree Drive          the Board
Edmund, OK 73003

Elizabeth Wendelken          Secretary                    0                  0
8023 Stanley Road
Powell, TN 37849	

Changes in Control
Except as indicated below, to the knowledge of the Company's management, there are no present arrangements or pledges of the Company's securities which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Identification of Directors and Executive Officers
The following table sets forth the names of all former and current directors and executive officers of the Company during the preceding calendar year and to the date hereof. These persons will serve until the next annual meeting of stockholders (to be held at such time as the Board of Directors shall determine) or until their successors are elected or appointed and qualified, or their prior resignations or terminations.

(2) The principal shareholder of IRC is the father of Michael E. Ratliff. 103,500 shares of stock are owned by Tracmark, Inc., a corporation, the principal shareholders of which are Michael E. Ratliff and his father.

33

                                                   Date  of         Date of
                               Positions          Election or      Termination
Name                              Held            Designation     or Resignation
----                           ---------          -----------     --------------

Jeffrey D. Jenson              President              6/94              5/95
1787 E.Ft. Union Blvd.
Salt Lake City, UT 84121

Kathleen L. Morrison           Secretary/            10/94              5/95
1787 East Ft. Union Blvd.      Treasurer
Salt Lake City, UT 84121

Travis D. Jenson               Vice-President        10/94              5/95
1787 E. Ft. Union Blvd.
Salt Lake City, UT 84121

Walter C. Arzonetti            Director               5/95             2/7/97
11 Avenue de la Mer
Palm Coast, FL 32137

Charles N. Manhoff             Director               5/95             2/7/97
11 19 Rocky Point Ct.
Albuquerque, NM 87123,

Edgar G. Baugh                 Director               5/95            1/30/96
76 Arrowhead Way
Darien, CT 06820

Raymond E. Johnson             Director               5/95            12/9/95
(Deceased)                                                       (Date of Death)
415 North State Street
Bellingham, WA 98225

Joe B. Mattei                  Director               5/95            1/30/96
72 Sugarberry Circle
Houston, TX 77024

John P. O'Hagan                Director               5/95            1/31/96
P.O. Box 635
Signal Mountain, TN 37377

George E. Walter, Jr.          Director, CEO          5/95            1/25/96

3907 Northfield Ct.            and President
Midland, TX 79707

James C. Walter                Vice President,        5/95            1/18/96
96 Canberra Drive              Secretary,
Knoxville, TN 37923            Treasurer

William A. Moffett             Director               5/95           Present
1073 Encantado Drive

                                      34	

Santa Fe, NM 87501

Benton L. Becker              Chairman of            6/95            1/30/97
1550 Madruga Ave. #329        the Board of
Coral Gables, FL 33146        Directors

Kelly S. Grabill              Secretary              9/95            5/2/96
9109 Lullabye Lane            Treasurer              9/95           1/30/96
Oak Ridge, TN 37830

Jeffrey D. DeMunnik           Treasurer              1/96           1/17/97
1100 Fox Road                 Secretary/             6/96           12/4/96
Knoxville, TN 37922

Ted P. Scallan                President              1/96          11/26/96
1613 Kilmer Drive
Knoxville, TN 37922

Lyle G. Stockstill            Director               1/96          11/25/96
560 Bellemeade Blvd.
Gretna, LA 70056

James B. Kreamer              Director              3/13/97        Present
3621 Cabin Creek Road
London, KY 40741

Shigemi Morita                Director              3/13/97        Present
80 Park Avenue
New York, N.Y. 10016

Allen Sweeney                 Chairman of           3/13/97        Present
1400 Oak Tree Drive           Board
Edmund, OK73003

Joseph E. Armstrong           Director              3/13/97        Present
2624 Selma Avenue
Knoxville, TN 37914	

Business Experience
Joseph Earl Armstrong is 40 years old and a resident of Knoxville, Tennessee. He is a graduate of the University of Tennessee and Morristown College where he received a Bachelor of Science Degree in Business Administration. From 1988 to the present, he has been an elected State Representative for Legislative District 15 in Tennessee. From 1994 to the present he has been in charge of government relations for the Atlanta Life Insurance Co. From 1981 to 1994 he was a District Manager for the Atlanta Life Insurance Co.
James B. Kreamer is 58 years old. He earned a Degree in Business from the University of Kansas in 1963. He has been the owner
35

of several business enterprises. In 1982, he purchased a seat on the Kansas City Board of Trade where he served on several committees working on the development of futures trading. Since 1979, he has been engaged in the oil and gas business as an investor. He currently serves as a member of the Board of Directors of Panaco, Inc., a NASDAQ energy company.
William A. Moffett is 63 years old. He received a BS Degree in Geological Engineering from Oklahoma University in 1956. From 1977 to 1982, he was Operations Manager for Esso Exploration and Production in the United Kingdom. From 1982 to 1984, he was General Production Manager for Intercol ( an affiliate of Exxon in Colombia). From 1984 to 1991 he was CEO for Stan Vac Indonesia, a joint Exxon/Mobil affiliate. From 1991 until his employment by the Company, Mr. Moffett was retired.
Shigemi Morita is 62 years old. He received an A.B. Degree from Elon College in North Carolina. From 1969 to 1996 he was the President and CEO of Morita & Co., an insurance agency specializing in insurance for Japanese companies doing business in the United States. In 1996, Morita & Co., Inc. was acquired by Tokio Marine Management, Inc., Mitsubishi International Corporation in New York and Mitsubishi International, Ltd. in Tokyo. He remains as President and as a consultant.
Allen H. Sweeney is 47 years old. He received an MBA in finance from Oklahoma City University in 1972 and a Bachelor Degree in Accounting from Oklahoma State University in 1969. From 1978 to 1980, he served as Treasurer and CEO of Phoenix Resources Company. From 1980 to 1981, he served as Vice-President-Finance for Plains Resources, Inc. From 1982 to 1984, he was Vice-President-Finance for Wildcat Mud, Inc. From 1984 to 1992 he operated an independent consulting service under the name of AHS and Associates, Inc. Since 1992, he has served as Director and President of Columbia Production Company and Mid-America Waste Management, Inc. Mr. Sweeney is a Director of Frontier Natural Gas Corporation of Houston, Texas, a public corporation.
Committees
At the present time, the Company has no operating committees. Family Relationships
There are no family relationships between any of the present directors or executive officers of the Company.
Involvement in Certain Legal Proceeding
Except as indicated below and/or hereinbefore, to the
36

knowledge of management, during the past five years, no present or former director, executive officer, affiliate or person nominated to become a director or an executive officer of the Company:
(1) Filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his or her involvement in any type of business, securities or banking activities;
(4) Was found by a court of competent jurisdiction in a civil action, by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated.
Item 6. Executive Compensation.
Cash Compensation
The following table sets forth the aggregate cash compensation paid by the Company for services rendered during the periods indicated to its directors and executive officers:
37

SUMMARY CASH COMPENSATION TABLE (3)

    Name & Position                Year                                   Salary
    ---------------                ----                                   ------

Walter C. Anzonetti                1994                                       0
      Director                     1995                                       0
                                   1996                                       0

Edgar G. Baugh                     1994                                       0
      Director                     1995                                       0
                                   1996                                       0

Benton L. Becker                   1994                                       0
      Chairman of                  1995                                       0
      the Board                    1996                                       0

Robert M. Carter(4)                1994                                       0
      Vice-President               1995                                       0
                                   1996                                 $31,570

Jeffrey DeMunnik                   1994                                       0
      Secretary                    1995                                       0
      Treasurer                    1996                                 $34,077

Jack E. Earnest                    1994                                       0
      Director                     1995                                       0
                                   1996                                       0

Daniel G. Follmer(5)               1994                                       0
      Chief Financial              1995                                       0
      Officer                      1996                                 $ 2,885

Kelly S. Grabill                   1994                                       0
      Secretary                    1995                                 $10,653
                                   1996                                 $ 7,104

Raymond E. Johnson                 1994                                       0
      Director                     1995                                       0
                                   1996                                       0
----------------	

(3) No other compensation was received by any officer or director.
(4) Has 75,000 options exercisable at $5.00 per share which expire on February 24, 1999. 22,346 are vested.
(5) Has 100,000 options exercisable at $5.00 per share, which expire on February 24, 1999. 29,795 are vested.
38

James E. Kaiser                   1994                                       0
     President                    1995                                       0

                                  1996                                 $20,000

Charles N. Manhoff                1994                                       0
     Director                     1995                                       0
                                  1996                                       0

Joe B.Mattei                      1994                                       0
     Director                     1995                                       0
                                  1996                                       0

William A. Moffett                1994                                       0
     CEO & Director               1995                                       0
                                  1996                                       0

John P. O'Hagan                   1994                                       0
     Director                     1995                                       0
                                  1996                                       0

Ted P. Scallan                    1994                                       0
     President                    1995                                       0
                                  1996                                 $53,120

Sheila Sloan(6)                   1994                                       0
     Treasurer                    1995                                       0
                                  1996                                 $17,850

Lyle Stocksill                    1994                                       0
     Director                     1995                                       0
                                  1996                                       0

George E. Walter Jr.              1994                                       0
     President and                1995                                 $ 2,584
     Director                     1996                                     923

James C. Walter                   1994                                       0
     Vice-President               1995                                 $23,076
     Secretary/Treasurer          1996                                   3,077

Elizabeth Wendelken(7)            1994                                       0
     Secretary                    1995                                       0
                                  1996                                 $14,500

-----------	

(6) Has 10,000 options exercisable at $5.00 per share, which expire on 6/12/98. 3,333 are vested,
(7) Has 10,000 options exercisable at $5.00 per share which expire on June 12, 1998. 3,333 are vested.
39

The following table sets forth the options exercised during the past 18 months by each of the directors and executive officers, the exercise price, the number of unexercised options and the value of the unexercised options as of June 30,1997:

      Name                  Options          Exercise  Unexercised    Value of
                           Exercised          Price      Options    Unexercised
                                                                      Options
--------------------------------------------------------------------------------

Walter C. Arzonetti         88,493             .275       11,507       $133,768

Robert M. Carter            25,000             .275            0              0

Jeffrey D. DeMunnik         20,644             .275        4,366         50,754

Kelly S. Grabill            12,500             .275            0              0

Raymond Johnson, Dec'd      10,000             .275            0              0

Charles N. Manhoff          88,356             .275       11,644        135,361

Joseph B. Mattei            37,000             .275       63,000        732,375

William A. Moffett          37,397             .275       62,613        727,876

Allen Sweeney               66,849             .275            0              0

James C. Walter             35,616             .275       64,384        748,464	

Bonuses and Deferred Compensation
None; not applicable.
Compensation Pursuant to Plans
The Company does not presently have any stock option, stock incentive, bonus or similar plan for its directors, executive officers or employees; however, options have been granted to directors and executive officers and certain consultants of the Company to purchase shares of "unregistered" and "restricted" common stock of the Company at various prices. See the heading "Other Compensation" and the "Restricted Stock Options Table" of this caption, below.
Pension Table
The Company does not presently have a pension or similar plan for its directors, executive officers or employees. Management intends to adopt a 401(k) plan and full liability insurance for directors and executive officers and a health insurance plan for employees in the near future.
40

Other Compensation
On April 11, 1995, the Board of Directors resolved that each member of the Board of Directors would receive compensation in the form of an option to purchase 100,000 "unregistered" and "restricted" post-split shares of the Company's common stock at a price of $0.25 per share. Pursuant to a resolution of the Board of Directors on May 2, 1995, the exercise price of such options was increased to $0.275 per share, which amount was then equal to 110% of the average bid prices for the Company's common stock on the OTC Bulletin Board on the date of the grant.
Commencing on May 4, 1995, certain other officers and consultants were induced to serve as executive officers or consultants of the Company in consideration of the grant of a similar option, and these options were ratified by the Board of Directors at meetings held June 6 and 7, 1995, in Nashville, Tennessee. At the annual meeting of the Board of Directors which was held on January 30, 1996, immediately following the annual meeting of stockholders, the Board of Directors also granted certain other directors, executive officers, consultants and employees options to acquire shares of the Company's "unregistered" and "restricted" shares of common stock of the Company.
The following table sets forth the names of the optionees, the number of shares granted, the dates granted, the exercise price the expiration dates, the number of shares vested and the market value of the shares as of June 30,1996.
41

                        RESTRICTED STOCK OPTIONS TABLE

===================================================================================================================================
Name of Option                    Number         Issue      Price         Date             Amount         Amount        Value as
Holder                            of             Date                     Expires         Exercised       Vested         of June
                                  Options                                                                June 30,       June 30,
                                                                                                          1997           1997
-----------------------------------------------------------------------------------------------------------------------------------
Joseph Armstrong                 50,000         3/13/97      5.0  *       6/12/98               0         16,666        193,671
-----------------------------------------------------------------------------------------------------------------------------------
Walter C. Arzonetti             100,000         5/4/95       0.275        5/7/97           88,493              0              0
-----------------------------------------------------------------------------------------------------------------------------------
Wesley Baker                     10,000         3/13/97      5.0  *       6/12/98               0          3,333         38,729
-----------------------------------------------------------------------------------------------------------------------------------
Edgar G. Baugh                  100,000         5/4/95       0.275        4/29/96               0              0              0
-----------------------------------------------------------------------------------------------------------------------------------
Benton L. Becker                100,000         5/4/95       0.275        5/4/97                0              0              0
-----------------------------------------------------------------------------------------------------------------------------------

Jeff Brockman                   100,000         5/4/95       0.275        8/4/97           72,329         27,671        321,537
-----------------------------------------------------------------------------------------------------------------------------------
Robert M. Carter                 25,000         5/4/95       0.275        8/4/97           25,000              0              0
                                 75,000         11/26/96     5.0  *       2/25/99               0         22,346        259,661
-----------------------------------------------------------------------------------------------------------------------------------
Jeffrey DeMunnik                 25,000         5/4/95       0.275        4/17/97          20,644              0              0
-----------------------------------------------------------------------------------------------------------------------------------
Jack E. Earnest                 100,000         5/4/95       0.275        4/29/96               0              0              0
-----------------------------------------------------------------------------------------------------------------------------------
Daniel G. Follmer               100,000         1/26/96      5.0  *       2/24/99               0         29,795        346,218
-----------------------------------------------------------------------------------------------------------------------------------
Kelly S. Grabill                 25,000         5/4/95       0.275        8/2/96           12,500              0              0
-----------------------------------------------------------------------------------------------------------------------------------
Raymond E. Johnson,             100,000         5/4/95       0.275        3/10/96          10,000              0              0
Dec'd
-----------------------------------------------------------------------------------------------------------------------------------
Kenny Securities                100,000         1/30/96      6.375*       5/4/99                0         100,000      1,162,000
-----------------------------------------------------------------------------------------------------------------------------------
James Kreamer                    50,000         3/13/97      5.0  *       6/12/98               0          16,667        193,671
-----------------------------------------------------------------------------------------------------------------------------------	

42

===================================================================================================================================
Name of Option                    Number         Issue      Price         Date             Amount         Amount        Value as
Holder                            of             Date                     Expires         Exercised       Vested         of June
                                  Options                                                                June 30,       June 30,
                                                                                                          1997           1997
-----------------------------------------------------------------------------------------------------------------------------------
Charles N. Manhoff              100,000         5/4/95       0.275        5/7/97            88,356             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Joseph B. Mattei                100,000         5/4/95       0.275        4/29/96           37,000             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Michael McCown                   50,000         11/26/96     5.0  *       2/25/99                0        14,897        173,103
                                 50,000         5/4/95       0.275        8/4/97            50,000             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Willilam A. Moffett             100,000         5/4/95       0.275        8/4/97               All             0              0
-----------------------------------------------------------------------------------------------------------------------------------
James Morita                     50,000         3/13/97      5.0  *       6/12/98                0        16,667        193,671
-----------------------------------------------------------------------------------------------------------------------------------
John P. O'Hagan                 100,000         5/4/95       0.275        4/29/96                0             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Russell Ratliff                 100,000         5/4/95       0.275        5/2/96            37,534             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Ted P. Scallan                  100,000         7/17/95      4.0          2/26/97                0             0              0
                                100,000         1/30/96      6.375        2/26/97                0             0              0
-----------------------------------------------------------------------------------------------------------------------------------

Sheila Sloan                     10,000         3/13/97      5.0  *       6/12/98                0         3,333         38,729
-----------------------------------------------------------------------------------------------------------------------------------
Lyle G. Stocksill               100,000         1/30/96      6.375        2/25/97                0             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Allen H. Sweeney                100,000         5/2/95       0.275        8/02/97              All             0              0
                                 50,000         3/13/97      5.0  *       6/12/98                0        16,667        193,671
-----------------------------------------------------------------------------------------------------------------------------------
George E. Walter,               400,000         5/4/95       0.275        4/29/96                0             0              0
Jr.
-----------------------------------------------------------------------------------------------------------------------------------
James C. Walter                 100,000         5/4/95       0.275        4/19/96           35,616             0              0
-----------------------------------------------------------------------------------------------------------------------------------
Elizabeth Wendelken              10,000         3/13/97      5.0  *       6/12/98                0         3,333         38,729
====================================================================================================================================
                  * Below Market	

43

Compensation of Directors
The Board of Directors has resolved to compensate members of the Board of Directors for attendance at meetings at the rate of $250 per day, together with direct out-of-pocket expenses incurred in attendance at the meetings, including travel.
Members of the Board of Directors may also be requested to perform consulting or other professional services for the Company from time to time. The Board of Directors will set a rate of compensation for such services which may be no less favorable to the Company than if the services had been performed by an independent third party contractor. The Board of Directors has reserved to itself the right to review all directors' claims for compensation on an ad hoc basis.
Employment Contracts
There are presently no employment contracts relating to any member of management. However, depending upon the Company's operations and requirements, the Company may offer long term contracts to directors, executive officers or key employees in the future.
Termination of Employment and Change of Control Arrangement
None.
Item 7. Certain Relationships and Related Transactions.
Transactions with Management and Others
With the exception of the Compensation Agreements of M. E. Ratliff and Jeffrey D. Jenson, and the issuance of "unregistered" and "restricted" shares of the Company's common stock to IRC in cancellation of debt, all as outlined under the heading "Business Development" of the caption "Description of Business," Part I, Item 1, above, and those options outlined under the caption "Executive Compensation," Part I, Item 6, above, there have been no material transactions, series of similar transactions or currently proposed transactions, to which the Company or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any director or executive officer or any security holder who is known to the Company to own of record or beneficially more than 5% of the Company's common stock, or any member of the immediate family of any of the foregoing persons, had a material interest. See the caption "Description of Business," Part I, Item 1, above, and the Exhibit Index.
Certain Business Relationships
44

There are no business relationships, existing or planned, between the Company or any of its subsidiaries and any director or executive officer or any security holder who is known to the Company to own of record or beneficially more than 5% of the Company's common stock, or any member of the immediate family of any of the foregoing persons.
Indebtedness of Management
No officer, director or security holder known to the Company to own of record or beneficially more than 5% of the Company's common stock or any member of the immediate family of any of the foregoing persons is indebted to the Company.
Parents of the Issuer
Unless IRC may be deemed to be a parent of the Company by virtue of its stock ownership, the Company has no parents.
Transactions with Promoters
With the exception of the Compensation Agreements of M. E. Ratliff and Jeffrey D. Jenson, and the issuance of "unregistered" and "restricted" shares of the Company's common stock to IRC in cancellation of debt, all as outlined under the heading "Business Development" of the caption "Description of Business," Part I, Item 1, above, and those options outlined under the caption "Executive Compensation," Part I, Item 6, above, there have been no material transactions, series of similar transactions, currently proposed transactions, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any promoter or founder or any member of the
immediate family of any of the foregoing persons, had a material interest. See the caption "Description of Business," Part I, Item 1, above, and the Exhibit Index.
Item 8. Description of Securities.
Authorized Capital Stock
The authorized capital stock of the Company consists of 50,000,000 shares of common stock, $0.001 par value per share.
Common Stock. The holders of the common stock are entitled to one vote per share on each matter submitted to a vote at any meeting of stockholders. Shares of common stock do not carry cumulative voting rights, and therefore, a majority of the shares of outstanding common stock will be able to elect the entire Board
45

of Directors and, if they do so, minority stockholders would not be able to elect any persons to the Board of Directors. The Company's Bylaws provide that a majority of the issued and outstanding shares of the Company shall constitute a quorum for stockholders meetings except with respect to certain matters for which a greater percentage quorum is required by statute or the By-laws.
Stockholders of the Company have no preemptive rights to acquire additional shares of common stock or other securities. The common stock is not subject to redemption and carries no subscription or conversion rights. In the event of liquidation of the Company, the shares of common stock are entitled to share equally in corporate assets after satisfaction of all liabilities. Holders of common stock are entitled to receive such dividends as the Board of Directors may from time to time declare out of funds legally available for the payment of dividends. The Company seeks growth and expansion of its business through the reinvestment of profits, if any, and except as indicated under the heading "Dividends" of the caption "Market Price of and Dividends On the Company's Common Equity and Other Stockholder Matters," Part II, Item 1, below, the Company does not anticipate that it will pay dividends in the foreseeable future.
The Board of Directors has the authority to issue the authorized but unissued shares of common stock without action by the stockholders. The issuance of such shares would reduce the percentage ownership held by existing shareholders and may dilute the book value of their shares.
There are no provisions in the By-laws or Articles of Incorporation of the Company which would delay, defer or prevent a change in control of the Company.
46

PART II
Item 1. Market Price of and Dividends on the Company's Common Stock and Other Stockholder Matters.
Market Information
The Company's common stock is listed on the OTC Bulletin Board of the NASD; however, the market for shares of the Company's common stock was extremely limited until the closing of the Purchase Agreement with IRC in May of 1995. No assurance can be given that the present market for the Company's common stock will continue or will be maintained, and the sale of the Company's "unregistered" and "restricted" common stock pursuant to Rule 144 by IRC or others as outlined under the heading "Special Risk Factors" of the caption "Description of Business," Part I, Item 1, above, of this Registration Statement may have a substantial adverse impact on any such public market. See the specific risk factor entitled "Future Sales of Common Stock," therein.
The Company's common stock has been listed on the OTC Bulletin Board since the quarter ended March 31, 1994. The high and low bid prices for shares of common stock of the Company since that period ( including inter-dealer transactions) are as follows:
- THIS SPACE INTENTIONALLY LEFT BLANK -
47

                                                 Bid

Quarter ending:                        High                Low

March 31, 1994 (8)                      0.25                 2

June 30, 1994                           0.25              0.125

September 30, 1994                      0.25              0.125

December 31, 1994                       0.25              0.25

March 31, 1995                          0.25              0.25

June 30, 1995                           3.75              0.25

September 30, 1995                      9.00              3.125

December 31, 1995                       8.00              5.375

February 29, 1996                       7.625             4.875

March 31, 1996                         11.00              7.625

June 30,1996                           14.50              5.50

September 30, 1996                     18.00              8.25

December 31, 1996                      18.50              9.50

March 31, 1997                         17.25             10.00

June 30, 1997                          14.50             10.50	

These bid prices were obtained from the National Quotation Bureau, Inc. ("NQB") and do not necessarily reflect actual transactions, retail markups, mark downs or commissions. The transactions include inter-dealer transactions.
Holders
The number of record holders of the Company's common stock as of December 31, 1996, was approximately 341.
Dividends

(8) The high bid price for the quarter ended March 31, 1994 is a trading price only.

48

There are no present material restrictions that limit the ability of the Company to pay dividends on common stock or that are likely to do so in the future. The Company has not paid any dividends with respect to its common stock, and does not intend to pay dividends in the foreseeable future.
Item 2. Legal Proceedings
Except as described hereafter, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company or owner of record or beneficially
of more than 5% of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
The Company is a defendant in an action in the Supreme Court of New York County in New York, New York, by a lender seeking the recovery of $250,000 based upon a promissory note. The Company has moved to dismiss that action. The Company has filed an action in Tennessee against that lender and two other lenders to invalidate warrants which were issued in connection with those loans.
Item 3. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Change from David T. Thomson, CPA to Charles M. Stivers, CPA
David T. Thomson, Certified Public Accountant, of Salt Lake City, Utah, audited the financial statements of Onasco Companies, Inc. (the Company's predecessor), for the years ended December 31, 1992, 1993 and 1994. These financial statements accompany this Registration Statement.
Charles M. Stivers, Certified Public Accountant, of Manchester, Kentucky, was engaged as the Company's accountant on May 4, 1995, and audited the financial statement of the Company for the year ended December 31, 1995. This financial statement accompanies this Registration Statement.
There were no disagreements between the Company and Mr. Thomson, whether resolved or not resolved, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved, would have caused him to make reference to the subject matter of the disagreement in connection with his report.
The report of Mr. Thomson did not contain any adverse opinion or disclaimer of opinion, and was not qualified or modified
49

as to uncertainty, audit scope or accounting principles.
The decision to change principal accountants was not submitted for approval to the Board of Directors; the change was made by the Company's President to Mr. Stivers because Mr. Stivers was the accountant who audited the cost basis of the principal assets of the Company acquired from IRC pursuant to the Purchase Agreement in May of 1995, and the Company had little or no operations prior to the completion of the Purchase Agreement.
Also, during the Company's two most recent fiscal years, and since then, Mr. Thomson has not advised the Company that any of the following exist or are applicable:
(1) That the internal controls necessary for the Company to develop reliable financial statements do not exist, that information has come to his attention that has led him to no longer be able to rely on management's representations, or that has made him unwilling to be associated with the financial statements prepared by management,
(2) That the Company needs to expand significantly the scope of its audit, or that information has come to his attention that if further investigated may materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements or any other financial presentation, or cause him to be unwilling to rely on management's representations or be associated with the Company's financial statements for the foregoing reasons or any other reason; or
(3) That he has advised the Company that information has come to his attention that he has concluded materially impacts the fairness or reliability of either a previously issued audit report or the underlying financial statements for the foregoing reasons or any other reason.
Further, during the Company's two most recent fiscal years and since then, the Company has not consulted Mr. Thomson regarding the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements or any other financial presentation whatsoever.
The Company has provided Mr. Thomson with a copy of the
50

disclosure provided under this caption of the Registration Statement, and has advised him to provide the Company with a letter addressed to the Securities and Exchange Commission as to whether he agrees or disagrees with the disclosures made herein. A copy of his response is attached hereto and incorporated herein by reference. See the Exhibit Index.
Change from Charles M. Stivers, CPA, to Price-Bednar, LLP, CPA
Price-Bednar, LLP, Certified Public Accountants, were engaged as the Company's accountants as of February 22, 1996, to audit the financial statements of the Company for the calendar year ending December 31, 1995.
There were no disagreements between the Company and Mr. Stivers, whether resolved or not resolved, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved, would have caused him to make reference to the subject matter of the disagreement in connection with his unaudited reports.
The unaudited reports of Mr. Stivers did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
The decision to change principal accountants was submitted for approval to the Board of Directors; the change was made to Price-Bednar because the Company was seeking to find a larger accounting firm with more in-depth experience in Securities and Exchange Commission filings.
Also, during the Company's most recent fiscal year, and since then, Mr. Stivers has not advised the Company that any of the following exist or are applicable:
(1) That the internal controls necessary for the Company to develop reliable financial statements do not exist, that information has come to his attention that has led him to no longer be able to rely on management's representations, or that has made him unwilling to be associated with the financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of its audit, or that information has come to his attention that if further investigated may materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements or any other financial presentation, or cause him to be unwilling to rely on management's representations or be associated with the Company's financial statements for the
51

foregoing reasons or any other reason; or
(3) That he has advised the Company that information has come to his attention that he has concluded materially impacts the fairness or reliability of either a previously issued audit report or the underlying financial statements for the foregoing reasons or any other reason.
Further, during the Company's most recent fiscal year and
since then, the Company has not consulted Mr. Stivers regarding the application of accounting principles to a specified transaction, either completed or proposed or the type of audit opinion that might be rendered on the Company's financial statements or any other financial presentation whatsoever.
The Company has provided Mr. Stivers with a copy of the disclosure provided under this caption of the Registration Statement, and has advised him to provide the Company with a letter addressed to the Securities and Exchange Commission as to whether he agrees or disagrees with the disclosures made herein. A copy of his response is attached hereto and incorporated herein by reference. See the Exhibit Index.
Change from Price-Bednar, LLP, CPA to Charles M. Stivers, CPA
The Company had engaged the services of another accountant to complete certain preparatory on-site audit activities for preliminary review by Price-Bednar. These services were not timely provided by the other accountant. Also, many of the records of Industrial Resources Corporation, a predecessor of the Company, were unavailable, and, Price-Bednar required a number of these records to be reconstructed prior to its completion of the audit. During the week of May 20, 1996, the Company was advised that the principal accountant of Price-Bednar, who was responsible for the Company's audit, would be out of town for the following week, and it became clear that Price-Bednar would not be able to complete the audit for at least three weeks, because certain information requested by them had not yet been provided by the Company. Price-Bednar was terminated by the President, effective June 7, 1996, and Charles M. Stivers, CPA, who had been engaged to conduct the preparatory on-site audit activities for Price-Bednar when the other accountant failed to perform as promised, indicated that he could timely deliver the required audit report and was promptly engaged to do so by the Board of Directors.
Also, during, the Company's two most recent fiscal years, and since then, Price-Bednar has not advised the Company that any of the following exist or are applicable:
(1) That the internal controls necessary for the
52

Company to develop reliable financial statements do not exist, that information has come to their attention that has led them to no longer be able to rely on management's representations, or that has made them unwilling to be associated with the financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of its audit, or that information has come to their attention that if further investigated may
materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements or any other financial presentation, or cause them to be unwilling to rely on management's representations or be associated with the Company's financial statements for the foregoing reasons or any other reason; or
(3) That they have advised the Company that information has come to their attention that they have concluded materially impacts the fairness or reliability of either a previously issued report or the underlying financial statements for the foregoing reasons or any other reason.
Further, during the Company's two most recent fiscal years and since then, the Company has not consulted Price-Bednar regarding the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements or any other financial presentation whatsoever.
The Company has provided Price-Bednar with a copy of the disclosure provided under this caption of the Registration Statement, and has advised them to provide the Company with a letter addressed to the Securities and Exchange Commission as to whether they agree or disagree with the disclosures made herein. A copy of their response is attached hereto and incorporated herein by reference. See the Exhibit Index
Change from Charles M. Stivers, CPA, to BDO Seidman
The Company terminated Charles M. Stivers, CPA and retained BDO Seidman effective to conduct the audit of the Company's financial statements for the year ended December 31, 1996 because it became apparent that Charles M. Stivers, as an individual practitioner, would not be able to perform the required
53

audit on a timely basis.
During, the Company's two most recent fiscal years, and since then, Charles M. Stivers has not advised the Company that any of the following exist or are applicable:
(1) That the internal controls necessary for the Company to develop reliable financial statements do not exist, that information has come to his attention that has led him to no longer be able to rely on management's representations, or that has made him
unwilling to be associated with the financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of its audit, or that information has come to his attention that if further investigated may materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements or any other financial presentation, or cause him to be unwilling to rely on management's representations or be associated with the Company's financial statements for the foregoing reasons or any other reason; or
(3) That he has advised the Company that information has come to his attention that he has concluded materially impacts the fairness or reliability of either a previously issued report or the underlying financial statements for the foregoing reasons or any other reason.
Further, during the Company's two most recent fiscal years and since then, the Company has not consulted Charles M. Stivers regarding the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements or any other financial presentation whatsoever.
The Company has provided Charles M. Stivers with a copy of the disclosure provided under this caption of the Registration Statement, and has advised him to provide the Company with a letter addressed to the Securities and Exchange Commission as to whether they agree or disagree with the disclosures made herein. A copy of their response is attached hereto and incorporated herein by reference. See the Exhibit Index
54

Item 4. Recent Sales of Unregistered Securities.
The following table provides information with respect to the sale of all "unregistered" and "restricted" securities sold by the Company during the past three years, which were not registered under the 1933 Act:

                                             Number
                                Date          Of       Aggregate
Name of Owner                  Acquired      Shares   Consideration

Robert C. Bohannon, Ph.D.      11/8/94        8,750         1

Henry H. Tate, Jr.             11/8/94        3,750         1

Industrial Resources           5/4/95     4,000,000         2
Corporation

M. E. Ratliff                  5/15/95      215,000         3

Jeffrey D. Jenson              5/15/95      240,000         3

Leonard W. Burningham, Esq.    5/15/95       50,000         3

Duane S. Jenson                9/29/95        4,000         4

Craig Carpenter                9/29/95        4,000         4

Industrial Resources           3/29/96       76,557         5
Corporation                    4/10/96       87,709         5

Allen Sweeney                 12/31/96       33,151         6

Russell Ratliff                3/29/96       37,534         6

James C. Walter                3/22/96       35,616         6

Mike Johnson                   3/26/96       10,000         6

Raymond E. Johnson              4/3/96       10,000         6

Charles N. Manhoff             4/10/96       88,356         6

Joseph B. Mattei               4/19/96       37,000         6

William A. Moffett             4/23/96       37,397         6
                               6/25/97       72,603         6

Jeffrey DeMunnik               5/29/96       16,644         6
                               3/15/97        4,000         6

Robert M. Carter               6/15/96       15,671         6	

55

                               8/26/96        2,000         6

                               6/30/97        7,329         6

Kelly S. Grabill               7/29/96       12,500         6

Jeff Brockman                  7/29/96       10,000         6

                               8/29/96       62,329         6
Robert Janda                   9/5/96        22,730  $187,520

Donald Janda                   9/5/96         2,131  $ 17,580

William Evans                  9/5/96        12,121  $100,000

Walter C.  Arzonetti           4/22/97       88,493         6

Neil Harding                   5/21/97      100,000         8

Michael McCown                 6/30/97       50,000         6	

1        Issued in consideration of services rendered to the
         Company.

2        Issued to IRC in consideration of the conveyance by
         IRC to the Company of certain oil and gas leases,
         equipment, securities and vehicles pursuant to the
         Purchase Agreement. See the heading "Business
         Development," of the caption "Description of
         Business," Part I, Item 1, above.

3.       Issued in consideration of services rendered to the
         Company. See the heading "Business Development," of
         the caption "Description of Business," Part I, Item
         1, above.

4        Issued in consideration of the conveyance of an
         Eimco Caterpillar.

5        Issued in consideration of the cancellation of debt
         owed by the Company to IRC. See the heading "Business
         Development" of the caption "Description of
         Business," Part I, Item 1, above.

6        Issued pursuant to Stock Option Agreements adopted
         by the Board of Directors granting these persons an
         option to purchase "unregistered" and "restricted"
         shares of the Company's common stock at a price of
         $0.275 per share.  See the "Restricted Stock
         Options Table" under the heading "Other	

56

         Compensation" of the caption "Executive
         Compensation," Part I, Item 6, above.

7        Issued in exchange for an oil drilling rig.

8        Issued as consideration for the granting of a loan
         in the amount of $1,000,000.	

Management believes that all of the foregoing persons were either "accredited investors" as that term is defined under applicable federal and state securities laws, rules and regulations, or were persons who by virtue of background, education and experience, either alone or through the aid and assistance of a personal representative, could accurately evaluate the risks and merits attendant to an investment in the securities of the Company. Further, all such persons were provided with access to all material information regarding the Company, prior to the offer or sale of these securities, and each had an opportunity to ask of and receive answers from directors, executive officers, attorneys and accountants for the Company. The offers and sales of the foregoing securities are believed to have been exempt from the registration requirements of Section 5 of the 1933 Act, as amended, pursuant to Section 4(2) thereof, and from similar state securities laws, rules and regulations covering the offer and sale of securities by available state exemptions from such registration.
Item 5. Indemnification of Directors and Officers.
Section 48-18-502 of the Tennessee Business Corporation Act (the "Act") authorizes a Tennessee corporation to indemnify any director against liability incurred in a legal proceeding if (i) he or she conducted himself or herself in good faith; and (ii) he or she reasonably believed that his or her conduct was in the best interest of the company or, if the conduct was not undertaken in his or her official capacity, that it was not opposed to the company's best interests. In the case of a criminal proceeding, the director must have had no reasonable cause to believe that his or her conduct was unlawful. A corporation may not indemnify a director under Section 48-18-502 in connection with a proceeding "by or in the right of the corporation in which the director was adjudged liable to the corporation" or in connection with any other proceeding charging improper personal benefit to him or her, in which he or she was adjudged liable on the basis that he or she improperly received a personal benefit.
Unless limited by its charter, Section 48-18-503 of the Act requires a corporation to indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because of his or her role as director against reasonable expenses incurred in connection with the proceeding. The Company's charter does not provide any limitations on this right of indemnification.
57

Pursuant to Section 48-18-504 of the Act, the Company may advance a director's expenses incurred in defending any proceeding upon receipt of an undertaking and a statement of the director's good faith belief that he or she has met the standard of conduct described in Section 48-18-502.
Section 48-18-505 permits a court, upon application of a director, to order indemnification if it determines that the director is entitled to mandatory indemnification under Section 48-18-503 or that be or she is fairly and reasonably entitled to indemnification, whether or not he or she met the standards set forth in Section 48-18-502.
Section 48-18-506 limits indemnification under Section 48-18-502 to situations in which either (i) the majority of a disinterested quorum of directors; (ii) independent special legal counsel; or (iii) the stockholders determine that indemnification is proper under the circumstances.
Unless the corporate charter provides otherwise, Section 48-18-507 extends the rights to indemnification and advancement of expenses to officers, employees and agents. The Company's corporate charter does not provide for any limitations on these rights of indemnification.
Regardless of whether a director, officer, employee or agent has the right to indemnity under Section 48-18-502 or Section 48-18-503, Section 48-18-508 allows the corporation to purchase and maintain insurance on his or her behalf against liability resulting from his or her corporate role.
Section 48-18-509 provides that the rights to indemnification and advancement of expenses shall not be deemed exclusive of any other rights under any bylaw, agreement, stockholder vote or vote of disinterested directors; however, no indemnification may be made where a final adjudication adverse to the director establishes his or her liability for breach of duty or loyalty to the corporation or its stockholders or for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law.
The Company is seeking bids from insurance companies to provide Directors' and Executive Officers' Insurance, and has adopted the provisions of the Act.
PART F/S
Index to Financial Statements
Financial Statements
58

PART F/S
Index to Financial Statements
Financial Statements

Audited Financial Statements for the year ended
December 31, 1994.  .............................  F-1

Independent Auditor's Report ....................  F-1

Balance Sheet, December 31, 1994 ................  F-2

Statement of Operations for the year ended
December 31, 1994 ...............................  F-4

Statement of Stockholders' Equity for the
year ended  December 31, 1994 ...................  F-5

Statement of Cash Flow for the year ended
December 31, 1994 (Unaudited) ...................  F-6

Notes to Financial Statements ...................  F-7

Audited Financial Statements for the years ended
December 31, 1995 and December 31, 1996 .........  F-10

Independent Auditors' Reports ...................  F-12

Balance Sheet, December 31, 1995 and
December 31, 1996 ...............................  F-14

Consolidated Statements of Loss for the years
ended December 31, 1995 and December 31, 1996 ...  F-16

Statement of Stockholder's Equity for the
years ended December 31, 1995 and December
31, 1996 ........................................  F-17

Statement of Cash Flow for the years ended
December 31, 1995 and December 31, 1996,
during the development stage ....................  F-18

Notes to the Financial Statements ...............  F-19

Unaudited Financial Statements for the six months
ended June 30, 1997 .............................  F-39	

59

                  Balance Sheet June 30, 1997 .....................  F-41

                  Statement of Loss for the six months
                  ended June 30, 1997 .............................  F-43

                  Statement of Stockholder's Equity for the
                  six months ended June 30, 1997 ..................  F-44

                  Statement of Cash Flow for the six months
                  ended June 30, 1997 .............................  F-45

                  Notes to Financial Statement ....................  F-46

                                      60	

[Letterhead of David T. Thompson P.C.]

INDEPENDENT AUDITOR'S REPORT	

Board of Directors
ONASCO COMPANIES, INC.
 (Formerly Gold Deposit Mining and Milling Company)
I have audited the balance sheets of Onasco Companies, Inc. (Formerly Gold Deposit Mining and Milling Company) (a development stage company) as of December 31, 1994, 1993 and 1992, and the related statements of operations, stockholders' equity and cash flows from November 1, 1991 to December 31, 1994. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits. The financial statements of Onasco Companies, Inc. and its Subsidiary as of October 31, 1991 and from development stage inception (October 17, 1991) to October 31, 1991 were audited by other auditors whose reports dated November 6, 1991 and November 18, 1991 expressed unqualified opinions on those statements.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Onasco Companies, Inc. as of December 31, 1994, 1993 and 1992 and the results of its operations and its cash flows from November 1, 1991 to December 31, 1994, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company is in the development stage and its ability to establish itself as a going concern is dependent upon the Company obtaining sufficient financing to continue its development activities and, ultimately, to achieve profitable operations (See Note 8). These items raise substantial doubt about the Company's ability to continue as a going concern.

                                                    /s/ David T. Thomson P.C.

Salt Lake City, Utah
April 14, 1995	

F-1

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

BALANCE SHEETS
 December 31, 1994
ASSETS

                                                         December 31, 1994
Current assets:                                          -----------------

  Cash and cash equivalents                                        0
  Production receivable
  Prepaid expenses
  Other current assets

          Total current assets                                     0

Oil and gas properties using full cost
accounting (Notes 4 and 5):
  Properties being amortized
  Properties not subject to amortization
                                                                --------
                                                                   0
  Less accumulated depletion
                                                                --------
                                                                   0

Other Assets
  Other property and equipment, less accumulated
    depreciation $55,300 (Note 6)
  Deposits
Organizational costs net of accumulated                            0
  amortization of $400
                                                                --------
                                                                   0	

F-2

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

BALANCE SHEETS
 December 31, 1994
LIABILITIES AND STOCKHOLDER'S EQUITY

                                                            December 31, 1994
                                                            -----------------

Current liabilities:

  Accounts payable - trade                                                0
  Production payable
  Accrued and other liabilities
  Long-term debt - current (Note 8)
  Stockholder advances payable                                          500
  Net current liabilities of discontinued operations                 27,500
                                                                    -------

     Total current Liabilities                                       28,000

Long-term debt (Note 8)

     Total liabilities                                               28,000
Commitments and Contingencies (Note 9)
Stockholders' equity:
  Common Stock, $.001 par value; 50,000,000 shares authorized
   5,229,300, 1,037,600, 1,012,600 shares issued,                     1,000
   and outstanding respectively
  Additional paid-in capital                                          5,300
  Deficit accumulated during the development stage                  (34,300)
                                                                    --------
     Total stockholder's equity                                     (28,000)
                                                                    --------

Total liabilities and stockholder's equity                                0	

F-3

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

STATEMENT OF OPERATIONS
For the years ended December 31, 1994 and 1993 Cumulative During the Development Stage

                                                                     Cumulative
                                 For the Year       For the Year     During the
                                     ended             ended        Development
                                 Dec. 31, 1994      Dec. 31, 1993      Stage
                                 -------------      -------------   -----------
Revenues:
  Oil and gas revenues                    0                  0         27,800
  Other revenues                                                          700
                                     ------             ------       --------
        Total revenues                    0                  0         28,500

Cost and expense:
  Lease operating expense                                              18,900
  Production taxes                                                      1,200
  Depletion, depreciation and
    amortization                                                       59,100
  Interest expense                                                     32,600
  General and administrative costs                         100        434,200
                                                        ------       --------
          Total costs and expenses        0                100        546,000
                                     ------             ------       --------

  Net (loss) from continuing
   operations                             0               (100)      (517,500)

  Discontinued Operations
    Net (Loss) from discontinued
      operations                     (8,200)            (5,700)       (78,900)

  Extraordinary Items
    Income from debt forgiveness     38,300                            38,300
    Utilization of net operating
      loss carry forward              6,700                             6,700
    Add: Loss of purchased company
      prior to date of acquisition                                        200
                                     ------              ------      --------

Net Income (loss)                    36,800             (5,800)      (551,200)
                                     ------              ------      --------	

F-4

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

STATEMENT OF STOCKHOLDER'S EQUITY
For the years ended December 31, 1994 and 1993

                                                                  Deficit
                                                                Accumulated
                              Commmon Stock      Additional      During the
                              -------------        Paid in      Development
                            #Shares     Amount     Capital         Stage
                            ------------------   ----------     -----------

BALANCE, December 31, 1992  1,014,100   $1,000      5,300         (65,300)

  Shares compiled under
    stock option re-
    purchase agreement
    on April 10, 1993
    at $.001 per share         (1,500)       0          0               0

Net income (loss) for
  the year ended
  December 31, 1993                 0        0          0          (5,800)
                            ---------    ------     -------      ---------

BALANCE

  December 31, 1993         1,012,600    1,000      5,300         (71,100)

  Shares issued from
  October 1, 1994 to
  December 31, 1994            25,000        0          0               0

Net income (loss) for
the year ended
December 31, 1994                   0        0          0          36,800
                            ----------    ------     ------       --------

BALANCE
  December 31, 1994         1,037,600    1,000      5,300         (34,300)	

F-5

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

STATEMENT OF CASH FLOWS
For the years ended December 31, 1994 and 1993

                                                                                                                   Cumulative
                                                                          Year ended           Year ended          During the
                                                                           Dec. 31              Dec. 31            Development
                                                                            1994                 1993                Stage
                                                                         ----------            ----------         -------------
Cash Flows from operating activities:
  Net income (loss)                                                      $     0              $    (100)             (517,500)
    Adjustments to reconcile net loss to net cash provided
      by operating activities:
  Depletion, depreciation and amortization                                                                             59,100
    Changes in assets and liabilities:
    Deposits                                                                                                           (4,900)
    Production receivable                                                                                              (9,000)
    Prepaid expenses                                                                                                   (4,100)
    Other current assets                                                                                                 (600)
    Accounts payable - trade                                                                        100                47,100
    Production payable                                                                                                  1,700
    Accrued and other liabilities                                                                                      19,900
    Stockholder Advances Payable                                                                                         (500)
    Net current liabilities of discontinued operations                                                                (26,900)
                                                                         ----------            ----------         -------------
Net cash used by operating activities                                          0                      0              (435,700)

Cash Flow used in investing activities:
  Additions to machinery and equipment                                         0                      0              (656,300)
  Additions to oil and gas properties - amortized                                                                    (484,100)
  Additions to oil and gas properties - unamortized                                                                   (60,600)
  Marketable Securities                                                                                              (250,000)
  Organizational cost                                                                                                  (6,600)
                                                                         ----------            ----------         -------------
    Net cash used in investing activities                                      0                      0            (1,457,600)

Cash Flow from financing activities:
  Proceeds from issuance of debt, net                                          0                      0                93,000
  Proceeds from issuance of common stock                                                                            1,801,000
                                                                         ----------            ----------         -------------
Net cash provided by financing                                                 0                      0            (1,894,000
                                                                         ----------            ----------         -------------
Net increase (decrease) in cash and cash equivalents                           0                      0                   700
Cash and cash equivalents at beginning of year                                 0                      0                     0
                                                                         ----------            ----------         -------------

Cash and cash equivalent at end of year                                        0                      0                   700
                                                                         ----------            ----------         -------------
Supplemental schedule of cash flow information
  Cash paid during the years for
   Income taxes                                                                0                      0                     0
                                                                         ----------            ----------         -------------
   Interest                                                                    0                      0                 9,600
                                                                         ----------            ----------         -------------	

F-6

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization - TENGASCO, INC. (the "Company"), a publicly held corporation, was organized under the laws of the State of Utah on April 18, 1916, as Gold Deposit Mining and Milling Company. The Company subsequently changed its name to Onasco Companies, Inc.
The corporate offices are located in Knoxville, Tennessee.
2. EARNINGS PER SHARE
Earnings per common and common equivalent shares are based upon the weighted average of common and common equivalent shares outstanding during the year. Primary and fully diluted earnings per share are the same. The number of common and common equivalent shares utilized in per share computations were 1,037,600, and 1,012,600 in years 1994 and 1993.
EARNINGS PER SHARE:

                                                 1994       1993
                                            ---------   --------
Loss from continuing operations                     0       (100)

Net income (loss)                              36,800      5,800
                                            ---------   --------

Primary earnings (loss) per common share:
 Income (loss) from continuing operations           0          0

 Discontinued operations                         (.01)         0

 Extraordinary items                              .04          0
                                            ---------   --------

Earnings (loss) per common share                  .03          0
                                            ---------   --------
Fully diluted earnings (loss)
per common share:

 Income (loss) from continuing operations           0          0

 Dicontinued operations                          (.01)         0

 Extraordinary items                              .04          0
                                            ---------   --------

Eaernings (loss) per common share                 .03          0
                                            ---------   --------	

F-7

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS
3. DISCONTINUED OPERATION
In April 1995, the Company dissolved the subsidiary company based in Texas. The dissolution was approved by Texas in April 1995. For accounting purposes, the Company has treated the dissolved subsidiary as a discontinued operation. The results of the subsidiary have been reported separately as a component of discontinued operations in the Statement of Operations for the periods presented. At the time of dissolution, the Company wrote-off its investment and assumed obligations of the subsidiary. The following is a summary of subsidiary operation.

                                                                    Cumulative
                               For the Year       For the Year      During the
                                  ended              ended          Development
                              Dec. 31, 1994      Dec. 31, 1993         Stage
                              -------------      -------------      ------------

Revenue:

  Sales                       $           0      $       1,100      $   1,700

  Cost of Sales                                                          (800)
                              --------------     -------------      ----------
    Gross Margin                          0              1,100            900
                              --------------     -------------      ----------

 Expense:
  Rent                                                                  1,000
  Depreciation                          200                400            900
  Amortization                          300                500          1,400
  Utilities                                                800          3,800
  Professional Fees                                                    10,200
  Salaries                            1,400              4,100         12,200
  Office Supplies                                          200            900
  Shipping                                                 200            500
  Equipment Rental                                         100          1,500
  Research                                                 300         25,600
  Marketing                                                100         11,300
  Other Taxes                                                             900
  Other Expenses                                           100          3,300
  Write-off Organization
   Factor                                                                 100
  Write-off Patent costs              6,300                             6,200
                              --------------     -------------      ----------

    Total Expenses                    8,200              6,800         79,800
                              --------------     -------------      ----------
Net Loss related to
  Discontinued Operations            (8,200)            (5,700)       (78,900)
                              --------------     -------------      ----------	

F-8

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS
4. DEVELOPMENTAL STAGE OPERATIONS
Although the Company was organized in 1916, it must be regarded as being in a formative stage due to its lack of significant business operations during recent years. Its future success depends upon the ability to operate its existing wells and to expand its operations. No assurance can be given that the Company will be successful in making acquisitions.
5. GOING CONCERN.
The Company has experienced startup losses for the year ended December 31, 1994. In light of this circumstance, the ability of the Company to continue as a going concern may be in doubt. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-9

Tengasco, Inc.
(formerly Onasco Companies, Inc.)

Consolidated Financial Statements
Years Ended December 31, 1996 and 1995
F-10
Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Contents

Report of Independent Certified Public Accountants          2

Report of Independent Certified Public Accountants          3

Consolidated Financial Statements

   Balance sheets                                           4

   Statements of loss                                       5

   Statements of stockholders' equity                       6

   Statements of cash flows                                 7

   Notes to financial statements                         8-27	

F-11

[Letterhead of Charles M. Stivers]
Report of Independent Certified Public Accountants
Board of Directors
Tengasco, Inc.
Knoxville, Tennessee
I have audited the balance sheet of Tengasco, Inc. as of December 31, 1995, and the related statements of loss, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on our audit.
I conducted my audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that our audit provides a reasonable basis for our opinion.
In my opinion financial statements referred to above present fairly, in all material respects, the financial position of Tengasco, Inc. as of December 31, 1995, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations and has a working capital deficiency that raise substantial doubt about its ability to continue as a going concern.

/s/Charles M. Stivers
Charles M. Stivers
Certified Public Accountant

Manchester, Kentucky
June 5, 1997	

F-12

[LOGO]       BDO Seidman, LLP             285 Peachtree Center Avenue, Suite 800
             Accountants and Consultants  Atlanta, Georgia 30303-1230
                                          Telephone: (404) 688-6841
                                          Fax: (404) 688-1075	

Report of Independent Certified Public Accountants
Board of Directors
Tengasco, Inc
Knoxville, Tennessee
We have audited the accompanying consolidated balance sheet of Tengasco, Inc. and subsidiary as of December 31, 1996, and the related consolidated statements of loss, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tengasco, Inc. and subsidiary as of December 31, 1996, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficiency that raise substantial doubt about its ability to continue as a going concern. In addition, as of December 31, 1996, management estimates that additional costs of approximately $l,200,000 are required to complete its pipeline facilities under construction. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

                                             /s/ BDO Seidman, LLP

Atlanta, Georgia
June 5, 1997	

F-13

December 31,                                           1996          1995
--------------------------------------------------------------------------------

Assets (Note 9)

Current
  Cash and cash equivalents                         $  146,554     $      712
  Marketable equity securities (Note 5)                     --        250,000
  Accounts receivable                                    4,658          9,018
  Prepaid expenses and other                             7,463          4,786
--------------------------------------------------------------------------------

Total current assets                                   158,675        264,516

Oil and gas properties, net (on the basis
  of full cost accounting) (Note 6)                  1,287,142        658,082

Pipeline facilities under construction,
  at cost (Note 7)                                     887,315             --

Property and equipment, net (Notes 8 and 10)           203,244        247,401

Other                                                  190,845         10,970
--------------------------------------------------------------------------------

                                                    $2,727,221     $1,180,969
================================================================================

                                     F-14	

                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)	

Consolidated Balance Sheets

December 31,                                              1996             1995
--------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current
  Notes payable (Note 9)                            $  780,000        $      -
  Loans payable to affiliates (Note 4)                  48,190               -
  Current maturities of long-term debt (Note 10)        14,017          34,038
  Accounts payable - trade                             347,093          46,922
  Accrued liabilities                                   35,086          21,623
--------------------------------------------------------------------------------

Total current liabilities                            1,224,386         102,583

Long term debt, less current maturities (Note 10)       47,828          59,000
--------------------------------------------------------------------------------

Total liabilities                                    1,272,214         161,583
--------------------------------------------------------------------------------

Commitments and contingencies (Notes 7, 9 and 11)

Stockholders' equity (Note 9)
  Common stock, $.001 par value; 50,000,000 shares
   authorized                                            5,708           5,229
  Additional paid-in capital                         4,783,369       2,425,185
  Unamortized stock option awards                     (292,186)       (130,208)
  Accumulated deficit                               (3,041,884)     (1,280,820)
--------------------------------------------------------------------------------

Total stockholders' equity                           1,455,007       1,019,386
--------------------------------------------------------------------------------

                                                    $2,727,221      $1,180,969
--------------------------------------------------------------------------------	

See accompanying notes to consolidated financial statements.
F-15

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Consolidated Statements of Loss

Years ended December 31,                                1996         1995
-------------------------------------------------------------------------
Revenues
 Oil and gas revenues                             $   26,253  $    27,802
 Other revenues                                            -          724
-------------------------------------------------------------------------

Total revenues                                        26,253       28,526
-------------------------------------------------------------------------

Costs and expenses
 Production costs and taxes                           17,138       20,072
 Depletion, depreciation and amortization            133,187       89,528
 General and administrative costs                  1,491,690      539,061
 Unrealized holding loss on marketable equity
  securities (Note 5)                                      -      593,752
 Interest expense                                    145,302       32,594
-------------------------------------------------------------------------

Total costs and expenses                           1,787,317    1,275,007
-------------------------------------------------------------------------

Net Loss                                         $(1,761,064) $(1,246,481)
--------------------------------------------------------------------------

Net loss per common share                             $(0.32)      $(0.36)
--------------------------------------------------------------------------

Weighted average common shares outstanding         5,427,247    3,484,207
--------------------------------------------------------------------------	

See accompanying notes to consolidated financial statements.
F-16
Tenegasco, Inc.
 (formerly Onasco Companies, Inc.)
Consolidated Statements of Stockholders' Equity

------------------------------------------------------------------------------------------------------------------
                                                                                      Unamortized
                                                    Common Stock        Additional          stock
                                                --------------------       paid-in         option    Accumulated
                                                 Shares      Amount        capital         awards        deficit
------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994                      1,037,600    $1,038     $    5,300     $       -     $  (34,339)

  Net effect of 1 for 2 reverse split            (518,800)     (519)             -             -              -

  Common stock issued to acquire assets
    of Industrial Resources Corporation         4,000,000     4,000       1,215,460            -              -

  Common stock issued to individuals              505,000       505          47,500            -              -

  Common stock issued for equipment                 8,000         8           2,200            -              -

  Common stock issued for exercised options        33,200        33           9,100            -              -

  Common stock subscribed for the
    extinguishment of debt                        164,300       164         881,900            -              -

  Stock option awards                                   -         -         190,625     (190,625)

  Amortization of stock option awards                   -         -               -        60,417             -

  Common stock options granted to
    non-employees                                       -         -          45,000             -             -

 Transfer of debt to equity by shareholder              -         -          28,100             -             -

  Net loss for the year ended
    December 31, 1995                                   -         -               -             -    (1,246,481)
------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1995                      5,229,300     5,229       2,425,185      (130,208)   (1,280,820)

  Common stock issued for exercised options       327,079       327          90,792             -             -

  Common stock issued for the
    extinguishment of debt                         65,569        66         638,823             -             -

  Common stock subscribed for the
    extinguishment of debt                         48,897        49         421,052             -             -

  Stock option awards                                   -         -         225,000      (225,000)            -

  Amortization of stock option awards                   -         -               -        63,022             -

  Common stock options granted to
    non-employees                                       -         -         371,864             -             -

  Common stock issued for private
    placements                                     36,982        37         280,653             -             -

  Stock warrants issued in connection with
    notes payable                                       -         -         330,000             -             -

  Net loss for the year ended
    December 31, 1996                                   -         -               -             -    (1,761,064)
------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1996                      5,707,827    $5,708      $4,783,369     $(292,186)  $(3,041,884)
------------------------------------------------------------------------------------------------------------------	

See accompanying notes to consolidated financial statements.
F-17

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Consolidated Statements of Cash Flows

Years ended December 31,                                 1996             1995
-------------------------------------------------------------------------------
Operating activities
 Net loss                                         $(1,761,064)     $(1,246,481)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
   Depletion, depreciation and amortization           133,187           89,528
   Unrealized holding loss on marketable
    equity securities                                      --          593,752
   Loss on disposal of property and equipment           3,671               --
   Compensation paid in stock options                 434,886          105,417
   Amortization of imputed value of stock warrants
    issued in connection with notes payable           110,000               --
   Changes in assets and liabilities:
    Accounts receivable                                 4,360           (9,018)
    Prepaid expenses and other                         (2,677)          (4,786)
    Accounts payable                                  300,171           19,422
    Accrued liabilities                                13,463           21,623
    Stockholder advances payable                           --             (500)
-------------------------------------------------------------------------------

Cash used in operating activities                    (764,003)        (431,043)
-------------------------------------------------------------------------------

Investing activities
 Proceeds from sale of marketable equity
  securities                                          250,000               --
 Additions to property and equipment                  (60,754)         (86,786)
 Net additions to oil and gas properties             (644,951)              --
 Additions to pipeline facitlities under
  construction                                       (887,315)              --
-------------------------------------------------------------------------------

Cash used in investing activites                   (1,343,020)         (86,786)
-------------------------------------------------------------------------------

Financing activities
 Payment of loan costs and other                     (238,798)         (10,970)
 Proceeds from borrowings                           2,156,581           93,038
 Repayments of borrowings                             (36,727)              --
 Proceeds from issuance of common stock               371,809          436,473
-------------------------------------------------------------------------------

Cash provided by financing activities               2,252,865          518,541
-------------------------------------------------------------------------------

Net increase in cash and cash equivalents             145,842              712

Cash and cash equivalents, beginning of year              712               --
-------------------------------------------------------------------------------

Cash and cash equivalents, end of year            $   146,554      $       712
-------------------------------------------------------------------------------	

See accompanying notes to consolidated financial statements.
F-18

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

1. Summary of                          Organization
   Significant Accounting
   Policies                            Tengasco, Inc. (the "Company"), a
                                       publicly held corporation, was organized
                                       under the laws of the State of Utah on
                                       April 18, 1916, as Gold Deposit Mining
                                       and Milling Company. The Company
                                       subsequently changed its name to Onasco
                                       Companies, Inc.

                                       On May 2, 1995, pursuant to a Purchase
                                       and Exchange Agreement, the Company
                                       acquired from Industrial Resources
                                       Corporation, a Kentucky corporation
                                       ("IRC"), certain oil and gas leases,
                                       equipment, marketable securities and
                                       vehicles in exchange for common stock
                                       (see Note 3).

                                       The Company changed its domicile from the
                                       State of Utah to the State of Tennessee
                                       on May 5, 1995 and its name was changed
                                       from "Onasco Companies, Inc." to
                                       "Tengasco, Inc."

                                       The Company's principal business consists
                                       of oil and gas well drilling, production
                                       and related property management in the
                                       Appalachian region of eastern Tennessee
                                       and eastern Kentucky. The Company's
                                       corporate offices are in Knoxville,
                                       Tennessee.

                                       During 1996, the Company formed Tengasco
                                       Pipeline Corporation, a wholly-owned
                                       subsidiary, to manage the construction
                                       and operation of a 23-mile gas pipeline.

                                       Consolidation

                                       The consolidated financial statements
                                       include the accounts of the Company and
                                       Tengasco Pipeline Corporation. All
                                       significant intercompany balances and
                                       transactions have been eliminated.

                                       Cash Equivalents

                                       The Company considers all investments
                                       with a maturity of three months or less
                                       when purchased to be cash equivalents.

                                       Oil and Gas Properties

                                       The Company follows the full cost method
                                       of accounting for oil and gas property
                                       acquisition, exploration and development
                                       activities. Under this method, all
                                       productive and nonproductive costs
                                       incurred in connection with the
                                       acquisition of, exploration for and
                                       development of oil and gas reserves for
                                       each cost center

                                     F-19	

                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                      Notes to Consolidated Financial Statements

--------------------------------------------------------------------------------

                                       are capitalized. Capitalized costs
                                       include lease acquisitions, geological
                                       and geophysical work, delay rentals and
                                       the costs of drilling, completing and
                                       equipping oil and gas wells. Gains or
                                       losses are recognized only upon sales or
                                       dispositions of significant amounts of
                                       oil and gas reserves. Proceeds from all
                                       other sales or dispositions are treated
                                       as reductions to capitalized costs.

                                       The capitalized costs of oil and gas
                                       properties, plus estimated future
                                       development costs relating to proved
                                       reserves and estimated costs of plugging
                                       and abandonment, net of estimated salvage
                                       value, are amortized on the
                                       unit-of-production method based on total
                                       proved reserves. The costs of unproved
                                       properties are excluded from amortization
                                       until the properties are evaluated,
                                       subject to an annual assessment of
                                       whether impairment has occurred. The

                                       costs of significant development projects
                                       awaiting completion of pipeline
                                       facilities are excluded from amortization
                                       until such time as the pipeline
                                       facilities are completed. The Company's
                                       proved gas reserves were estimated by
                                       Coburn Petroleum Engineering, independent
                                       petroleum engineers, as of December 31,
                                       1996.

                                       The capitalized oil and gas property and
                                       pipeline costs, less accumulated
                                       depreciation, depletion and amortization
                                       and related deferred income taxes, if
                                       any, are generally limited to an amount
                                       (the ceiling limitation) equal to the sum
                                       of: (a) the present value of estimated
                                       future net revenues computed by applying
                                       current prices in effect as of the
                                       balance sheet date (with consideration of
                                       price changes only to the extent provided
                                       by contractual arrangements) to estimated
                                       future production of proved oil and gas
                                       reserves, less estimated future
                                       expenditures (based on current costs) to
                                       be incurred in developing and producing
                                       the reserves using a discount factor of
                                       10% and assuming continuation of existing
                                       economic conditions; and (b) the cost of
                                       investments in unevaluated properties
                                       excluded from the costs being amortized.

                                       Pipeline Facilities Under Construction

                                       Pipeline facilities under construction
                                       are carried at cost. The Company will
                                       provide for depreciation of the pipeline
                                       facilities using the straight-line method
                                       over the estimated useful life of the
                                       asset once the pipeline is completed and
                                       placed in service. The pipeline
                                       facilities are expected to be completed
                                       during the

                                   F-20	

                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                      Notes to Consolidated Financial Statements	

third quarter of 1997. Accordingly, no depreciation expense has been recorded for 1996 and 1995 relating to the pipeline facilities.
Property and Equipment
Property and equipment are carried at
cost. The Company provides for
depreciation of property and equipment
using the straight-line method over the
estimated useful lives of the assets
which range from five to seven years.
Other Assets
Other assets consist principally of
deferred loan costs that the Company is
amortizing over the term of the
respective loans, which is six months.
Income Taxes
The Company accounts for income taxes in
accordance with Statement of Financial
Accounting Standards No. 109, "Accounting
for Income Taxes" which requires the use
of the "liability method." Accordingly,
deferred tax liabilities and assets are
determined based on the temporary
differences between the financial
statement and tax bases of assets and
liabilities, using enacted tax rates in
effect for the year in which the
differences are expected to reverse.
Concentration of Credit Risk
The Company's primary business activities
include oil and gas sales to several
customers in the states of Tennessee and
Kentucky. The related trade receivables
subject the Company to a concentration of
credit risk within the oil and gas
industry.
Loss Per Common Share
Loss per share amounts are computed by
dividing net loss by the weighted average
number of common shares outstanding
during the year. Common stock equivalents
have not been considered because their
effect would be anti-dilutive.
F-21

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

Accounting Estimates
The accompanying financial statements are
prepared in conformity with generally
accepted accounting principles which
requires management to make estimates and
assumptions that affect the reported
amounts of assets and liabilities and
disclosure of contingent assets and
liabilities at the date of the financial
statements and the reported amounts of
revenues and expenses during the
reporting period. The actual results
could differ from those estimates.
Fair Values of Financial Instruments
Fair values of cash and cash equivalents
and short-term debt approximate cost due
to the short period of time to maturity.
Fair values of long-term debt are based
on quoted market prices or pricing models
using current market rates.
Significant Risks and Uncertainties
The Company's operations are subject to
all of the environmental and operational
risks normally associated with the oil
and gas industry. The Company maintains
insurance that is customary in the
industry; however, there are certain
risks for which the Company does not
maintain full insurance coverage. The
occurrence of a significant event that is
not fully covered by insurance could have
a significant adverse effect on the
Company's financial position.
New Accounting Pronouncements
On March 3, 1997, the Financial
Accounting Standards Board issued
Statement of Financial Accounting
Standards No. 128, Earnings Per Share
(SFAS 128). This pronouncement provides a
different method of calculating earnings
per share than is currently used in
accordance with Accounting Principles
Board Opinion No. 15, Earnings Per
Share. SFAS 128 provides for the
calculation of "Basic" and "Diluted"
earnings per share. Basic earnings per
share includes no dilution and is
calculated by dividing income available
to common shareholders by the weighted
average number of common shares
outstanding for the period. Diluted
earnings per share reflects the potential
dilution of securities that could share
in the earnings of an entity, similar to
fully diluted earnings per share. The
Company will adopt SFAS
F-22

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

                                       128 in 1997 and its implementation is not
                                       expected to have a material effect on the
                                       consolidated financial statements.

2. Going Concern                       The Company has experienced losses
                                       totaling $1,761,064 and $1,246,481 for
                                       the years ended December 31, 1996 and
                                       1995, respectively, and has a working
                                       capital deficit of $1,065,711 at December
                                       31, 1996. These matters raise substantial
                                       doubt about the Company's ability to
                                       continue as a going concern. In addition,
                                       as of December 31, 1996, management
                                       estimates that additional costs of
                                       approximately $1,200,000 are required to
                                       complete its pipeline facilities under
                                       construction. Management's plans include
                                       raising additional capital in order to
                                       complete the pipeline facilities and

                                       drill additional oil and gas wells. In
                                       addition, the Company is seeking joint
                                       venture partners to assist in the sales
                                       and marketing of its energy services (see
                                       Note 14). The accompanying financial
                                       statements do not include any adjustments
                                       relating to the recoverability and
                                       classifications of recorded asset
                                       amounts or the amounts and
                                       classifications of liabilities that might
                                       be necessary should the Company be unable
                                       to continue as a going concern.

3.  Business Acquisition               Effective May 2, 1995, the Company
                                       acquired approximately 60% of the assets
                                       of IRC in a reverse acquisition in which
                                       IRC's stockholders acquired voting
                                       control of the Company. The acquisition
                                       was accomplished through the Company's
                                       issuance of 4,000,000 shares of Tengasco,
                                       Inc. common stock and a $450,000 8%
                                       promissory note payable to IRC. The
                                       promissory note was converted into 83,799
                                       shares of Tengasco, Inc. common stock in
                                       December 1995 (see Note 15). For
                                       financial reporting purposes, the portion
                                       of IRC'S assets involved in the
                                       transaction is deemed to be the acquiring
                                       entity. Since the Company had no
                                       significant assets or operations at the
                                       acquisition date, as required by the
                                       Securities and Exchange Commission, the
                                       accounts of the Company have been
                                       recorded at IRC's cost basis.	

F-23

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

The following unaudited pro forma information indicates what the revenues and net loss of the Company would have been if the acquisition had occurred on January 1, 1995:

                                       Revenues                     $    47,555
                                       ----------------------------------------

                                       Net loss                     $(1,393,520)
                                       ----------------------------------------

                                       Net loss per common share    $     (0.40)
                                       ----------------------------------------

4. Related Party Transactions          The Company has loans payable due to
                                       affiliates aggregating $48,190. A major
                                       stockholder of the Company is also a
                                       major stockholder of the affiliates. The
                                       loans bear interest at the rate of 8% per
                                       annum and are due on demand.

                                       During 1996, the Company converted
                                       approximately $1,060,000 of debt payable
                                       to IRC, a related party, to common stock
                                       and common stock subscribed (see Note
                                       15). The Company also converted
                                       approximately $100,000 of debt payable to
                                       a major stockholder to common stock
                                       subscribed (see Note 15).

5. Marketable Equity  Securities       Marketable securities were carried at the
                                       lower of cost or market. The marketable
                                       securities were acquired in the Purchase
                                       and Exchange Agreement with IRC on May 2,
                                       1995 and consisted of 500,000 shares of
                                       United Petroleum Corporation stock. The
                                       United Petroleum Corporation stock had a
                                       one-for-three reverse stock split on June
                                       13,1995 which left the Company with
                                       166,667 shares. The marketable securities
                                       were written down to market in 1995,
                                       resulting in a loss of approximately
                                       $594,000. The United Petroleum
                                       Corporation stock was sold in January
                                       1996 for $250,000.	

F-24

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

6.  Oil and Gas Properties   The following table sets forth
                             information concerning the Company's
                             oil and gas properties at December 31:

                                                          1996        1995
                             -----------------------------------------------
                             Evaluated                 $1,288,243   $654,258
                             Unevaluated                   26,317     15,352
                             -----------------------------------------------
                                                        1,314,560    669,610
                             Accumulation depreciation,
                             depletion and amortization   (27,418)   (11,528)
                             -----------------------------------------------
                                                       $1,287,142   $658,082
                             -----------------------------------------------

                             Evaluated costs excluded from
                             amortization at December 31, 1996 consist
                             of approximately $730,000 of costs
                             relating the Company's Swan Creek
                             development project which is awaiting the
                             completion of a gas pipeline expected to
                             be completed in the third quarter of 1997.

7.  Pipeline  Facilities     During the fourth quarter of 1996, the
    Under Construction       Company began construction of a 23-mile gas
                             pipeline which will (1) connect the Swan Creek
                             development project to a gas purchaser
                             and (2) enable the Company to develop gas
                             transmission business opportunities in
                             the future.

                             As of December 31, 1996, management
                             estimates the costs to complete the
                             pipeline are approximately $l,200,000.

                             In January 1997, the Company entered into
                             an agreement with the Tennessee Valley
                             Authority ("TVA") whereby the TVA will
                             allow the Company to bury the pipeline
                             within the TVA's transmission line
                             rights-of-way. In return for this right,
                             the Company paid $35,000 plus agreed to
                             annual payments of approximately $6,200
                             for 20 years. This agreement expires in
                             2017 at which time the parties may renew
                             the agreement for another 20 year term in
                             consideration of similar inflation-adjusted
                             payment terms.	

F-25

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

8. Property and Equipment Property and equipment consisted of the following:

                                                                                        1996         1995
                                       ------------------------------------------------------------------------------
                                       Machinery and equipment                        $245,756      $260,693
                                       Vehicles                                         83,299        85,455
                                       Other                                            42,113        20,991
                                       ------------------------------------------------------------------------------

                                                                                       371,168       367,139

                                       Less accumulated depreciation                  (167,924)     (119,738)
                                       ------------------------------------------------------------------------------

                                       Property and equipment - net                   $203,244      $247,401
                                       ------------------------------------------------------------------------------

9. Notes Payable

                                       Notes payable consisted of the following:
                                                                                        1996           1995
                                      ------------------------------------------------------------------------------

                                       Note payable to an
                                       investment company
                                       due May 1997 with
                                       interest payable
                                       monthly at 10% per
                                       annum; less
                                       unamortized discount
                                       of $123,750 relating
                                       to stock warrants
                                       issued; collateralized by a
                                       subordinated security
                                       interest in all
                                       assets of the Company (A).
                                                                                      $376,250        $  -

                                       Note payable to an
                                       individual due April
                                       1997 with interest

                                       payable monthly at
                                       10% per annum; less
                                       unamortized discount
                                       of $48,125 relating
                                       to stock warrants
                                       issued; collateralized by all
                                       assets of the Company (B).                      201,875           -

                                       Note payable to a
                                       company due April
                                       1997 with interest
                                       payable monthly at
                                       10% per annum; less
                                       unamortized discount
                                       of $48,125 relating
                                       to stock warrants
                                       issued; collateralized by all
                                       assets of the Company (A).                      201,875           -
                                       ------------------------------------------------------------------------------

                                                                                      $780,000        $  -
                                       ------------------------------------------------------------------------------	

F-26

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

In conjunction with the issuance of the notes payable listed above, the Company granted the lenders detachable stock warrants which enable the holder to obtain up to 200,000 shares of the Company's common stock at a price of $5 per share.
(A) These notes had not been repaid as of the above noted due dates. As noted in (C) below, the Company has filed a claim against the lenders.
(B) In March 1997, the individual note holder (above) filed a lawsuit asserting the Company was in default of the $250,000 note. This action seeks the principal amount, interest, and costs of collection. No additional costs have
been accrued in the accompanying consolidated financial statements in connection with this lawsuit. Management believes it has certain defenses to this motion as noted in (C) below.
(C) Also in March 1997, the Company filed a claim against the above three lenders and a former officer of the Company asserting that the Company did not authorize the issuances of certain stock warrants related to the borrowings and seeking rescission of the warrant agreements. The Company is disputing the validity of the stock warrant agreements based upon certain provisions which were not authorized by the board of directors. If the Company is unsuccessful in its attempt to rescind these stock warrant agreements, these provisions could result in the lenders obtaining additional shares.
F-27

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

10. Long Term Debt Long-term debt consisted of the following:

                                               1996           1995
--------------------------------------------------------------------
11% installment note, payable $667
monthly, including interest, due
December 2001, collateralized by a
vehicle                                        $30,563          $ -

10.7% installment note, payable $423
monthly, including interest, due May
2000, collateralized by a vehicle               14,466         17,800

12% installment note, payable $385
monthly, including interest, due April
2000, collateralized by a vehicle               12,545         15,500

10.5% installment note, payable $789
monthly, including interest, due
August 2000, collateralized by a vehicle           -           25,000

Loan payable to an equipment
supplier, due in monthly installments
of $5,300                                          -           15,900

Other                                            4,271         18,838
----------------------------------------------------------------------
Total long term debt                            61,845         93,038
Less current  maturities                       (14,017)       (34,038)
----------------------------------------------------------------------
Long term debt, less current maturities        $47,828        $59,000
----------------------------------------------------------------------	

F-28

                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                      Notes to Consolidated Financial Statements

--------------------------------------------------------------------------------

                                       The approximate future maturities of
                                       debt were as follows:

                                              Year                        Amount
                                       _________________________________________

                                              1997                      $ 14,017
                                              1998                        15,259
                                              1999                        14,849
                                              2000                        10,166
                                              2001                         7,554
                                       _________________________________________

                                                                         $61,845
                                       =========================================

11.  Commitments                       As of December 31, 1996, the future
                                       minimum payments to be made under	

noncancellable operating leases were:

        Year                       Amount
_________________________________________

       1997                      $ 51,000
       1998                        51,000
       1999                        51,000
       2000                        47,000
_________________________________________

                                 $200,000
=========================================	

Rent expense was approximately $54,000 and $5,000 for the years ended December 31, 1996 and 1995, respectively.
F-29

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

12. Stock Options Changes that occurred in options outstanding in 1996 and 1995 are summarized below:

                             1996                  1995
                   -----------------------  ------------------
                            Average                    Average
                           Exercise                   Exercise
                   Shares    Price           Shares    Price
 -------------------------------------------------------------

 Outstanding,
  beginning
  of year         1,791,849   $0.483               -   $    -
 Granted            730,000    5.566       1,825,000    0.479
 Exercised         (327,079)   0.275         (33,151)   0.275
Expired/canceled   (992,350)   0.275               -        -
                  ----------               ----------

 Outstanding
  end of year     1,202,420    3.295       1,791,849    0.483

 Exercisable
  end of year       538,805    1.882         562,260    0.427	

The following table summarizes information about stock options outstanding at December 31, 1996:

          Options Outstanding             Options Exercisable
 ---------------------------------------  -------------------
                     Average
 Exercise          Remaining    Average               Average
  Price            Contractual  Exercise             Exercise
  Range   Shares      Life       Price     Shares      Price
 ------------------------------------------------------------

$0.275   472,420   0.58 yrs.    $0.275    365,687      $0.275
 4.000-  730,000   1.19 yrs.     5.565    173,118       5.275
 6.375
         -------                          -------	

Total 1,202,420 0.95 yrs. 3.269 538,805 1.882

F-30

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

The fair value of stock options used to compute compensation expense to non-employees is the estimated present value at grant date using the Black-Scholes option-pricing model with the following weighted average assumptions for 1996 and 1995: expected volatility of 54% for both years; a risk-free interest rate of 5.21% in 1996 and 6.40% in 1995; and an expected option life of 2.45 years in 1996 and 2.25 years in 1995. The amount of compensation expense included in general and administrative costs in the accompanying consolidated statements of loss was approximately $372,000 and $45,000 at December 31, 1996 and 1995, respectively.
Statement of Financial Accounting Standards No. 123, (SFAS 123),
"Accounting for Stock-Based Compensation" was implemented in January 1996. As permitted by SFAS 123, the Company has continued to account for stock compensation to employees by applying the provisions of Accounting Principles Board Opinion No. 25. If the accounting provisions of SFAS 123 had been adopted, net loss and loss per share would have been as follows:

                    1996             1995
_________________________________________

Net loss
  As reported  $(1,761,064)  $(1,246,481)
  Pro forma     (1,932,628)   (1,307,960)
________________________________________

Loss per share
  As reported       $(.32)        $(0.36)
  Pro forma          (.36)         (0.38)
________________________________________	

For employees, the fair value of stock options used to compute pro forma net loss and loss per share disclosures is the estimated present value at grant date using the Black-Scholes option-pricing model with the following weighted average assumptions for 1996 and 1995: Expected volatility of 54% for both years; a risk free interest rate of 5.52% in 1996 and 6.32% in 1995; and an expected option life of 2.72 years in 1996 and 2.25 years in 1995.
F-31

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

13. Income Taxes                       The Company had no taxable income during
                                       the years ended December 31, 1996 and
                                       1995.

                                       A reconciliation of the statutory U.S.
                                       Federal income tax and the income tax
                                       provision included in the accompanying
                                       consolidated statements of loss is as	

follows:

Year ended December 31,                     1996          1995
----------------------------------------------------------------

Statutory  rate                                34%            34%
Tax (benefit) at statutory rate         $(599,000)     $(424,000)
State income tax (benefit)                (99,000)       (75,000)
Other                                       3,000         17,000
Increase in deferred tax asset
  valuation allowance                     695,000        482,000
----------------------------------------------------------------
Total income tax provision              $       -      $       -
----------------------------------------------------------------
The components of the net deferred tax assets and liabilities are
as follows:

Year ended December 31,                      1996           1995
----------------------------------------------------------------
Deferred tax asset:
 Basis  difference in marketable
  equity  securities                  $        -       $ 238,000
 Net operating loss carryforward          798,000        218,000
 Capital loss carryforward                238,000             -
 Accrued expenses                         223,000         39,000
----------------------------------------------------------------

                                        1,259,000        495,000

Valuation allowance                    (1,177,000)      (482,000)
----------------------------------------------------------------
                                           82,000         13,000
----------------------------------------------------------------

Deferred tax liability:
 Oil and gas properties                    81,000         13,000
 Property and equipment                     1,000              -
----------------------------------------------------------------
                                           82,000         13,000
----------------------------------------------------------------
Net deferred taxes                    $         -      $       -
----------------------------------------------------------------	

F-32

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

The Company recorded a valuation allowance at December 31, 1996 and 1995 equal to the excess of deferred tax assets over deferred tax liabilities as management is unable to determine that these tax benefits are more likely than not to be realized.
As of December 31, 1996, the Company had net operating loss carryforwards for federal income tax purposes of approximately $l,995,000 which will expire, if not utilized, as follows:

                                              Year            Amount
                      ----------------------------------------------------------
                                              2010          $ 546,000

                                              2011          1,449,000
                      ----------------------------------------------------------
                                              Total        $1,995,000
                      ----------------------------------------------------------

                                       Additionally, at December 31, 1996, the
                                       Company has a capital loss carryforward
                                       of approximately $594,000 which will
                                       expire, if not offset against a capital
                                       gain, in 2001.

14.  Subsequent Events                 In May 1997, the Company entered into a
                                       term loan with an individual for
                                       aggregate proceeds of $l,000,000 which
                                       the Company will receive at various
                                       times in the second and third quarters
                                       of 1997. The Company provided the lender
                                       with 100,000 shares of common stock as a
                                       loan origination fee. The loan, which
                                       is due December 31, 1997, bears interest
                                       at 11% per annum and is secured by
                                       equipment owned by a major shareholder
                                       of the Company. IRC is serving as
                                       guarantor on the loan facility. In
                                       conjunction with the loan agreement, the
                                       lender has an option to purchase 300,000
                                       shares of the Company's common stock
                                       from IRC.

                                       In May 1997, the Company entered into a
                                       joint venture agreement with Enserch
                                       Energy Services, Inc. ("EES") whereby
                                       the Company will share equally in the
                                       gross profit from any sales to customers	

the parties refer to each other for energy services. The agreement is in effect until 2002 at which time the Company and EES can continue the agreement for successive one-year terms.
F-33

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

15. Supplemental Disclosure of

    Cash Flows                         The Company paid approximately $26,000
                                       and $33,000 for interest in 1996 and
                                       1995, respectively. The Company paid $0
                                       for income taxes in 1996 and 1995.

                                       In 1996, the Company transferred
                                       property and equipment with a net book
                                       value of $46,539 to lenders in exchange
                                       for debt reductions aggregating $42,865
                                       resulting in a loss of $3,674.

                                       In 1996, the Company issued 114,466
                                       shares of common stock and common stock
                                       subscribed to extinguish approximately
                                       $1,060,000 of debt, which approximated
                                       fair value of the shares.

                                       In 1995, The Company issued 4,000,000
                                       shares of common stock and a $450,000 8%
                                       promissory note to IRC (see Note 3) to
                                       acquire approximately $l,752,000 of
                                       assets including property, plant, and
                                       equipment, oil and gas properties and
                                       marketable equity securities. The
                                       Company recorded these assets at the
                                       lower of market or IRC's historical
                                       cost basis, except for the marketable

                                       equity securities which were brought
                                       over at their lower market value.

                                       In 1995, the Company issued
                                       approximately 164,300 shares of common
                                       stock to extinguish approximately
                                       $882,000 of debt, which approximated
                                       fair value of the shares. The
                                       extinguished debt included the $450,000
                                       8% promissory note, discussed above.

16.  Supplemental  Oil
     and Gas Information               Information with respect to the
                                       Company's oil and gas producing
                                       activities is presented in the following
                                       tables. Estimates of reserve quantities,
                                       as well as future production and
                                       discounted cash flows before income
                                       taxes, were determined by Coburn
                                       Petroleum Engineering, independent
                                       petroleum engineer, as of December 31,
                                       1996 and 1995.

                                       Oil and Gas Related Costs

                                       The following table sets forth
                                       information concerning costs related to
                                       the Company's oil and gas property
                                       acquisition, exploration and development
                                       activities in the United States during
                                       the years ended December 31, 1996 and	

1995:
F-34

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

                                     1996            1995
----------------------------------------------------------

Property  acquisition
 Proved                         $   78,991        $607,809
 Unproved                           25,274          15,352
Less - proceeds from sales of
 properties                       (100,000)              -

Development costs                  673,022          43,210
-----------------------------------------------------------

                                 $ 677,287        $666,371
-----------------------------------------------------------	

Results of Operations from Oil and Gas Producing Activities
The following table sets forth the Company's results of operations from oil and gas producing activities for the years ended December 31, 1996 and 1995:

                                    1996             1995
-----------------------------------------------------------
Revenues                          $ 26,253        $ 27,802
Production costs and taxes         (17,138)        (20,072)
Depreciation, depletion and
  amortization                     (52,145)        (24,011)
-----------------------------------------------------------

Results of operations before
  income taxes                     (43,030)        (16,281)
Income taxes                             -               -
-----------------------------------------------------------

Results of operations from oil
 and gas producing activities     $(43,030)       $(16,281)
-----------------------------------------------------------	

In the presentation above, no deduction has been made for indirect costs such as corporate overhead or interest expense. No income taxes are reflected above due to the Company tax loss carryforwards. For the years ended December 31, 1996 and 1995, the depreciation, depletion and amortization rate per barrel of oil equivalent production was $20.16 and $90.84, respectively.
Oil and Gas Reserves (unaudited)
The following table sets forth the Company's net proved oil and gas reserves at December 31, 1996 and 1995 and the changes in net proved oil and gas reserves for the years then ended. Proved
F-35

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

reserves represent the estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in the future years from known reservoirs under existing economic and operating conditions. The reserve information indicated below requires substantial judgment on the part of the reserve engineers, resulting in estimates which are not subject to precise determination. Accordingly, it is expected that the estimates of reserves will change as future production and development information becomes available and that revisions in these estimates could be significant.

                                         Oil (bbls)           Gas (Mcf)
------------------------------------------------------------------------
Proved reserves
 Balance,  January 1, 1995                       -                   -
  Acquisition of proved reserves           101,565           5,337,978
  Production                                     -              (1,586)
------------------------------------------------------------------------

 Balance,  December 31,  1995              101,565           5,336,392
  Discoveries and extensions                     -          17,212,571
  Revisions of previous estimates                -              33,902
  Production                                     -             (15,510)
-------------------------------------------------------------------------
 Balance, December 31, 1996                101,565          22,567,355
-------------------------------------------------------------------------

Proved developed non-producing
 reserves at, December 31, 1996                  -           7,167,350
-------------------------------------------------------------------------
Proved developed non-producing
 reserves at, December 31, 1995                  -           2,536,388
-------------------------------------------------------------------------	

Of the Company's total proved reserves as of December 31, 1996, approximately 31% were classified as proved developed nonproducing and approximately 69% were classified as proved undeveloped. All of the Company's reserves are located in the continental United States.
F-36

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

Standardized Measure of Discounted Future Net Cash Flows (unaudited)
The standardized measure of discounted future net cash flows from the Company's proved oil and gas reserves at December 31, 1996 and 1995 is presented in the following table:

                                                                1996                   1995
---------------------------------------------------------------------------------------------
Future cash inflows                                     $84,106,507             $11,892,672
Future production costs and taxes                        (6,219,598)             (1,818,322)
Future  development costs                                (5,775,000)               (600,000)
Future income tax expenses                              (18,909,520)             (2,156,985)
---------------------------------------------------------------------------------------------
Net future cash flows                                    53,202,389               7,317,365

Discount at 10% for timing of cash flows                (22,823,876)             (3,653,903)
---------------------------------------------------------------------------------------------
Discounted future net cash
  flows from proved reserves                             30,378,513              $3,663,462
---------------------------------------------------------------------------------------------
The following table sets forth the
changes in the standardized measure of
discounted future net cash flows from
proved reserves during 1996 and 1995:
                                                               1996                     1995
---------------------------------------------------------------------------------------------
Balance, beginning of year                              $ 3,663,462              $         -
---------------------------------------------------------------------------------------------
Sales, net of production costs
 and taxes                                                   (9,115)                  (7,730)
Acquisition of proved reserves                                    -                4,665,382
Discoveries and extensions                               33,874,577                        -
Changes in prices and
 production costs                                         2,374,267                        -
Revisions of quantity estimates                              42,164                        -

Net change in income taxes                               (9,975,394)                (994,190)
Interest factor - accretion of discount                     465,765                        -
Changes in production  rates
 and other                                                  (57,213)                       -
---------------------------------------------------------------------------------------------
Balance, end of year                                    $30,378,513               $3,663,462
---------------------------------------------------------------------------------------------	

F-37

Tengasco, Inc.
 (formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements

Estimated future net cash flows represent an estimate of future net revenues from the production of proved reserves using current sales prices, along with estimates of the operating costs, production taxes and future development and abandonment costs (less salvage value) necessary to produce such reserves. The average prices used at December 31, 1996 and 1995 were $19.10 and $17.00 per barrel of oil and $2.94 and $l.91 per mcf of gas, respectively.
No deduction has been made for
depreciation, depletion or any indirect
costs such as general corporate overhead
or interest expense.
Operating costs and production taxes are
estimated based on current costs with
respect to producing gas properties.
Future development costs are based on
the best estimate of such costs assuming
current economic and operating
conditions.
Income tax expense is computed based on
applying the appropriate statutory tax
rate to the excess of future cash
inflows less future production and
development costs over the current tax
basis of the properties involved, less
applicable carryforwards, for both
regular and alternative minimum tax.
The future net revenue information
assumes no escalation of costs or
prices, except for gas sales made under
terms of contracts which include fixed
and determinable escalation. Future
costs and prices could significantly
vary from current amounts and,
accordingly, revisions in the future
could be significant.
F-38

TENGASCO, INC.
 (formerly Onasco Companies, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended
June 30, 1997
F-39

TENGASCO, INC.
 (formerly Onasco Companies, Inc)
CONTENTS

Consolidated Financial Statements

     Balance sheets                                  2

     Statements of loss                              3

     Statements of stockholders' equity              4

     Statements of cash flows                        5

     Notes to financial statements                   6	

F-40

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

Balance Sheets
June 30, 1997
ASSETS

                                                June 30,        December 31,
                                                  1997             1996
                                              (Unaudited)        (Audited)
                                             -------------     -------------
Current Assets:
  Cash and cash equivalents                  $     220,937     $     146,554
  Accounts Receivable                                2,561             4,658
  Other current assets                               3,076             7,463
                                             -------------     -------------

Total current assets                               226,574           158,675

Oil and gas properties, net (on the basis
  of full cost accounting)                       1,351,798         1,287,142
                                             -------------     -------------

Pipeline facilities, under construction,
  at cost                                        1,167,192           887,315

Property and equipment, net                        235,791           203,244

Other                                               18,901           190,845
                                             -------------     -------------	

$ 3,000,256 $ 2,727,221

The accompanying notes are an integral part of these financial statements
F-41

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)

CONSOLIDATED BALANCE SHEETS
 June 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY

                                                June 30,       December 31,
                                                  1997             1996
                                              (Unaudited)       (Audited)
                                              -----------      -------------

Current liabilities

  Notes payable                               $  1,750,000     $    780,000
  Loans payable to affiliates                            0           48,190
  Current maturities of long-term debt              24,742           14,017
  Accounts payable - trade                         249,916          347,093
  Accrued liabilities                               62,769           35,086
                                              ------------     ------------
Total current liabilities                        2,087,427        1,224,386

Long term debt, less current maturities             85,137           47,828
                                              ------------     ------------
Total liabilities                                2,172,564        1,272,214
                                              ------------     ------------

Stockholders' equity

  Common stock, $.001 par value,
    50,000,000 shares authorized                     6,123            5,708
  Additional paid-in capital                     5,400,615        4,783,369
  Unamortized stock award                         (179,377)        (292,186)
  Deficit                                       (4,399,669)      (3,041,884)
                                              -------------     ------------
Total stockholders' equity                         827,692        1,455,007
                                              -------------    -------------

                                              $  3,000,256     $  2,727,221
                                              =============    =============	

The accompanying notes are an integral part of these financial statements
F-42

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)
STATEMENT OF LOSS
 (Unaudited)

                                             For the Six      For the Six
                                            Months ended     Months ended
                                              June 30,         June 30,
                                                1997             1996
                                            ------------     ------------

Revenues:
  Oil and gas revenues                       $        0       $   18,400
                                             ----------       ----------

        Total Revenues                                0           18,400
                                             ----------       ----------

Costs and other deductions
  Field Expenses                                 41,718            6,103
  Depletion, depreciation and amortization       33,296           40,860
  Amortization of deferred loan costs           170,833                0
  Interest expense                              300,322            7,001
  General and administrative costs              811,606          641,800
                                             ----------       ----------
Total costs and other deductions              1,357,785          695,764
                                             ----------       ----------
Net loss                                     (1,357,785)        (677,364)
----------------------------------           ----------       ----------
Loss per share of common stock                     (.24)            (.12)
----------------------------------           ==========       ==========	

The accompanying notes are an integral part of these financial statements
F-43

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 (Unaudited)

                                                                                    Additional     Unamortized
                                                              Common Stock            Paid-in         Stock
                                                           -------------------        Capital         Award            Deficit
                                                           # Shares     Amount       ----------    ------------       --------
                                                           ---------    ------

Balance December 31, 1996                                5,707,827     $5,708        $4,783,369   $(292,186)        $(3,041,884)

  Common Stock issued for exercised options                330,305        329            90,504

  Common stock subscribed for the
    extinguishment of debt                                  86,084         86           484,135

  Stock option award                                                                     30,000     (30,000)

  Amortization of stock award                                                           (69,061)    142,809

  Common stock options issued                                                            81,668

  Net loss for period ended June 30, 1997                                                                            (1,357,785)
---------------------------------------------------------------------------------------------------------------------------------

Balance June 30, 1997                                    6,124,216     $6,123        $5,400,615   $(179,377)        $(4,399,669)
                                                         =========     ======        ==========   ==========        ============	

The accompanying notes are an integral part of these financial statements
F-44

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)

                                             For the Six          For the Six
                                            Months Ended         Months Ended
                                            June 30, 1997        June 30, 1996
                                           --------------       --------------
Operating activities
  Net loss                                 $   (1,357,785)      $     (677,364)
  Adjustments to reconcile net loss to
  cash used in operating activities:
   Depletion, depreciation and amortization        33,296               40,860
   Amortization of deferred loan costs            170,833                    0
   Amortization of imputed value of stock
    warrants issued                               220,000                    0
   Compensation paid in stock options             155,416              119,200
   Changes in assets and liabilities:
     Accounts receivable                            2,097                4,818
     Prepaid expenses and other                     4,387              (49,310)
     Accounts payable                             (97,177)             223,812
     Accrued liabilities                           27,683                1,605
     Stockholder advances payable                 (48,190)                   0
                                           --------------       --------------

Cash used in operating activities                (889,440)            (336,379)
                                           --------------       --------------

Investing activities
  Proceeds from sale of marketable equity
   secuurities                                          0              250,000
  Additions to property and equipment             (64,735)             (18,935)
  Additions to oil and gas properties             (64,656)            (610,740)
  Additions to pipeline facilities               (279,877)                   0
                                           --------------       --------------

Cash used in investing activities                (409,268)            (379,675)
                                           --------------       --------------

Financing activities
  Proceeds from borrowings                        809,387               27,750
  Repayments of borrowings                        (11,350)              (5,350)
  Proceeds from issuance of common stock          575,054              685,200
                                           --------------       --------------

Cash provided by financing activities      $    1,373,091        $     707,600
                                           --------------       --------------

Net increase (decrease) in cash and cash
  equivalents                                      74,383               (8,454)

Cash and cash equivalents, beginning of
  period                                          146,554                  712

Cash and cash equivalents, end of period   $      220,937        $      (7,742)
                                           ==============        =============	

The accompanying notes are an integral part of these financial statements
F-45

TENGASCO, INC.
 (Formerly Onasco Companies, Inc.)
Notes to Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form l0-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the Company's consolidated financial statements and footnotes thereto for the year ended December 31, 1996, included in Form 10-SB, which are incorporated by reference herein.
F-46

PART III
Item 1. Index to Exhibits.
The following exhibits are filed as a part of this Registration Statement:

Number                      Description

 3.1             Initial Articles of Incorporation

 3.2             Bylaws

 3.3             Articles of Amendment dated April 12, 1966

 3.4             Articles of Amendment dated July 12, 1984

 3.5             Articles of Amendment dated December 18, 1991

 3.6             Articles of Amendment dated September 11, 1992

 3.7             Articles of Incorporation of the Tennessee wholly-owned
                 subsidiary **

 3.8             Articles of Merger and Plan of Merger (taking into account
                 the formation of the Tennessee wholly-owned subsidiary for
                 the purpose of changing the Company's domicile and effecting
                 reverse split)

 5.1             Opinion or Robson & Miller, LLP

10.1(a)          Purchase Agreement with IRC

10.1(b)          Amendment to Purchase Agreement with IRC

10.1(c)          General Bill of Sale and Promissory Note

10.2(a)          Compensation Agreement - M. E. Ratliff

10.2(b)          Compensation Agreement - Jeffrey D. Jenson

10.2(c)          Compensation Agreement - Leonard W. Burningham, Esq.

10.3             Agreement with The Natural Gas Utility District of Hawkins
                 County, Tennessee

10.4             Agreement with Powell Valley Electric Cooperative, Inc.

10.5             Agreement with Enserch Energy Services, Inc.	

61

16.1             Letter of David T. Thompson, CPA, Regarding
                 Change in Certifying Accountant

16.2             Letter of Charles M. Stivers, CPA, Regarding
                 Change in Certifying Accountant

16.3             Letter of Price-Bednar, LLP, CPA, Regarding
                 Change in Certifying Accountant

23.1             Consent of Charles M. Stivers, CPA

23.2             Consent of David T. Thomson, CPA

23.3             Consent of BDO Seidman, LLP

23.4             Consent of Robson & Miller, LLP

99.1             Beech Creek Lease Schedule

99.2             Wildcat Lease Schedule

99.3             Burning Springs Lease Schedule

99.4             Fentress County Lease Schedule

99.5             Swan Creek Lease Schedule

99.6             Alabama Lease Schedule

99.7             Coburn Engineering Report	

* Summaries of all exhibits contained within this Registration Statement are modified in their entirety by reference to these Exhibits.
** These are form documents much of which are substantially handwritten and may be illegible. The best available copy thereof has been filed with the SEC and copies may be obtained from the principal executive offices of the Company at no charge.
62

SIGNATURES
In accordance with the requirements of the Securities Act of 1993, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing of Form 10-SB and authorized this registration statements on its behalf by the undersigned, thereunto duly authorized, in the City of Knoxville, State of Tennessee on the 30 day of July, 1997.
Tengasco, Inc.

By: /s/ Michael E. Ratliff
    -----------------------
    Michael E. Ratliff	

In accordance with the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates stated.

    Signature                  Title                       Date

/s/ Michael E. Ratliff        Chief Executive         July 29, 1997
-------------------------     Officer
    Michael E. Ratliff

/s/ Allen H. Sweeney          Chairman of the Board   July 29, 1997
-------------------------     of Directors
    Allen H. Sweeney

/s/ Daniel G. Follmer         President and Chief     July 29, 1997
-------------------------     Financial Officer
    Daniel G. Follmer

/s/ Joseph Earl Armstrong     Director                July 29, 1997
-------------------------
    Joseph Earl Armstrong

/s/ James B. Kreamer          Director                July 29, 1997
-------------------------
    James B. Kreamer

/s/ William A. Moffett        Director                July 29, 1997
-------------------------
    William A. Moffett	

63

    Signature                  Title                       Date

/s/ Shigemi Morita            Director                July 29, 1997
----------------------
    Shigemi Morita

/s/ Robert M. Carter          Executive               July 29, 1997
-----------------------       Vice-President
    Robert M. Carter

/s/ Sheila F. Sloan           Treasurer               July 29, 1997
-----------------------
    Sheila F. Sloan

/s/ Elizabeth Wendelken       Secretary               July 29, 1997
-----------------------
    Elizabeth Wendelken	

64

EXHIBIT 3.1

11835
Articles of Incorporation
OF THE

GOLD DEPOSIT MINING & MILLING COMPANY                  [LOGO] Mining Company

United States of America,
State of Utah,	

County of Cache
For the purpose of establishing and conducting the business of mining and reduction of ores, the undersigned do hereby associate themselves together by incorporating under and in pursuance of the Laws of the State of Utah, and do declare and agree as follows, that is to say:
I.
That the said Corporation shall be called and known by the name of GOLD DEPOSIT MINING & MILLING COMPANY and shall be and is formed and organized at Logan, Cache County, State of Utah in which said City shall be located its principal and general office for the transaction of its official, financial, general and commercial business; and the period of its existence shall be fifty years, unless sooner dissolved according to law.
II.
That the names of the parties in this agreement, who are the Corporators of this Incorporation, and their places of residence respectively, in full, are as follows, to wit:

  Robert  Murdock Sen.        Logan, Cache County, State of Utah
-------------------------------------------------------------------------------
  Robert Murdock Jr.          Logan, Cache County, State of Utah
-------------------------------------------------------------------------------
  Haskell Engineering Co.     Salt Lake City, State of Utah
-------------------------------------------------------------------------------
  William Green               Salt Lake City, State of Utah
-------------------------------------------------------------------------------
  E. Green                    Salt Lake City, State of Utah
-------------------------------------------------------------------------------
  J. A. Crockett              Logan, Cache County, State of Utah
-------------------------------------------------------------------------------	

III.
That the business and pursuit of this Corporation, and the objects for which it is established are, and shall continue to be, to carry on and conduct a
general Mining, Milling, Leaching, Concentrating, Ore reducing and Smelting business.
To examine, prospect and explore, and to work, develop, mine and extract ores and minerals from lands, mines, works, options and claims.
To erect mills, smelters and reduction works in any suitable place, and also any buildings, tramways, electric power, telegraph or telephone lines, water ditches, pipe lines or works necessary or convenient for the purposes of the company.
To purchase, or otherwise acquire, ores, and mineral-bearing substances, tailings and concentrates, and to smelt and reduce the same, as well as the ores and products extracted or produced from the property of the Company.
To acquire any invention, or the right or license to use any invention, capable of being used for any of the purposes of the Company.

2
Generally, to purchase, take or lease or in exchange, hire, locate, or otherwise acquire any real and personal property, and any rights or privileges which the Company may think necessary or convenient for the purposes of its business; and in particular, any lands, mines, works, options, claims, buildings, mills, reduction works, water, water rights, ditches, pipe-lines, tramways, electric power, telegraph and telephone lines, licenses, easements and privileges.
To improve, develop, sell, convey, lease, mortgage, dispose of, turn to account or otherwise deal with all or any part of the property or rights of the Company. To do all such other things as are incidental or conducive to the attainment of the above objects, or any of them.
IV.
The amount of the Capital Stock of said Corporation shall be One Hundred Thousand ($100,000.00) Dollars, which shall be divided into One Million (1,000,000.00) Shares, of the face or par value of Ten cents each.
V.
The amount of stock subscribed and taken by each of the Corporators above named, parties to this agreement, is as follows, to wit:

  Robert Murdock Sen.                 315,000.00
-------------------------------------------------------------------------------
  Robert Murdock Jr.                  163,000.00
-------------------------------------------------------------------------------
  Haskell Engineering Co.             119,000.00
-------------------------------------------------------------------------------

  William Green                         1,000.00
-------------------------------------------------------------------------------
  E. Green                              1,000.00
-------------------------------------------------------------------------------
  J. A. Crockett                        1,000.00
-------------------------------------------------------------------------------
  Remaining in the treasury           400,000.00
-------------------------------------------------------------------------------	

VI.
That the officers of said Company shall be: First, a Board of Five Directors. Second, a President; Third, a Vice-President; Fourth, a Treasurer; Fifth, a Secretary.

Said offices of Treasurer and Secretary may be held by the same person. The President, Vice-President, and Treasurer, shall be Directors.
VII.
That the qualification of the officers of said Corporation shall be as follows: To be elegible to the office of Director, President, Vice-President or Treasurer, the person must be the owner, as shown by the books of the Corporation, of at least One Thousand shares of the Capital Stock of said Corporation. A person need not be a stockholder of said Corporation to be eligible to the office of Secretary thereof.
The term of office of said officers of said Corporation shall be one year and until their successors shall be duly elected and qualified, unless sooner resigned or removed, and any vacancy in the Board of Directors may be filled by the remaining members thereof, and any vacancy in any of the other offices may be filled by the Board of Directors until the next regular meeting of the Stockholders, provided, that the following named persons, parties hereto, shall be Directors of said Corporation from the date of incorporation hereof, until their successors shall have been duly elected at the first regular election of said Corporation, as hereinafter provided, and shall have duly qualified, namely:
Robert Murdock Sen., Robert Murdock Jr., Wm. Green, E. Green and J. A. Crockett and that the said Robert Murdock Sen. shall be President; the said E. Green, Vice-President; the said Robert Murdock Jr., Treasurer, and the said Robert Murdock Jr., Secretary.
From the date hereof until their successors shall have been duly elected at the first regular (illegible) of officers of said Corporation, as hereinafter provided, and shall have duly qualified.

3
VIII.
The first meeting of the stockholders of said Corporation for the election of officers, being the first annual meeting, shall be held as above provided, on the Second day of January 1917, and it is hereby provided, that a failure to hold said last named meeting, or any annual meeting of the stockholders of said Corporation, at the day appointed, shall not forfeit or in any way interfere with the corporate rights acquired under this agreement, but any such meeting may be held at any subsequent time upon call and giving notice as provided by law. Such notice must specify the purpose or purposes for which any special meeting is called. No notice shall be required of stated or annual meetings.
IX.
That any or either of the officers of said Corporation may be removed by the holders of a majority of the capital stock of said Corporation voting therefor at a stockholders' meeting, duly called and held to consider the question of such removal, and any or either of said officers may resign by filing a written resignation in the general office of said Corporation.
X.
That three members of the entire Board of Directors, provided in Article VI of this Agreement, shall constitute a quorum thereof, and be authorized to transact the business of said Corporation, and exercise its corporate powers.
XI.
That the private property of the stockholders shall not be liable for the debts or obligations of said Corporation.
XII.
That said Corporation shall, and hereby does, purchase, take, receive and hold the following described mining property, with appurtenances, privileges and franchises, situated in The Battle Mountain Mining District, Lander County, State of Nevada, in full payment of and for the Six Hundred Thousand (600,000.) shares of the Capital Stock of the Corporation, issued in pursuance to this agreement, to wit: The Greenwitch, the Gold Flake, the Seal, the Hardy, the Silver Dipper, the Carbonate Hill, the Gold Metal, the Triangle, the Republic, lode mining claims, and undivided one half interest in, to and of the Buzzard Lode Mining Claim, all situate in said Battle Mountain Mining District.

STATE OF UTAH )
COUNTY OF CACHE ) ss.
Robert Murdock Sen. and Robert Murdock Jr. and John A. Crockett being first severaly duly sworn, each for himself says: That they and each of them are parties to the foregoing Articles of Agreement for the incorporation of the Gold Deposit Mining & Milling Company: That all of the said incorporators are residents of the State of Utah: That it is bona fide their intention to commence
and carry on the business mentioned in said agreement: That affiants, and each of them, verily believe that each and all parties to said agreement have paid the full amount of the stock subscribed for by them, and each of them respectively, in manner and form as therein set forth, and that the full par value of said Capital Stock has been paid in manner and form as set forth in said agreement, and that all the statements made in said agreement are true.

/s/ Robert Murdock
-----------------------------

/s/ Robert Murdock Jr.
-----------------------------

/s/ John A. Crockett
-----------------------------	

Subcribed and sworn to before me this 12th day of April, [illegible]

[SEAL]                                        /s/ [illegible]
                                              ------------------------------
                                                             Notary Public
My Commission expires  March 15th, 1920	

STATE OF UTAH )
COUNTY OF CACHE ) ss.
On the 16th day of April A.D. 1916 personally appeared before me Robert Murdock Sen. and Robert Murdock Jr., the signers of the above investment, who duly acknowledged to me that they executed the same.

[SEAL]                                        /s/ [illegible]
                                              ------------------------------
                                                             Notary Public
My Commission expires  March 15th, 1920	

STATE OF UTAH )
COUNTY OF CACHE ) ss.
I, the undersigned County Clerk, in and for the County of Cache, State of Utah, do hereby certify that the foregoing is a full, true and correct copy of the Articles of Incorporation of the Gold Deposit Mining and Milling Company and the oath of affirmation of the Incorporators, and I further certify that the said corporation has duly filed in my office the Articles of Incorporations, together with the oath of affirmation of the incorporators and oath of office of each officer, as required by Chapter 1 of Title 14, Complied Laws of Utah, 1907.
In witness whereof I have hereunto set my hand and affixed my official seal
this 24 day of April A.D. 1916.

  /s/ [illegible]
  -------------------------------
                     County Clerk

By /s/ [illegible]
  -------------------------------
                    Deputy Clerk	

[SEAL]

EXHIBIT 3.2

BY-LAWS
OF
TENGASCO, INC.
ARTICLE I- OFFICES
The principal office of the corporation in the State of Tennessee shall be located in the Medical Arts Building, 603 Main Avenue, Suite 500, Knoxville, Tennessee, County of Knox. The corporation may have such other offices, either within or without the State of incorporation as the board of directors may designate or as the business of the corporation may from time to time require.
ARTICLE II- STOCKHOLDERS
1. ANNUAL MEETING
Unless the date is designated to the contrary by the Board of Directors or its Executive Committee, the annual meeting of the stockholders shall be held on the 13th day of March in each year, beginning with the year 1996 at the hour ten o'clock A.M., for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday such meeting shall be held on the next succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president by a majority of the directors or by the Chairman of the Board of Directors, and shall be called by the president at the request of the holders of not less than 25 per cent of all the outstanding shares of the corporation entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State unless otherwise prescribed by statute, as the place of meeting for any annual meeting or for any special meeting called by the directors. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any place, either within or without the State unless otherwise prescribed by statute, as the place for holding such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation.
by-laws 1

4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 30 nor more than 90 days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, 5 days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least 2 days immediately preceding such meeting. In lieu of closing the stock transfer books, the directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than 5 days and, in case of a meeting of stockholders, not less than 5 days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least 2 days before each meeting of stockholders, a complete list of the stockholders and/or trustees of stockholders voting trust entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of the number of shares held by each, which list, for a period of 30 days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list
by-laws 2

shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer books or to vote at the meeting of stockholders.
7. QUORUM.
At any meeting of stockholders fifty one per cent of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than said number of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting.
9. VOTING.
Each stockholder and/or trustee of stockholders voting trust entitled to vote in accordance with the terms and provisions of the certificate of incorporation and these by-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholders or Trustee. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as follows.
1. Roll Call
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
by-laws 3

5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a meeting of the stockholders, or any other action which may be taken at a meeting of the stockholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board of directors. Subject to have provisions of Art. III, 13 herein, the directors shall in all cases act as a board, and they may adopt such rules and regulations for the conduct of their meetings and the management of the corporation, as they may deem proper, not inconsistent with these by-laws and the laws of this State. The board shall elect a Chairman from its members, who shall act as the presiding officer at all board meetings.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be 4. All directors shall serve one year terms. Each director shall hold office until the next annual meeting of stockholders and until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of stockholders. The directors may provide, by resolution, the time, place and manner for the holding of additional regular meetings without other notice than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be collectively called by or at the collective request of the president, any two directors. The person or persons
by-laws 4

authorized to call special meetings of the directors may fix the place for holding any special meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least 30 days previously thereto by written notice delivered personally, or by telegram or mailed to each director at his business address. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.
6. QUORUM.
At any meeting of the directors 4 shall constitute a quorum for the transaction of business, but if less than said number is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. The directors may provide that quorum requirements may be satisfied by directors present to be telephonically.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board for any reason except the removal of directors without cause may be filled by a vote of a majority of the directors then in office, although less than a quorum exists. Vacancies occurring by reason of the removal of directors without cause shall be filled by vote of the stockholders. A director elected to fill a vacancy caused by resignation, death or removal shall be elected to hold office for the unexpired term of his predecessor.
by-laws 5

9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by majority vote of the board. Directors may be removed without cause by majority vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board, the president or the secretary of the corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the board of such officer, and the acceptance of the resignation shall not be necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services, but by resolution of the board a fixed sum and expenses for actual attendance at each regular or special meeting of the board may be authorized. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive committee and other committees, each consisting of three or more directors. Each such committee shall serve at the pleasure of the board. The board may vest its executive committee with all powers and authority the board deems appropriate, consistent with State corporate Law. The Chairman of the Board shall serve as an ex officio member of every committee of the board.
by-laws 6

ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a secretary and a treasurer, each of whom shall be elected by the directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be elected annually at the first meeting of the directors held after each annual meeting of the stockholders. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed by a majority vote of the directors without cause at any time, however such removal shall not prejudice the employment contract rights with the corporation, if any, of the person removed. All officers serve at the pleasure of the board.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the directors for the unexpired portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation and, subject to the control of the directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the stockholders. He may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the directors or by these by-laws to some other
by-laws 7

officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the directors from time to time.
6. VICE PRESIDENT.
In the absence of the president or in event of his death, inability or refusal to act, the vice-president shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-president shall perform such other duties as from time to time may be assigned to him by the president and directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the directors' meetings in one or more books provided for that purpose, see that all notices are duly given in accordance with the provisions of these by-laws or as required, be custodian of the corporate records and of the seal of the corporation and keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder, have general charge of the stock transfer books of the corporation and in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the directors shall determine. He shall have charge and custody of and be responsible for all funds and securities of the corporation; receive and give resource whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with these by-laws and in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the directors.
9. SALARIES.
The salaries compensation of the officers shall be fixed from time to time by the directors and no officer shall be prevented from receiving such salary or compensation by reason of the fact that the officer also a director of the corporation.
by-laws 8

ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to
specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the directors may select.
ARTICLE VI- CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form as shall be determined by the directors. Such certificates shall be signed by the president and by the secretary or by such other officers authorized by law and by the directors. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the stockholders, the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the
by-laws 9

former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the directors may prescribe.
2. TRANSFER OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation which shall be kept at its principal office.
(b) The corporation shall be entitled to treat the holder of record of any share as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 30th day of December in each year.
ARTICLE VIII- DIVIDENDS
The directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation, the state of incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be given to any stockholder or director of the corporation under the provisions of these by-laws or under the provisions of the articles of incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
by-laws 10

ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be adopted by a vote of the stockholders representing a majority of all the shares issued and outstanding, at any annual stockholders' meeting or any special stockholders' meeting when the proposed amendment has been set out in the notice of such meeting.
by-laws 11

EXHIBIT 3.3

ARTICLES OF AMENDMENT TO THE [SEAL]
ARTICLES OF INCORPORATION OF
Gold Deposit Mining & Milling Company
Pursuant to the provisions of Section 16-10-57 of the Utah Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Gold Deposit Mining & Milling Company.
SECOND: The following amendment of the Articles of Incorporation was adopted by the shareholders of the corporation on April 1, 1966, in the manner prescribed by the Utah Business Corporation Act.
(Insert or attach Amendment)
RESOLVED that Article I of the Articles of Incorporation of Gold Deposit Mining & Milling Company be and hereby is amended so as to read as follows:
[ILLEGIBLE]
I
"That the said corporation shall be called and known by the name of GOLD DEPOSIT MINING & MILLING COMPANY, and the period of its existence shall be perpetual."
THIRD: The number of shares of the corporation outstanding at the time of such adoption was 983,015; and the number of shares entitled to vote thereon was 983,015.

[ILLEGIBLE]
FIFTH: The number of shares voted for such amendment was 701,145; and the number of shares voted against such amendment was: None.
SIXTH: The number of shares of stock [ILLEGIBLE] entitled to vote thereon as a class voted for and against such amendment, respectively was: None
[ILLEGIBLE]
SEVENTH: the manner, if not set forth in such amendment, in which any exchange, reclassification, or [ILLEGIBLE] provided for in the amendment shall be effected, is, [ILLEGIBLE]
No change
EIGHTH: [ILLEGIBLE] in the amount of stated capital, and the amount of [ILLEGIBLE], by such amendment, are as follows. [ILLEGIBLE]
No change
Dated April 9, 1966.
Gold Deposit Mining & Milling Company (Note 3)

/s/ [ILLEGIBLE]                      )
its President                        )
                                     )(Note 4)
/s/ [ILLEGIBLE]                      )
its Secretary and                    )
    Treasurer                        )	

State of Utah )
County of Salt Lake ) ss
I, [ILLEGIBLE], notary public, do hereby certify that on this 11th day of April, 1966, personally appeared before me J.W. Andrews [ILLEGIBLE]

/s/ [ILLEGIBLE]	

and Treasurer of the corporation, and that the statements therein contained are true.
In witness whereof I have hereunto set my hand and seal this 11th day of April, A.D. 1966.
My commission expires May, 14, 1967.

/s/ [ILLEGIBLE]
Notary Public	

Notes: 1. If inapplicable, insert "None".
2. If inapplicable, insert "No change".
3. Exact corporate name of corporation adopting the Articles of Amendment.
4. Signatures and titles of officers signing for the corporation.

EXHIBIT 3.4

STATE OF UTAH
[STAMP]
Office of Lt. Governor/Secretary of State
CERTIFICATE OF AMENDMENT
OF
GOLD DEPOSIT MINING & MILLING COMPANY
I, DAVID S. MONSON, Lt. Governor/Secretary of State of the State of Utah, hereby certify that duplicate originals of Articles of Amendment to the Articles of Incorporation of
GOLD DEPOSIT MINING & MILLING COMPANY
duly signed and verified pursuant to the provisions of the Utah Business Corporation Act, have been received in my office and are found to conform to law.
ACCORDINGLY, by virtue of the authority vested in me by law, I hereby issue this Certificate of Amendment to the Articles of Incorporation of
GOLD DEPOSIT MINING & MILLING COMPANY
and attach hereto a duplicate original of the Articles of Amendment.
File No. 11835
IN TESTIMONY THEREOF, I have
 hereunto set my hand and affixed the
Great Seal of the State of Utah at Salt
Lake City, this l2th day of
July 1984 A.D.

          /s/ David S. Monson
----------------------------------------
     LT. GOVERNOR/SECRETARY OF STATE	

ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
GOLD DEPOSIT MINING & MILLING COMPANY
Pursuant to the provisions of Section 16-10-57 of the Utah Business
Corporation Act, the undersigned corporation hereby adopts the following Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Gold Deposit Mining & Milling Company.
SECOND: The following amendments to the Articles of Incorporation of Gold Deposit Mining & Milling Company were duly adopted by the shareholders of the corporation at meetings held October 3, 1983, and July 9, 1984, in the manner prescribed by the Utah Business Corporation Act, to-wit:
ARTICLE III - PURPOSES
a. To conduct business in all fields of high technology, including medical, computer, and any other business or enterprise deemed to be beneficial to the corporation.
b. To acquire by purchase, exchange, gift, bequest, subscription or otherwise, and to hold, own, mortgage, pledge, hypothecate, sell, assign, transfer, exchange or otherwise dispose of or deal in or with its own corporate securities or stock or other securities, including without limitations, any shares of stock, bonds, debentures, notes, mortgages, or other obligations, and any certificates, receipts or other

-2-
instruments representing rights or interests therein or any property or assets created or issued by any person, firm, association, or corporation, or any government or subdivisions, agencies or instrumentalities thereof; to make payment therefor its own securities or to use its unrestricted and unreserved earned surplus for the purchase of its own shares, and to exercise as owner or holder of any securities, any and all rights, powers and privileges in respect thereof.
c. To do each and every thing necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any one or more of the subjects herein enumerated, or which may at any time appear conducive to or expedient for protection or benefit of this corporation, and to do said acts as fully and to the same extent as natural persons might, or could do, in any part of the world as principals, agents, partners, trustees or otherwise, either alone or in conjunction with any other person, association or corporation.
d. The foregoing clauses shall be construed both as purposes and powers and shall not be held to limit or restrict in any manner the general powers of the corporation, and the enjoyment and exercise thereof, as conferred by the laws of the State of Utah; and it is the intention that the purposes and powers specified in each of the paragraphs of this Article III shall be regarded as independent purposes and powers.
ARTICLE IV - CAPITAL STRUCTURE
The aggregate number of shares which this corporation shall have authority to issue is 50,000,000 shares of one mill ($0.001) par value.

-3-
All stock of the corporation shall be of the same class, common, and shall have the same rights and preferences. Fully-paid stock of this corporation shall not be liable to any further call or assessment. The Board of Directors is authorized to establish other stock classes than common, to convert treasury or unissued shares to other classes, and to fix and determine the relative rights with respect to shares in each class.
Shareholders shall not have pre-emptive rights to acquire unissued shares of stock of this corporation.
THIRD: The number of shares of the corporation outstanding at the time of the adoption of such amendments was 980,778, and the number entitled to vote thereon was 980,778.
FOURTH: The designation and number of outstanding shares of each class entitled to vote thereon as a class were as follows, to-wit:

CLASS                         NUMBER OF SHARES
-----                         ----------------
Common                              980,778	

FIFTH: The number of shares voted for such amendments was 696,146, with none opposing and none abstaining.
SIXTH: These amendments do not provide for any exchange, reclassification or cancellation of issued shares.
SEVENTH: These amendments decrease the stated capital of the corporation from $100,000 divided into 1,000,000 shares to $50,000 divided into 50,000,000.
IN WITNESS WHEREOF, the undersigned President and Secretary, having been thereunto duly authorized have executed the foregoing Articles

-4-
of Amendment for the corporation under the penalties of perjury this 10th day of July, 1984.
GOLD DEPOSIT MINING & MILLING COMPANY

                              By /s/ Richard E. deButts
                                 ----------------------------------
                                 Richard E. deButts, President

Attest:

/s/ Melissa Rodee
----------------------------
Melissa Rodee, Secretary	

EXHIBIT 3.5

ARTICLES OF AMENDMENT
T0 THE ARTICLES OF INCORPORATION OF
GOLD DEPOSIT MINING & MILLING COMPANY
Pursuant to the provisions of Section 16-10-57 of the Utah Business Corporation Act, the undersigned corporation hereby adopts the following Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Gold Deposit Mining & Milling Company.
SECOND: The following amendments to the Articles of Incorporation of Gold Deposit Mining & Milling Company were duly adopted by the stockholders of the corporation at a meeting held November 22, 1991, in the manner prescribed by the Utah Business Corporation Act, to-wit:
ARTICLE I - NAME
The name of this corporation is "Onasco Companies, Inc.
and
To forward split the corporation's one mill ($0.001) par value common voting stock presently issued and outstanding on a basis of 2.015496 for one, retaining the par value at one mill per share, with appropriate adjustments being made in the additional paid in capital and stated capital accounts of the corporation.
THIRD: The number of shares of the corporation outstanding at the time of the adoption of such amendments was 2,480,778, and the number entitled to vote thereon was 2,480,778.
FOURTH: The designation and number of outstanding shares of each class entitled to vote thereon as a class were as follows, to-wit:

CLASS                         NUMBER OF SHARES
-----                         ----------------
Common                            2,480,778	

FIFTH: The number of shares voted for such amendments was 1,339,146, with none opposing and none abstaining.
SIXTH: Except as provided in Paragraph Seventh below, these amendments do not provide for any exchange, reclassification or cancellation of issued shares.
SEVENTH: These amendments do effect a change in the stated capital of the corporation. Pursuant to the resolution adopted by the stockholders of the corporation at a meeting held November 22, 1991, the

2,480,778 one mill ($0.001) par value common voting shares issued and outstanding were forward split on a basis of 2.015496 for one, retaining the par value at one mill ($0.001) per share, with appropriate adjustments being made in the additional paid in capital and stated capital accounts of the corporation, and resulting in a total of 5,000,000 shares of one mill ($0.001) par value common voting stock being then issued and outstanding.
IN WITNESS WHEREOF, the undersigned President and Secretary, having been thereunto duly authorized have executed the foregoing Articles of Amendment for the corporation under the penalties of perjury this 16th day of December, 1991.
GOLD DEPOSIT MINING & MILLING COMPANY

                                           By /s/ Jeannette Nikes
                                              -------------------

Attest:

/s/  [illegible]
-------------------	

2

EXHIBIT 3.6

ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONASCO COMPANIES, INC.
Pursuant to the provisions of Section 16-10a-1006 of the Utah Business Corporation Act, the undersigned corporation hereby adopts the following Articles of Amendment to its Articles of Incorporation.
ARTICLE ONE
The name of the corporation is Onasco Companies, Inc.
ARTICLE TWO
The corporation's Articles of Incorporation are hereby amended by adding an Article XVII and an Article XVIII to such Articles of Incorporation, the text of which additional articles is set forth in full below:
"ARTICLE XVII
Effective as of 9:00 A.M. Central Time on September 15, 1992 (the "Effective Time"), all of the outstanding common stock, par value $0.001 per share, of the Corporation is hereby reclassified and combined so that, at the Effective Time, each outstanding share of common stock shall become one twentieth of a share of new common stock ("Reconstituted Common Stock"). Following the Effective Time, the holders of issued and outstanding shares of common stock of the Corporation outstanding prior to the Effective Time shall cease to be holders of such shares and shall be issued one share of Reconstituted Common Stock for each 20 shares of common stock previously held. Following the Effective Time, each share of common stock outstanding prior to the Effective Time shall be deemed for all purposes to represent one twentieth of a share of Reconstituted Common Stock, and each certificate representing shares of common stock outstanding prior to the Effective Time shall be deemed to represent a number of shares of Reconstituted Common Stock which is equal to one twentieth of the number of shares of common stock previously represented by such certificate. No fractional shares or scrip shall be issued upon such reclassification and combination. In lieu of the issuance of fractional shares or scrip, any shareholder that would receive less than a full share of Reconstituted Common Stock as a result of such transaction shall be issued one additional share of Reconstituted Common Stock. In addition, following the Effective Time, the par value of shares of the Corporation's common stock shall remain at $0.001 per share and the Corporation shall continue to have authority to issue an aggregate of 50,000,000 shares in the manner specified in Article IV hereof.

ARTICLE XVIII
Except as otherwise expressly provided by the Utah Business Corporation Act, any action which may be taken at any annual or special meeting of the shareholders of the Corporation may be taken without a meeting and without prior notice, if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares of the Corporation entitled to vote thereon were present and voted."
ARTICLE THREE
Following the reclassification and combination described in ARTICLE XVII above, the corporation will issue in the name of each holder of record of outstanding shares of common stock of the corporation, certificates representing the number of shares of Reconstituted Common Stock which such shareholder shall be entitled to receive as a result of the reclassification and combination. The corporation will deliver certificates representing such shares of Reconstituted Common Stock to each shareholder upon the surrender to the corporation for cancellation of the stock certificates representing such holder's shares that were outstanding prior to such reclassification and combination.
ARTICLE FOUR
The foregoing amendments to the Articles of Incorporation were duly adopted by the shareholders of the corporation on September 1, 1992 in accordance with
Section 16-10a-1003 of the Utah Business Corporation Act. The number of shares of the corporation outstanding at the time of such adoption was 20,259,987 shares of Common Stock, all of which were entitled to vote on the amendments.
ARTICLE FIVE
The designation and number of outstanding shares of each class of the corporation entitled to vote on the amendments as a class were as follows:

Class                             Number of Shares
-----                             ----------------
Common                               20,259,987	

ARTICLE SIX
Holders of a total of 14,800,000 shares of Common Stock were present and voted at the meeting. The number of shares voted for such amendments was 14,800,000 shares of Common Stock. No shares were voted against the amendments.
-2-

IN WITNESS WHEREOF, the undersigned President of the corporation, having been duly authorized, has executed these Articles of Amendment this 10th day of September, 1992.
Onasco Companies, Inc.

By:  /s/ Robert C. Bohannon Ph.D, President
     ---------------------------------------
     Robert C. Bohannon
     President	

-3-

EXHIBIT 3.7

CHARTER
OF
TENGASCO, INC.
The undersigned person(s) under the Tennessee Business Corporation Act adopt(s) the following charter for the above listed corporation:
1. The name of the corporation is TENGASCO, INC.
[NOTE: Pursuant to Tennessee Code Annotated Section 48-14-101(a)(1), each corporation name must contain the word "corporation", "incorporated", or "company" or the abbreviation "corp.", "inc." or "co."]
2. The number of shares of stock the corporation is authorized to issue is
50 million shares with par value of $.001/share
3. (a) The complete address of the corporation's initial registered office in Tennessee is
Wesley M. Baker, 4928 Homberg Dr., Knoxville, TN 37919

Street Address City State, Zip Code

County of Knox
[NOTE: A street address, a zip code and the county are required by Tennessee Code Annotated Section 48-12-102(a)(3).]
(b) The name of the initial registered agent, to be located at the address listed in 3 (a), is
Wesley M. Baker, Esq.

4. The name and complete address of each incorporator is:
Wesley M. Baker, 4928 Homberg Dr., Suite B-3, Knoxville, TN 37919

Name             Address                                     Zip Code

--------------------------------------------------------------------------

Name             Address                                     Zip Code

--------------------------------------------------------------------------
Name             Address                                     Zip Code	

[NOTE: An address and zip code are both required by Tennessee Code Annotated
Section 48-12-102 (a)(4).]
5. The complete address of the corporation's principal office is:
4928 Homberg Dr., Suite B-3, Knoxville, TN 37919

Street Address City State/Country, Zip Code
[NOTE: An address and a zip code are both required by Tennessee Code Annotated
Section 48-12-102 (a)(5).]
6. The corporation is for profit.
7. Other provisions:
[NOTE: Insert here any provision(s) desired and permitted by law. Examples:
names and addresses of persons serv-[ILLEGIBLE]

[ILLEGIBLE]the corporation, provision [ILLEGIBLE] duly, etc. See Tennessee Code Annotated Section 48-12-102(b).]

April 26, 1995                      /s/ Wesley M. Baker
--------------                      --------------------------------------
Signature Date                      Incorporator's Signature

                                    Wesley M. Baker
                                    --------------------------------------
                                    Incorporator's Name (typed or printed)	

[SEAL] State of Tennessee                                          BDA 1678
--------------------------------------------------------------------------------

       Secretary of State
      Corporations Section                   DATE: 04/28/95
 James K. Polk Building, Suite 1800          REQUEST NUMBER: 3005-0107
   Nashville, Tennessee  37243-0306          TELEPHONE CONTACT: (615) 741-0537
                                             FILE DATE/TIME: 04/28/95  1024
                                             EFFECTIVE DATE/TIME: 04/28/95 1024
                                             CONTROL NUMBER: 0294055	

TO:
WESLEY BAKER, ATTY AT LAW
4928 HOMBERG DR
SUITE B-3
KNOXVILLE, TN 37919
RE:
TENGASCO, INC.
CHARTER - FOR PROFIT
CONGRATULATIONS UPON THE INCORPORATION OF THE ABOVE ENTITY IN THE STATE OF TENNESSEE, WHICH IS EFFECTIVE AS INDICATED.
A CORPORATION ANNUAL REPORT MUST BE FILED WITH THE SECRETARY OF STATE ON OR BEFORE THE FIRST DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF THE CORPORATION'S FISCAL YEAR. ONCE THE FISCAL YEAR HAS BEEN ESTABLISHED, PLEASE PROVIDE THIS OFFICE WITH THE WRITTEN NOTIFICATION. THIS OFFICE WILL MAIL THE REPORT DURING THE LAST MONTH OF SAID FISCAL YEAR TO THE CORPORATION AT THE ADDRESS OF ITS PRINCIPAL OFFICER OR TO A MAILING ADDRESS PROVIDED TO THIS OFFICE IN WRITING. FAILURE TO FILE THIS REPORT OR TO MAINTAIN A REGISTERED AGENT AND OFFICE WILL SUBJECT THE CORPORATION TO ADMINISTRATIVE DISSOLUTION.
WHEN CORRESPONDING WITH THIS OFFICE OR SUBMITTING DOCUMENTS FOR FILING, PLEASE REFER TO THE CORPORATION CONTROL NUMBER GIVEN ABOVE. PLEASE BE ADVISED THAT THIS DOCUMENT MUST ALSO BE FILED IN THE OFFICE OF THE REGISTER OF DEEDS IN THE COUNTY WHEREIN A CORPORATION HAS ITS PRINCIPAL OFFICE IF SUCH PRINCIPAL OFFICE IS IN TENNESSEE.

--------------------------------------------------------------------------------
FOR: CHARTER - FOR PROFIT                                  ON DATE: 04/28/95
                                                           FEES
FROM:                                      RECEIVED:       $50.00        $50.00
BUBBY, INC.
4928 HOMBERG DR                    TOTAL PAYMENT RECEIVED:              $100.00
KNOXVILLE, TN  37919-0000                  RECEIPT NUMBER:          00001801452
                                           ACCOUNT NUMBER:             00215698

[SEAL] State of Tennessee                           /s/ Riley C. Darnell
                                                    --------------------
                                                    RILEY C. DARNELL
                                                    SECRETARY OF STATE	

SS-4458

EXHIBIT 3.8

[STAMP]
FILED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
 MAY-4 1995
CERTIFIED COPY

/S/RILEY DARNELL
SECRETARY OF STATE	

ARTICLES OF MERGER
OF
ONASCO COMPANIES, INC.
 (A Utah Corporation)
AND
TENGASCO, INC.
 (a Tennessee Corporation)
RECEIVED
 MAY - 5 1995
UT DIV. OF CORP. & COMM. CODE
Pursuant to the provisions of Section 48-21-102 of the Tennessee Business Corporation Act and Section 16-10a-1105 of the Utah Revised Business Corporation Act, these corporations do hereby adopt the following Articles of Merger.
1. Annexed hereto and made a part hereof is the Plan of Merger for merging Onasco Companies, Inc., a Utah corporation ("Onasco"), with and into Tengasco, Inc., a Tennessee corporation ("Tengasco"). This Plan of Merger has been adopted by the respective Boards of Directors of Onasco and Tengasco, as required by applicable laws, rules and regulations.
2. The merger of Onasco with and into Tengasco is permitted by the laws of the States of Utah and Tennessee and has been authorized in compliance with their respective laws, rules and regulations.
3. The Plan of Merger was submitted to the stockholders of Onasco at a special meeting held April 28, 1995, pursuant to the provisions of Section 16-10a-1104(3) of the Utah Revised Business Corporation Act, at which the required majority of Onasco's stockholders adopted, ratified and approved the Plan of Merger, the manner of approval thereof by Onasco's stockholders was as follows:
(i) The designation, number of outstanding shares and the number of votes entitled to be cast by each class entitled to vote on the
Plan of Merger are as follows:

                                                             Number
                                                             Entitled
Designation              Outstanding Shares                   to Vote
-----------              ------------------                  ---------
  Common                     1,037,650                       1,037,650	

[STAMP]
FILED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
 MAY-4 1995
CERTIFIED COPY

/S/RILEY DARNELL
SECRETARY OF STATE	

(ii) The total number of votes cast for and against the Plan of Merger by each class entitled to vote on the Plan is as follows:

Designation                   Voted For                     Voted Against
-----------                   ---------                     -------------
  Common                       801,383                          None	

(iii) The number of votes cast for the Plan of Merger was sufficient for the approval thereof by the class.
4. Tengasco was formed by Onasco for the purpose of changing the domicile of Onasco to the State of Tennessee, and no shares are presently outstanding, and accordingly, no vote of the stockholders of Tengasco is required; however, the members of the Board of Directors of Tengasco unanimously consented to and adopted, ratified and approved the Plan of Merger in accordance with the Tennessee Business Corporation Act and its Bylaws.
5. No amendments to the Articles of Incorporation of Tengasco are effected by the Plan of Merger.
6. The Plan of Merger effects a one for two reverse split of the outstanding common stock of Onasco.
7. The Plan of Merger shall become effective on the date that these Articles of Merger are filed with the Secretary of State of the State of Tennessee and the Department of Commerce of the State of Utah.
8. The address of the principal executive office of the Surviving
Corporation shall be 4928 Homberg Drive, Suite 3, Knoxville, Tennessee 37919.
ONASCO COMPANIES, INC.
 a Utah corporation

Date:  5-2-95                               /s/  Jeff D. Jenson
                                            -------------------------------
                                            Jeffrey D. Jenson, President

Date:  5-2-95                               /s/  Kathleen L. Morrison
                                            -------------------------------
                                            Kathleen L. Morrison, Secretary	

[STAMP]
RECEIVED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
 MAY-4 1995
CERTIFIED COPY

                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE
[SEAL]  SHERYL ROSS
        Notary Public
        STATE OF UTAH
        My Comm. Expires JAN 06,1996
        3785 SO 300 E SLC UT 84115	

STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On May 2nd, 1995, personally appeared before me, a Notary Public in and for the State and County aforesaid, Jeffrey D. Jenson, President, and Kathleen L. Morrison, Secretary of Tengasco, Inc., personally known to me to be the persons whose names are subscribed to the above instrument in the said capacities, who acknowledged that they executed the said instrument.

[SEAL]  SHERYL ROSS                          /s/ Sheryl Ross
        Notary Public                        -------------------------------
        STATE OF UTAH                        NOTARY PUBLIC
        My Comm. Expires JAN 06,1996
        3785 SO 300 E SLC UT 84115	

[STAMP]
RECEIVED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
 MAY-4 1995
CERTIFIED COPY

/S/RILEY DARNELL
SECRETARY OF STATE	

PLAN OF MERGER
OF
ONASCO COMPANIES, INC.
 (a Utah Corporation)
INTO
TENGASCO, INC.
 (a Tennessee Corporation)
THIS PLAN OF MERGER entered into this 2nd day of May, 1995, by and between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), and TENGASCO, INC., a Tennessee corporation ("Tengasco").
WHEREAS, Onasco is a corporation organized and existing under the laws of the State of Utah with its principal office in Salt Lake County, Utah; and
WHEREAS, Onasco desires to change its domicile to the State of Tennessee; and
WHEREAS, Onasco has caused Tengasco to be formed under the laws of the State of Tennessee solely to effect such change of domicile;
NOW, THEREFORE, in consideration of the premises and of the mutual agreement of the parties hereto, the Plan of Merger ("Plan") and the terms and conditions thereof and the mode of carrying the same into effect, together with any provisions required or permitted to be set forth therein, are hereby determined and agreed upon for submission to the stockholders of Onasco and Tengasco as required by the laws of the States of Utah and Tennessee as follows:
1.

Merger and Surviving Corporation
Onasco will merge into Tengasco, and Tengasco will be the "Surviving Corporation."
2.

Terms and Conditions of Merger
2.1 Each share of common stock of Onasco (the "Shares") shall first be reverse split on the basis of one for two (1 for 2) and, upon the effective date of the Plan, be converted into one share of common stock of Tengasco. On the effective date of the Plan,

[STAMP]
RECEIVED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
MAY-4 1995
CERTIFIED COPY

/S/RILEY DARNELL
SECRETARY OF STATE	

such shares so converted constitute all of the then issued and outstanding shares of common stock of the Surviving Corporation.
2.2 The separate existence of Onasco shall cease.
2.3 The Surviving Corporation shall thereupon and thereafter possess all the rights, privileges, powers and franchises as well of a public as of a private nature, and be subject to all of the restrictions, disabilities and duties of Onasco; and all and singular, the rights, privileges, powers and franchises of Onasco, and all property, real, personal and mixed, and all debts due to Onasco on whatever account, as well for stock subscriptions as all other things in action or belonging to Onasco shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the Surviving Corporation as they were of Onasco, and the title to any real estate vested by deed or otherwise in Onasco shall not revert or be in any way impaired by reason of the Plan; but all rights of creditors and all liens upon any property of Onasco shall be preserved unimpaired, and all debts, liabilities and duties of Onasco shall thenceforth attach to the Surviving Corporation and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it. Specifically, but not by way of limitation, the Surviving Corporation shall be responsible and liable to dissenting stockholders of Onasco; and any action or proceeding whether civil, criminal or administrative, pending by or against Onasco, shall be prosecuted as if the Plan had not taken place, or the Surviving Corporation may be substituted in such action or proceeding.
2.4 All corporate acts, plans, policies, contracts, approvals and authorizations of Onasco and its stockholders, Board of Directors, committees elected or appointed by the Board of Directors, officers and agents, which were valid and effective immediately prior to the effective time of the Plan, shall be taken for all purposes as the acts, plans, policies, contracts, approvals and authorizations of the Surviving Corporation and shall be as effective and binding thereon as the same were with respect to Onasco. The employees of Onasco shall become the employees of the Surviving Corporation and continue to be entitled to the same rights and benefits which they enjoyed as employees of Onasco.
2.5 The assets, liabilities, reserves and accounts of Onasco shall be recorded on the books of the Surviving Corporation at the amounts at which they, respectively, shall then be carried on the books of Onasco, subject to such adjustments or eliminations of intercompany items as may be appropriate in giving effect to the Plan.
2.6 The Articles of Incorporation of Tengasco shall be the Articles of Incorporation of the Surviving Corporation; and the Bylaws of Tengasco shall become the Bylaws of the Surviving Corporation.
2.7 All of the present directors and executive officers of Onasco shall be designated directors and executive officers of the Surviving Corporation to serve in the same capacities until the next annual meetings of the stockholders and directors and until their respective successors are elected and qualified, or their prior resignation or termination.

[STAMP]
RECEIVED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
 MAY-4 1995
CERTIFIED COPY

/S/RILEY DARNELL
SECRETARY OF STATE	

2.8 The principal office of the Surviving Corporation shall be 4928 Homberg Drive, Suite 3, Knoxville, Tennessee 37919. The Surviving Corporation shall also maintain a registered agent and registered office in Tennessee, Wesley Baker, Esq., 4928 Homberg Drive, Suite B-3, Knoxville, Tennessee 37919.
2.9 The Plan must be adopted by persons owning a majority of the shares of Onasco and Tengasco. Stockholders of Onasco shall be given such written notice as may be required by the laws of the State of Utah.
2.10 Stockholders of both corporations shall be afforded all rights and privileges and be subject to all obligations contained within the Utah Revised Business Corporation Act and the Tennessee Business Corporation Act regarding dissenters' rights, and the Surviving Corporation shall be obligated to notify the stockholders as provided therein.
2.11 The effective date of the Plan shall be the date when the Articles of Merger are filed and accepted by the Secretary of State of the State of Tennessee and at such time as all applicable provisions of the Utah Revised Business Corporation Act have been met.
IN WITNESS WHEREOF, the parties hereto have executed this Plan the day and year first above written.
ONASCO COMPANIES, INC.,
a Utah Corporation

                                             By /s/ Jeff D. Jenson
                                             ----------------------------
                                             Jeffrey D. Jenson, President

Attest:

/s/ Kathleen L. Morrison
-------------------------------
Kathleen L. Morrison, Secretary
                                             TENGASCO, a Tennessee Corporation

                                             By /s/Jeff D. Jenson
                                             ----------------------------
                                             Jeffrey D. Jenson, President

Attest:

/s/ Kathleen L. Morrison
-------------------------------
Kathleen L. Morrison, Secretary	

[STAMP]
RECEIVED 95 MAY-4 AM 9:36
RILEY DARNELL
SECRETARY OF STATE
 MAY-4 1995
CERTIFIED COPY

/S/RILEY DARNELL
SECRETARY OF STATE	

STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 2nd day of May, 1995, personally appeared before me Jeffrey D. Jenson and Kathleen L. Morrison, who duly acknowledged to me that they are authorized to and did sign the foregoing Plan for and on behalf of Onasco Companies, Inc.

[SEAL]   SHERYL ROSS                             /s/ Sheryl Ross
         Notary Public                           ------------------------
         STATE OF UTAH                           NOTARY PUBLIC
         My Comm. Expires JAN 06,1996
         3785 SO 300 E SLC UT 84115	

STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 2nd day of May, 1995, personally appeared before me Jeffrey D. Jenson and Kathleen L. Morrison, who duly acknowledged to me that they are authorized to and did sign the foregoing Plan for and on behalf of Tengasco, Inc.

[SEAL]   SHERYL ROSS                             /s/ Sheryl Ross
         Notary Public                           ------------------------
         STATE OF UTAH                           NOTARY PUBLIC
         My Comm. Expires JAN 06,1996
         3785 SO 300 E SLC UT 84115	

July 30, 1997
Tengasco, Inc.
603 Main Avenue - Suite 500
Knoxville, Tennessee 37902
Re: Tengasco, Inc.
Gentlemen:
We have acted as counsel to Tengasco, Inc., a Tennessee corporation (the "Company"), in connection with a registration statement on Form 10-SB (the "Registration Statement"), to be filed with the Securities and Exchange Commission for the purpose of registering all of the outstanding and issued common stock, $.001 par value per share (the "Common Stock") of the Company under the Securities Act of 1933, as amended (the "Act").
As counsel for the Company, we have examined and are familiar with the Certificate of Incorporation and By-Laws of the Company, and all amendments thereto. We are also familiar with the form of the Company's stock certificate, as well as all corporate proceedings taken by the Company in connection with the authorization of the issuance of its Common Stock. Throughout such examination we have assumed the genuineness of signatures and accuracy and conformity to original documents of all copies of documents supplied to us. As to questions of fact material to the opinion expressed herein, we have, when relevant facts were not independently determinable, relied upon information furnished to us by officers and directors of the Company or their duly authorized agents or employees.
Based upon the foregoing, it is our opinion that all of the Company's outstanding and issued shares of Common Stock have been duly executed and delivered and the consideration therefor duly paid, and such shares are validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
Robson & Miller, LLP

EXHIBIT 10.1(a)

PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made this 2nd day of May, 1995, among ONASCO COMPANIES, INC., a Utah corporation ("Onasco" or "Buyer"); and INDUSTRIAL RESOURCES, CORPORATION, a Kentucky corporation ("IRC" or "Seller").
WITNESSETH:
RECITALS
WHEREAS, the respective Boards of Directors of Onasco and IRC and the stockholders of IRC have adopted resolutions pursuant to which Onasco shall buy and IRC shall sell the gas leases, equipment and vehicles which are more particularly described in Exhibit "A" hereof (hereinafter the "Assets"), which is incorporated herein by reference; and
WHEREAS, Onasco held a special meeting of its stockholders on April 28, 1995, at which the stockholders approved a reverse split of the $0.001 par value common stock of Onasco on the basis of two shares for one, such reverse split to be effective as of the Closing of this Agreement, as outlined in the minutes of such meeting, a copy of which is attached hereto as Exhibit "B" and incorporated herein by reference; and
WHEREAS, the consideration for the Assets shall be 4 million post-split "unregistered" and "restricted" shares of $0.001 par value common stock of Onasco;
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, it is agreed:
Section 1
Purchase and Sale of the Assets
1.1 Purchase and Sale. Onasco hereby agrees to purchase and IRC hereby agrees to sell the Assets owned by IRC as of March 17, 1995, together with any accessions thereto and all items received by IRC in exchange for any of the Assets after March 17, 1995.
1.2 Consideration for the Assets. The consideration paid for the Assets shall consist solely of 4 million post-split "unregistered" and "restricted" shares of $0.001 par value common stock of Onasco.
1.3 Delivery of Shares. Upon the execution and delivery by IRC of an assignment or assignments and other instruments required or necessary to transfer the Assets to Onasco, Onasco shall deliver one stock certificate to IRC representing 4 million post-split

"unregistered" and "restricted" shares of common stock of Onasco as full payment for the Assets.
Section 2
Closing
The closing (the "Closing") contemplated hereby shall be held at the offices of Leonard W. Burningham, 455 East 500 South, #205, Salt Lake City, Utah 84111, within five days of the date hereof.
Section 3
Representations and Warranties of Onasco
Onasco represents and warrants to, and covenants with, IRC as follows:
3.1 Corporate Authority and Due Authorization. Onasco is a corporation duly organized and in good standing under the laws of the State of Utah and has full corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. Execution of this Agreement and performance by Onasco hereunder have been duly authorized by all requisite corporate action on the part of Onasco; this Agreement constitutes a valid and binding obligation of Onasco; and performance hereunder will not violate any provision of the Articles of Incorporation, Bylaws, agreements, mortgages or other commitments of Onasco.
3.2 Condition Subsequent. As a condition subsequent to the performance of this Agreement, Onasco shall prepare and cause to be filed with the Securities and Exchange Commission a Registration Statement on Form 10-SB within 90 days of the date hereof.
Section 4
Representations and Warranties of IRC
IRC represents and warrants to, and covenants with, Onasco as follows:
4.1 Ownership. IRC owns the Assets, free and clear of any liens or encumbrances of any type or nature whatsoever, except as stated in the schedule which is attached as the final page of Exhibit "A" hereof.
4.2 Condition of the Assets. At the time of Closing, the Assets shall be in good and marketable condition, suitable for the uses for which they were intended and, reasonable wear and tear excepted, shall be free of any material defect.
2

4.3 Corporate Authority and Due Authorization. IRC is a corporation duly organized and in good standing under the laws of the State of Kentucky and has full corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. Execution of this Agreement and performance by IRC hereunder has been duly authorized by all requisite corporate action on the part of IRC, including the execution of unanimous consents of its Board of Directors and its sole stockholder, which are attached hereto as Exhibits "C" and "D", respectively, and this Agreement constitutes a valid and binding obligation of IRC and performance hereunder will not violate any provision of the Articles of Incorporation, Bylaws, agreements, mortgages or other commitments of IRC.
4.4 No Inventory. None of the Assets constitute inventory of IRC and the principal business of IRC is not the sale of merchandise from stock.
4.5 Shares Acquired with Investment Intent. IRC represents and agrees as follows:
(a) That the shares being acquired in consideration of the Assets are received for investment purposes and not with a view toward further distribution;
(b) That it has full and complete understanding of the phrase "for investment purposes and not with a view toward further distribution;"
(c) That it understands the meaning of "unregistered shares" and knows that they are not freely traceable;
(d) That any stock certificate issued by Onasco in connection with the shares being received shall be imprinted with a legend restricting the sale, assignment, hypothecation or other disposition unless it can be made in accordance with applicable laws, rules and regulations;
(e) That the stock transfer records of Onasco shall reflect that IRC has requested Onasco not to effect any transfer of any stock certificate representing any of the shares being acquired unless it shall first have obtained an opinion of legal counsel to the effect that the shares may be sold in accordance with applicable securities laws, rules and regulations, and it understands that any opinion must be from legal counsel satisfactory to Onasco and, regardless of any opinion, it understands that the exemption covered by any opinion must in fact be applicable to the shares;
(f) That it shall not sell, offer to sell, transfer, assign, hypothecate or make any other disposition of any interest in the shares being acquired except as may be pursuant to any applicable securities laws, rules and regulations.
3

4.6 Further Assurances of IRC. IRC execute such assignment or assignments and will perform such other acts as will enable Onasco to take free and clear title to the Assets.
Section 5
Termination
Prior to Closing, this Agreement may be terminated (1) by mutual consent of Onasco and IRC; and (2) by either the directors of Onasco or IRC if there has been a material misrepresentation or material breach of any warranty or covenant by the other party; provided, however, that all representations and warranties shall survive the termination hereof.
Section 6
General Provisions
6.1 Further Assurances. At any time and from time to time, after the execution hereof, each party will execute such additional instruments and take such action as may be reasonably requested by the other party to carry out the intent and purposes of this Agreement.
6.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been given if delivered in person or sent by prepaid first-class registered or certified mail, return receipt requested, as follows:

If to Onasco:                 1787 East Fort Union Blvd., #106
                              Salt Lake City, Utah 84121

                              and

                              Leonard W. Burningham, Esq.
                              455 East 500 South, #200
                              Salt Lake City, Utah 84111

If to IRC:                    Route 6, Box 248A
                              Manchester, Kentucky 40962

                              and

                              Wesley Baker, Esq.
                              P.O. Box 22178
                              Knoxville, Tennessee 37933-0178	

4

6.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or written, between the parties hereto relating to the transactions contemplated herein or the subject matter hereof.
6.4 Headings. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
6.5 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Tennessee, except to the extent preempted by federal law, in which event (and to that extent only), federal law shall govern.
6.6 Assignment. No party may assign any rights, duties or obligations under this Agreement, and in the event of any such assignment, such assignment shall be deemed null and void.
6.7 Waiver. Any failure on the part of any party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the party to whom such compliance is owed.
6.8 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
6.9 Default. In the event of default hereunder, the non-defaulting party shall be entitled to recover reasonable attorney's fees and costs in enforcing the terms and provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the day and year first above written.
ONASCO COMPANIES, INC.
By [ILLEGIBLE]
Its President

Attest:

[ILLEGIBLE]

Its Secretary

5

PURCHASE AGREEMENT
COUNTERPART SIGNATURE PAGE
THIS COUNTERPART SIGNATURE PAGE for that certain Purchase Agreement among ONASCO COMPANIES, INC., a Utah corporation, and INDUSTRIAL RESOURCES, CORPORATION, a Kentucky corporation, is executed as of the date set forth hereinbelow.
INDUSTRIAL RESOURCES, CORPORATION

Date: 5 - 3 - 95                   By   [ILLEGIBLE]
                                        ----------------------------

                                   Its  President
                                        ----------------------------

Attest:

[ILLEGIBLE]
------------------------------

Its  Sec & Treasurer
     -------------------------	

6

EXHIBIT "A"
ASSETS

INVENTORY OF ASSETS
COOPER TC 38-38 DRILLING RIG - Cost $87,291.26, Bought March, 1993

     Double drum well service unit, S/N 00339, braden winch, powered by GM 6-71
diesel engine, Allison transmission, Skytop 84' 155,000# capacity derick,
hydraulically raised and telescoped, 3-sheave crow block assembly, tubing board,
control console, guy lines, stairs, catwalks, handrails, toolboxes, fuel tank, 2
Fire extinguishers. All above are mounted and unitized on a four axle "back-in"
carrier, 2 front mounted hydraulic jacks with jack stands, 2 rear mounted
hydraulic jacks with jack stands, 10.00 x 20 tires front and rear, approx. 600'
of 7/8"th's inch tubing line, approx. 6,000' of 518" swab line.	

One: McKissick 2-sheave split block.
Foster 58.96 tubing tongs for 2-3/8", 2-7/8", and 4-1/2"

(Reconditioned)
Cavins type "B" tubing slips (air)
2-3/8" BJ tubing slips (Reconditioned)
Rod tools
Rod Hook
Base Beam & new floor
Two: 5/8" Elevators

PIPE THREADING MACHINE - approx. value $2,000

DITCH WITCH - approx. value $2000

PARTS TRAILER - approx. value $2000

SMALL PARTS BUILDING - approx. value $1000

PIPE TRAILER - approx. value $500.

COPY MACHINES -1 Panasonic, 1 Xerox, 1 Monroe. Approx. Value $6,000

4 INCH FRAC VALUE - approx. value $600

MFG MOCK METER- approx. value $700

SET OF NEW POWER TONG TEETH - approx. value $500

GAS GATHERING SYSTEM -

SURFACE GAMMA RATEMETER -Approx. value $5000, 1991 Made by Ludlum Measurements, Model 2200-16, Serial Number #79086

1500 GALLON VACUUM PUMP AND TANK - approx. value $1,000

3000 FT. 4 1/2 CASING - @ $2.50/ft. = $7,500
3000 FT. 2 3/8" TUBING - @ $1.05/ft. = $3,150
3000 FT. 1" SUCKER RODS - @ $.40/ft. = $1,200

NORRISEAL DEHYDRATOR - approx. value $13,000, Serial #2230450A, Model # 25M60-SLDF-AB, 1001-A Norriseal control

DEHYDRATION UNIT - Purchase price $7,500 on August 14, 1992, approx. value $12,500. Serial # PESI 421, complete with 25' tall tower; nameplate data: NWP 1200 PSI, 100-F, SN 67-7615, Year 1985, T.P. 1800, W.O. 4386

DEHYDRATION UNIT w/TOWER - Approx. value $10,000, Serial #SB 12-6H, tower #7-74 8111-001

COMPRESSORS
AJAX DPC 160 GAS COMPRESSOR - Purchased 1995 from TABCO for $37,500, with a GLYCOL RE-BOILER & TOWER for $5,000. Total purchase price of $42,500. Payments to be made monthly in the amount of $5,312.50, starting February 5, 1995. Approx. Value $60,000, ID #'s-K-6001-C 5000, A-2002-G, Model # 507, Serial #36957, A-2801-F.
INGERSOLL RAND COMPRESSOR - approx. Value $30,000, ID #'s-Serial # 13936, 95024A 566567, 46-B7782 87042 F, 47177118 490, 97032 6284, Model# NKRB-1-5, B-8791
INGERSOLL RAND (PARTS COMPRESSOR) - approx. value $13,000, ID#'s - Serial 91890, 2 B-18-4, 25416-361
CHICAGO PNEUMATIC COMPRESSOR - approx. value $62,500 FE-2, 8 1/4" x 4 1/4" x 5" stroke (ID.#86053), with Waukasau H-2475 engine (ID.#52181), and fan type air exchanger (ID.#867), all mounted on one oil field skid

CHICAGO PNEUMATIC COMPRESSOR - Purchased on February 13, 1992 for $25,100, approx. value $62,500. 1972 Model YCE Gas Compressor (ID. #279936), with Model 6G510 Natural Gas Engine, radiators, coolers etc...
MISC. PARTS USED FOR ALL COMPRESSORS AS JOB REQUIREMENTS DICTATE: VALUE IS INTEGRAL IN COMPRESSOR VALUES
 1 compressor muffler
4 fan shroud
4 Radiators
Comp 94701 Ingersoll-Rand 94663 105782
2 gray pipes to comp
BURNT HOUSE
JENSEN PUMP JACK - approx. value $4,000, ID#'s c-401564, Serial # 9209004 OIL & GAS SEPARATOR - approx. value $500, Serial # 4050-1 ROCKWELL METER - approx. value $1,500, ID# 87416 COMPRESSOR - approx. value $2,200, ID#15053 350
2 (two) 210 TANKS - approx. value $4,000, ID#'s 9402-8633, 0510033

CORNETT #1
110 TANK - approx. value $1,300, ID # 43702

CORNETT #2
LUFKIN PUMP JACK - approx. value $3,500, ID#'s 4380, 18KK-35

ROBINSON-ALVERAS
210 TANK - approx value $2,000, ID# 0510040

KEITH
2 (TWO) 210 TANKS - approx. value $4,000, ID#'s (9401-8632), 9400 (8632) O510032
PUMP JACK - approx. value $3,500, ID# 5798
WATER TANK - approx. value $1,500, ID #2

BEECH CREEK

2 (TWO) 110 TANKS - approx. value $2,600, ID#'s

VEHICLES
1993 BLAZER - purchased 1-7-93, VIN # 1GNEK18K9PJ337726, 23 payments left @ $615.79 = $14,163.17, purchase price $23,273.90 plus down-payment.
1992 FORD BRONCO - purchased 8-14-92, VIN# 1FMEU15NXNLB02170, purchase price $29,050.49
1991 CHEVROLET PICK-UP - purchased new 7(?)9-91, VIN# 2GECK19K8M1222564, purchase price $19,906.63
1991 CHEVROLET PICK-UP 4X4 - purchased June 24, 1991, purchase price $18,029.68. 
VIN# 1GCEK14ZXME160040.
INTERNATIONAL TRACTOR - ID# TDA2274CG, 1982, approx, value $7,500
INTERNATIONAL TRACTOR - F2000D, ID # D112313H, 1966, approx. value $5,0OO
LOWBOY TRAILER - ID# B12466, 1979, approx. $5,000
GOOSENECK 5TH WHEEL TRAILER - #5027, approx. value $3,500
CATERPILLAR D-5 DOZER- 1D#82H712, approx. value $30,000

WELLS & LEASES
BURNING SPRINGS WELLS - Alveras #1, #2; Robinson-Alveras #1, #2; Cornett #1,#2; Keith #1, #2, #2A, #2B, #4, #5; Gregory #2; Gib Hale #1, #2; Approx. value $
BEECH CREEK LEASES - Signed acreage: 8,063.599 Acres. Verbal commitment acreage:
2,114.14. Total of signed and verbal: 10,177.739 Acres.
Approx. value $
WILDCAT LEASES - Signed acreage: 2,971.5 Acres. Verbal commitment acreage: 455 Acres. Total verbal and signed acres: 3,426.5 Acres. Approx. value $

STOCK - One million shares of United Petroleum Corporation stock valued at $1.00 per share.

EQUIPMENT                PURCHASE PRICE        PAYMENTS MADE         APPROX. V

COOPER RIG               $87,291.26            $87,291.26            $87,291.26
PIPE THREADER                                                         $2,000.00
DITCH WITCH                                                           $5,500
TRAILER                                                               $2,000
PARTS TRAILER                                                         $2,000
SMALL PARTS BUILDING                                                  $1,000
COPY MACHINES                                                         $6,000
FRAC VALVE                                                              $600.00
MOCK METER                                                              $700.00
TONG TEETH                                                              $500.00
GATHERING SYS.                                                          $
GAMMA RATEMETER                                                       $5,000.00
1500 GAL VAC. PUMP                                                    $1,000.00
3000 FT. 4 1/2" CASINO                                                $7,500.00
3000 FT. 2 3/8" TUBING                                                $3,150.00
3000 FT. 1" SUC. RDS.                                                 $1,200.00
DEHYDRATOR                                                           $13,000.00
DEHYDRATOR                $7,500.00             $7,500.00            $12,500.00
DEHYDRATOR                                                           $10,000.00
AJAX COMP.               $42,500.00             $5,312.50             $5,312.50
INGERSOLL COMP.                                                      $30,000.00
INGERSOLL COMP.                                                      $13,000.00
CHICAGO COMP.                                                        $62,500.00
CHICAGO COMP.            $25,100.00            $25,100.00            $62,500.00
JENSEN PUMPJACK                                                       $4,000.00
O & G SEPARATOR                                                         $500.00
ROCKWELL METER                                                        $1,500.00
LEASE COMPRESSOR                                                      $2,200.00
TWO 210 TANKS                                                         $4,000.00
110 TANK                                                              $1,300.00
LUFKIN PUMP JACK                                                      $3,500.00
210 TANK                                                              $2,000.00
IWO 210 TANKS                                                         $4,000.00
PUMP JACK                                                             $3,500.00
WATER TANK                                                            $1,500.00
TWO 110 TANKS                                                         $2,600.00
1993 BLAZER              $23,273.90 +D.P.        $9,110.73            $9,110.73
1992 BRONCO              $29,050.49             $20,436.60           $20,436.60
1991 CHEVY 4x4           $18,029.68             $l8,029.68           $18,029.68
1991 CHEV. PICKUP        $19,906.63             $17,509.13           $17,509.13

INTERNAT. TRACTOR                                                     $5,000.00
INTERNAT. TRACTOR                                                     $7,500.00
LOWBOY TRAILER                                                        $5,000.00
GOOSENECK TRAILER                                                     $3,500.00
D-5 BULLDOZER                                                        $30,000.00
BURNING SPRINGS WELLS                                                    $
BEECH CREEK LEASES                                                       $
WILDCAT LEASES                                                           $
UPC STOCK                                                         $1,000,000	

EXHIBIT "B"
MINUTES OF A SPECIAL MEETING OF THE STOCKHOLDERS
OF
ONASCO COMPANIES, Inc.

MINUTES OF A
SPECIAL MEETING OF
THE SHAREHOLDERS OF
ONASCO COMPANIES, INC.
A Special Meeting of the shareholders of Onasco Companies, Inc., a Utah Corporation, was held at the following time, date and place pursuant to a written notice having been mailed to all of the shareholders of record on April 18, 1995:
Time: 10:00 a.m
Date: April 28, 1995
Place: 1787 East Fort Union Blvd. #106, Salt Lake City, UT 84121 The following individuals, constituting a quorum of the Board of directors, were present at the meeting:
Jeff D. Jenson
Travis T. Jenson
Jeff D. Jenson, chaired the meeting, Travis T. Jenson, the Corporation's Vice President, served as Secretary of the meeting.
The Secretary presented a list of shareholders as prepared and certified by the Corporation's transfer agent, American Registrar & Transfer Company, Inc., dated as of the record date April 18, 1995, to the Chairman and stated that as of the record date there were 1,037,650 shares of common stock of the Corporation issued, outstanding and entitled to vote. The Secretary informed the Chairman that following his review of proxies and verifying the share holdings of those present at the meeting he had determined that a total of 801,383 shares were present, representing 77.23% of the outstanding shares of the Corporation.
Having received the information from the Secretary, the Chairman announced that the holders of stock in excess of the amount necessary to constitute a quorum were present in person or represented by proxy and the meeting could proceed to the matters at hand. The proxies presented were ordered to be filed with the Secretary.
The Secretary then presented an affidavit, showing that the notice of the meeting had been duly mailed to each shareholder at the last known address, ten
(10) days prior to the meeting.
The Chairman then reviewed the agenda, and upon motions duly made and seconded the following resolutions were unanimously adopted:
WHEREAS, subject to the execution of the Purchase Agreement between Onasco Companies, Inc. and Industrial Resources, Corporation, persuant ton which

Onasco will purchase real property and oil & gas leases presently owned by Industrial Resources, Inc. for 4,000,000 shares of "unregistered" and "restricted" common stock in Onasco, and 480,000 shares of stock issued under Rule 701 will be issued to consultants involved in the transaction;
BE IT RESOLVED, that the present issued and outstanding stock of Onasco Companies, Inc., a Utah Corporation, be subject to a reverse split at the ratio of 1 new share for every 2 shares presently issued and outstanding, with such reverse split to be effective as of the date of filing of Articles of Merger with the State of Tennesse;
FURTHER RESOLVED, that the reversal hereinabove stated shall not alter the authorized capital of the corporation of 50,000,000 common shares of common stock with a par value of one mil ($.001);
FURTHER RESOLVED, that the Company change its name to Tengasco, Inc., and change its domicile from the State of Utah to the State of Tennessee, with such resolutions to be effective as of the dte of filing the Articles of Merger with the State of Tennesse;
FURTHER RESOLVED, that the Board of Directors is hereby authorized, empowered and directed to make proper application to the Secretary of State of the State of Utah and the State of Tennessee, for the change of domicile and any
amendments to the articles in the respects hereinabove mentioned, and to execute, present, and file the applications, petitions, and other documents required by the laws of the State of Utah and the State of Tennessee to effect the aforesaid change of domicile and amendments.
FURTHER RESOLVED, that the Company retain the Services of Leonard W. Burningham, Esq., to assist in the stock purchase, change of domicile, filing a registration statement on Form 10 within 90 days of execution of the aforementioned purchase agreement, and any other matters deemed necessary to complete the said transaction;
FURTHER RESOLVED, that the present Board of Directors serve until the stock purchase agreement is executed and then resign in conjunction with the following new board members and officers being elected:
DIRECTORS

Raymond E. Johnson (Ray)      415 North State St.           (360) 734-0091
                              Bellingham, WA 98225

Jack E. Earnerst              5945 Shady River Road         (713) 781-9700
                              Houston, TX 77057

Edgar G. Baugh (Jack)         76 Arrowhead, Way             (203) 655-0624
                              Darien CT 06820	

Walter C. Arzonetti           11 Avenue de la Mer           (904) 445-1022
                              Palm Coast FL 32137

Charels N. Manhofff           1119 Rocky Point Ct.          (505) 292-3210
                              Albuquerque NM 87123

Joe B. Mattei                 72 Sugerberry Circle          (713) 266-0700
                              Houston, TX 77024

William A. Mofffett           1073 Encantado Drive          (505) 983-9212
                              Santa Fe, NM 87501

OFFICERS
--------

George E. Walter, Jr.         3907 Northfield Ct.
President/CEO                 Midland, TX 79707

James C. Walter               1216 Calvary Ct.              (606) 877-1830
Vice President                London KY 40471
Secretary/Treasurer	

The Secretary was then instructed to insert in the minute book copies of
the Notice of Special Meeting, proxies, and the Secretary affidavit of mailing. With no further business matters at hand, a motion was duly made and seconded to adjourn the meeting without further ado.

[ILLEGIBLE]                                       [ILLEGIBLE]
---------------------                             --------------------
Chairman                                          Secretary	

EXHIBIT "C"
UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS
OF
INDUSTRIAL RESOURCES, CORPORATION

UNANIMOUS OF TO BOARD OF DIRECTORS OF
INDUSTRIAL RESOURCES, CORPORATION
The undersigned, being all of the duly elected and incumbent directors of Industrial Resources, Corporation, a Kentucky corporation (the "Corporation"), acting pursuant to Section 271B.8-210 of the Kentucky Business Corporation Act, do hereby consent to and adopt the following resolution, effective the date hereof:
WHEREAS, the Corporation has been engaged in negotiations to convey certain gas leases, equipment and vehicles listed in Exhibit "A" attached to the Purchase Agreement, which is incorporated herein by reference (the "Assets") to Onasco Companies, Inc., a Utah corporation ("Onasco"), in consideration of 4 million "unregistered" and "restricted" post-split shares of the $0.001 par value common stock of Onasco (the "Purchase Transaction"); and
WHEREAS, the parties to the Purchase Transaction wish to document its terms by means of the Purchase Agreement; and
WHEREAS, the Board of Directors deems it to be in the best interests of the Corporation to proceed with the Purchase Transaction and to take such actions as will facilitate it;
NOW, THEREFORE, be it RESOLVED, that the President and the Secretary of the Corporation are hereby authorized to execute the Purchase Agreement and to take such further actions on behalf of the Corporation as are necessary for the performance thereof.

Date: 5 - 3 - 95                             /s/ James W. Ratliff
      --------------                         ----------------------------------
                                             James W. Ratliff

Date: 5 - 3 - 95                             /s/ Linda Beth Ratliff
      --------------                         ----------------------------------
                                             Linda Beth Ratliff

Date: 5 - 3 - 95                             /s/ Russell A. Ratliff
      --------------                         ----------------------------------
                                             Russell A. Ratliff	

EXHIBIT "D"
CONSENT OF THE SOLE STOCKHOLDER
OF
INDUSTRIAL RESOURCES, CORPORATION

CONSENT OF THE SOLE STOCKHOLDER OF
INDUSTRIAL RESOURCES, CORPORATION
The undersigned, being the holder all of the issued and outstanding shares of common stock of Industrial Resources, Corporation, a Kentucky corporation (the "Corporation"), acting pursuant to Section 271B.7-040 of the Kentucky Business Corporation Act, does hereby consent to and adopt the following resolution, effective the date hereof:
WHEREAS, the Corporation has been engaged in negotiations to convey certain gas leases, equipment and vehicles listed in Exhibit "A" attached to the Purchase Agreement, which is incorporated herein by reference (the "Assets") to
Onasco Companies, Inc., a Utah corporation ("Onasco"), in consideration of 4 million "unregistered" and "restricted" post-split shares of the $0.001 par value common stock of Onasco (the "Purchase Transaction"); and
WHEREAS, the parties to the Purchase Transaction wish to document its terms by means of the Purchase Agreement; and
WHEREAS, the Board of Directors and the undersigned stockholder deem it to be in the best interests of the Corporation to proceed with the Purchase Transaction and to take such actions as will facilitate it;
NOW, THEREFORE, be it RESOLVED, that the undersigned sole stockholder of the Corporation hereby consents to the execution by the Corporation of the Purchase Agreement, the sale of the Assets and the performance by the executive officers of such other actions as are necessary to carry out its terms or such sale.

Date: 5 - 3 - 95                             /s/ James W. Ratliff
      --------------                         ----------------------------------
                                             James W. Ratliff	

EXHIBIT "E"
RESOLUTIONS OF THE BOARD OF DIRECTORS
OF
ONASCO COMPANIES, INC.

RESOLUTIONS OF THE BOARD OF DIRECTORS OF
ONASCO COMPANIES, INC.
The undersigned, being all of the duly elected and incumbent directors of Onasco Companies, Inc., a Utah corporation (the "Corporation"), acting pursuant to Section 16-10a-821 of the Utah Revised Business Corporation Act, do hereby consent to and adopt the following resolutions, effective the date hereof:
WHEREAS, the Corporation has been engaged in negotiations to acquire certain assets (the "Assets") currently owned by Industrial Resources, Corporation, a Kentucky corporation ("IRC"), in consideration of 4 million "unregistered" and "restricted" post-split shares of the $0.001 par value common
stock of the Corporation (the "Purchase Transaction"); and
WHEREAS, the parties to the Purchase Transaction wish to document its terms by means of a Purchase Agreement, a copy of which has been presented to a meeting of the Board of Directors and which is made a part hereof; and
WHEREAS, the Board of Directors deems it to be in the best interests of the Corporation to proceed with the Purchase Transaction and to take such actions as will facilitate it; and
WHEREAS, the Board of Directors further deems it to be in the best interests of the Corporation to change its domicile from the State of Utah to the State of Tennessee and to appoint a new Board of Directors to manage the affairs of the Corporation in light of its changed direction; and
WHEREAS, the Board of Directors has caused Tengasco, Inc., a Tennessee corporation ("Tengasco"), to be organized in order to facilitate the change of domicile of the Corporation; and
WHEREAS, on April 11, 1995, the Board of Directors resolved that, in the event that a corporate reorganization is concluded between the Corporation and IRC, the new directors of the Corporation and Duane S. Jenson shall each be granted options to purchase 100,000 "unregistered" and "restricted" shares of common stock of the Corporation at the price of $0.25 per share;
N0W, THEREFORE, be it RESOLVED, that the Board of Directors hereby authorizes the President and the Secretary of the Corporation to execute the Purchase Agreement and hereby adopts the Purchase Agreement as a binding obligation of the Corporation; and
FURTHER, RESOLVED, that the Board of Directors hereby authorizes the issuance of 4 million "unregistered" and "restricted" post-split shares of the $0.001 par value

common stock of the Corporation under the Purchase Agreement to IRC, with such shares to be fully paid and non-assessable; and
FURTHER, RESOLVED, that the Corporation adopt a Plan of Merger and such Articles of Merger as are required by the Utah Revised Business Corporation Act and/or the Tennessee Business Corporation Act to provide for the merger of the Corporation into Tengasco in order to effect a change of domicile of the Corporation to the State of Tennessee; and
FURTHER, RESOLVED, that the exercise price of the options granted pursuant to the resolution of the Board of Directors on April 11, 1995, shall be modified to be $0.275 per share, which amount is equal to 110% of the bid price for the Corporation's common stock on the date of the grant, that the shares to be purchased thereby shall be post-split shares and that the Corporation engage
counsel to prepare a stock option plan with regard to these options; and
FURTHER, RESOLVED, that the Corporation adopt written consultant compensation agreements to issue an aggregate of 480,000 post-split shares of common stock of the Corporation to Jeffrey D. Jenson, Michael E. Ratliff and Leonard W. Burningham, Esq., in consideration of services rendered and to be rendered to the Corporation in "non-capital raising transactions," with the appropriate restrictions as provided under Rule 701 of the Securities and Exchange Commission. Such shares shall be fully paid and non-assessable upon the performance of said services; and
FURTHER, RESOLVED, that the present directors of the Corporation shall submit their resignations in seriatim and that the following designees of IRC shall be appointed to serve as directors in their place, effective as of the closing of the Purchase Agreement, and subject to the receipt by the Corporation of a Consent signed by each such person to serve in such capacity: Edgar G. Baugh; William A. Moffett; Joe Mattei; Jack Earnest; Ray E. Johnson; Charles N. Manhoff; and Walter Arzonetti; and
FURTHER, RESOLVED, that the present executive officers of the Corporation shall submit their resignations in seriatim and that the following designees of IRC shall be appointed to serve as executive officers in their place, effective as of the closing of the Purchase Agreement, and subject to the receipt by the Corporation of a Consent signed by each such person to serve in such capacity:
George E. Walter, Jr. (President/CEO); and James C. Walter (Vice President and Secretary/Treasurer); and
FURTHER, RESOLVED, that the executive officers of the Corporation are hereby authorized to retain counsel to prepare and file with the Securities and Exchange Commission a Registration Statement on Form 10-SB within 90 days of the execution of the Purchase Agreement; and
2

FURTHER, RESOLVED, that the executive officers of the Corporation are hereby authorized to engage an accountant to prepare the consolidated financial statements, taking into account the acquisition of the Assets, that will be filed concurrently with the Corporation's Form 10-SB; and
FURTHER, RESOLVED, that regardless of the fact that a substantial portion of the value of the Assets being acquired is represented by securities, the Corporation shall not be deemed to be an "investment company" as that term is defined under the Investment Company Act of 1940, as amended, as the Corporation has no intention of engaging in such business now or in the near future.

Date: 5-2-95                                 /s/ Jeffrey D. Jenson
      --------------                         ----------------------------------
                                             Jeffrey D. Jenson

Date: 5-2-95                                 /s/ Travis T. Jenson
      --------------                         ----------------------------------
                                             Travis T. Jenson

Date: 5-2-95                                 /s/ Kathleen L. Morrison
      --------------                         ----------------------------------
                                             Kathleen L. Morrison	

3

EXHIBIT "F"
RESIGNATIONS OF THE DIRECTORS AND EXECUTIVE OFFICERS
OF
ONASCO COMPANIES, INC.

RESIGNATION OF JEFFREY D. JENSON
Due to the completion of the Purchase Agreement between Onasco Companies, Inc., a Utah corporation (the "Company"), and Industrial Resources, Corporation, a Kentucky corporation ("IRC"), the change of domicile of the Company and the change of direction that it will be taking, I, Jeffrey D. Jenson, hereby resign my position as a director and executive officer of the Company, effective immediately.

DATED: 5-2-95                                /s/ Jeffrey D. Jenson
      --------------                         ----------------------------------
                                             Jeffrey D. Jenson	

RESIGNATION OF KATHLEEN L. MORRISON
Due to the completion of the Purchase Agreement between Onasco Companies,
Inc., a Utah corporation (the "Company"), and Industrial Resources, Corporation, a Kentucky corporation ("IRC"), the change of domicile of the Company and the change of direction that it will be taking, I, Kathleen L. Morrison, hereby resign my position as a director and executive officer of the Company, effective immediately.

DATED: 5-2-95                                /s/ Kathleen L. Morrison
      --------------                         ----------------------------------
                                             Kathleen L. Morrison	

RESIGNATION OF TRAVIS T. JENSON
Due to the completion of the Purchase Agreement between Onasco Companies, Inc., a Utah corporation (the "Company"), and Industrial Resources, Corporation, a Kentucky corporation ("IRC"), the change of domicile of the Company and the change of direction that it will be taking, I, Travis T. Jenson, hereby resign my position as a director and executive officer of the Company, effective immediately.

DATED: 5-2-95                                /s/ Travis T. Jenson
      --------------                         ----------------------------------
                                             Travis T. Jenson	

EXHIBIT "G"
CERTIFICATE OF GOOD STANDING
OF
ONASCO COMPANIES, INC.

04/26/95 --- STATE OF UTAH - DEPARTMENT OF COMMERCE --- 09:49:45
--- CERTIFICATION OF GOOD STANDING ---
THE UTAH DIVISION OF CORPORATIONS AND COMMERCIAL CODE HEREBY CERTIFIES THAT
ONASCO COMPANIES, INC.
IS A UTAH CORPORATION AND IS QUALIFIED TO TRANSACT BUSINESS IN THE STATE OF UTAH. A CERTIFICATE OF INCORPORATION WAS ISSUED FROM THIS OFFICE ON 04-24-1916 AND SAID CORPORATION IS IN GOOD STANDING, AS APPEARS OF RECORD IN THE OFFICES OF THE DIVISION.

                                                       DATED THIS 26TH DAY
FILE #  011835                                          OF APRIL, 1995

----------------------------------
THIS CERTIFICATION IS NOT VALID
UNLESS PRINTED ON PAPER DISPLAYING
THE STATE SEAL IN BLUE, THE               REMOTE ACCESS CERTIFICATION # 054540
DIVISION SEAL IN GOLD, AND THE
DIVISION DIRECTOR'S SIGNATURE.
----------------------------------
--------------------------------------------------------------------------------

                                 CTRL "B" = EXIT _
Menu: [Ctrl R-Shift]                 19200 8N1                  VT100     Online

[STAMP]
DIVISION OF CORPORATIONS                     /s/ Korla T. Woods
AND COMMERCIAL CODE                          ----------------------------------
                                             Korla T. Woods
                                             Director, Division of
                                             Corporations and Commercial Code	

EXHIBIT 10.1 (b)

INDUSTRIAL RESOURCE, CORP.
Rt. 6, Box 248A
Manchester, Kentucky 40962
ofc (606)598-7701 -- FAX (606)598-7798
Mr. Jeff Jenson March 5, 1996
1787 E. Fort Union Blvd.
Suite 106
Salt Lake City, UT 84121
Re: Amendment to that certain "Purchase Agreement" dated May 2, 1995 between Onasco Companies, Inc. and Industrial Resource, Corp.
Dear Mr. Jenson,
Pursuant to our telephone conversation we hereby agree to amend the subject Agreement as follows;
1. Equipment listed in Exhibit "A" attached hereto shall be excluded from that Agreement.
2. Additionally Industrial Resource Corp. agrees to sell the assets to the Corporation at there appraised value or $450,000.00 whichever is lower. The consideration for this sale shall be a note payable for $450,000.00 with interest at 8% simple annually.
Agreed to by;

/s/ Jeff Jenson
----------------------------
Jeff Jenson

/s/ James Ratliff
----------------------------
James Ratliff
for Industrial Resource, Corp.	

[LOGO]                  Miller Services, lnc.
              ---------------------------------------------
              OIL/GAS DRILLING  o  OPERATING AND PRODUCTION
              ---------------------------------------------
              POST OFFICE B0X 130 o  HUNTSVILLE, TN 37756
                         PHONE (615) 663-9457
                          FAX (615) 663-9461	

February 22, 1996
Mr. Jeff DeMussik
TENGASCO, INC.
 603 Main Ave., Ste. 500
Knoxville, Tn. 37902
Dear Jeff:
Pursuant to your request that I do an appraisal on the following equipment:
COOPER TC 38-38 SERVICE RIG

     Double drum well service unit, S/N 00339, Braden winch, powered by GM 6-71
diesel engine, Allison transmission, Skytop 84' 155, 000# capacity derrick,
hydraulically raised and telescoped, 3-sheave crown block assembly, tubing
board, control console, guy lines, stairs, catwalks, handrails, toolboxes, fuel
tank, 2 fire extinguishers. All above are mounted and unitized on a four axle
"back-in" carrier, 2 jack stands, 10.00 x 20 tires front and rear, approx. 600'
Of 7/8"th's inch tubing line, approx. 6,000' of 5/8" swab line.	

One: McKissick 2-sheave split block
Foster 58.96 tubing tongs for 2 3/8", 2 7/8", and 4 1/2"

(Reconditioned)
Cavins type "B" tubing slips (air)
2 3/8" BJ tubing slips (Reconditioned)
Rod tools
Rod Hook
Base Beam & new floor
Two: 5/8" Elevators
$ 89,300.00

1 - 4 INCH FRAC VALVE 6000# W.P.
$2,300.00
1 - NORRISEAL DEHYDRATOR Serial #2230450A, Model #25M60-SLDF-AB, 1001-a Norriseal control $17,000.00
1 - DEHYDRATION UNIT Serial #PESI 421, complete with 25' tall tower; nameplate data: NWP 1200 PSI, 100-F, SN 67-7615, Year 1985, T.P. 1800, W.O. 4386 $16,250.00
1 - AJAX DPC 160 GAS COMPRESSOR w/GLYCOL RE-BOILER & TOWER ID#s K-6001-C 5000,
A-2002-G, Model #507, Serial #36957, A-2801-F $ 84,000.00
1 - INGERSOLL RAND COMPRESSOR ID #s-Serial #13936, 95024A 566567, 46-B7782 87042
F, 47177118 490, 97032 6284, Model # NXRB-1-5, B-8791 $ 41,000.00
1 - INGERSOLL RAND (PARTS COMPRESSOR) Serial #91890, 2 B-184,
25416-361
$ 9,000.00
CHICAGO PNEUMATIC COMPRESSOR - FE-2, 8 1/4" X 4 1/4" X 5" STROKE (ID#86053), with Waukasau H-2475 engine (ID#52181), and fan type air exchanger (ID#867), all mounted on one oil field skid
$ 71,000.00
CHICAGO PNEUMATIC COMPRESSOR - Model YCE Gas Compressor (ID #279936), with Model 6G510 Natural Gas Engine, radiators, coolers, etc.

$ 67,200.00
INTERNATIONAL TRACTOR - 1D# TDA2274CG, 1982
$ 7,500.00
INTERNATIONAL TRACTOR - F2000D, ID #112313H, 1966 w/winch
$ 5,000,00
LOWBOY TRAILER - ID# B12466, 1979 35 Ton
$ 7,200.00
GOOSENECK 5TH WHEEL TRAILER - #5027
$ 3,500.00

CATERPILLAR D-5 DOZER - 10 ft. Blade, Tilt & winch
$ 25,000.00
As you know, I am familiar with the history of the above drilling equipment. Maintenance of this equipment has been very good. I consider this equipment to be in very good condition.
Sincerely,

/s/ Deloy Miller
----------------
Deloy Miller
President	

EXHIBIT 10.1 (c)

GENERAL BILL OF SALE
In consideration of four hundred fifty thousand dollars ($450,000.00), paid to me this day by TENGASCO, INC., as buyer, whose address is 4928 HOMBERG DR. #B-3, KNOXVILLE, Tennessee 37919, I, INDUSTRIAL RESOURCE CORP., whose address is RT. 6 BOX 248A RT. 6, MANCHESTER, Kentucky 40962, hereby grant, transfer, sell and deliver to buyer the following property: OILFIELD EQUIPMENT PER "EXHIBIT A" ATTACHED HERETO.
I agree that I will warrant and defend the buyer, the buyer's personal representatives, successors and assigns against any claims made by any person against this proper
This property is sold "as is" and "where is," and no warranties express or implied are made as to the condition of this property.

6/1/95                                             [illegible]
-------                                            --------------------------
Date                                               INDUSTRIAL RESOURCE CORP.	

PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, TENGASCO, INC., as maker, promises to pay to the order of INDUSTRIAL RESOURCE CORP., or any subsequent holder of this Note, the sum of four hundred fifty thousand dollars ($450,000.00) with interest from the date hereof at the rate of 8.0% per annum, calculated monthly, the principal and interest to be paid as set forth below.
Payment of Principal and Interest. Payment of principal and interest is to be made to the holder of this Note on or by December 31st, 1997.
No Prepayment Penalty. The entire principal balance of this Note can be prepaid at any time without penalty.
Default - Waiver - Acceleration. In the event of default on this Note, Maker, TENGASCO, INC., waives demand, presentment of payment, protest, notice of protest, dishonor and any defense by reason of any extension of time or other indulgence granted by the holder of this Note, and agrees that, if any payment on this Note is not made when due, the holder shall have the right to accelerate and make the entire unpaid balance of principal and interest immediately due and payable. Default is defined as:
a. Failure to make any payment of principal or

Page 2
interest when due under the terms of this Note;
b. The violation of any other term, condition or promise of this Note; or
c. A filing by or against Maker, TENGASCO, INC., of any Bankruptcy proceeding, or any filing of relief of debtors in any court or under any statute.
Costs. If the holder of this Note incurs any costs in the collection or enforcement of this Note, including costs of filing suit and reasonable attorney fees, Maker agrees to pay such costs.
Construction. If more than one party is named as the Maker of this Note, the obligations incurred by each party are joint and several.
This Note shall be interpreted in accordance with the laws of Tennessee. No provision of this Note shall be affected by the invalidity of any other provision or provisions contained herein.

/s/ [illegible]                            June 1, 1995
---------------                            -------------
TENGASCO, INC.                             Date

----------------                           -------------
Witness                                    Date	

EXHIBIT 10.2(a)

COMPENSATION AGREEMENT
THIS AGREEMENT made and entered into this 2nd day of May, 1995, by and between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), of 1787 East Ft. Union Blvd., #106, Salt Lake City, Utah 84121, and M. E. Ratliff (the "Consultant").
WITNESSETH:
WHEREAS, the Consultant has provided substantial services for the benefit of Onasco in connection with its contemplated acquisition of certain assets from Industrial Resources, Corporation, a Kentucky corporation ("IRC"); and
WHEREAS, Onasco desires to compensate the Consultant for his efforts on behalf of Onasco estimated to be of a value of $21,500, which shall include all expenses incurred by the Consultant or paid by him for and on behalf of Onasco which were in any way related to the acquisition of these assets;
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and other good and valuable consideration, and the covenants and conditions contained herein, the parties hereto hereby agree as follows, to-wit:
1. This Compensation Agreement shall contain the entire agreement between the parties and may not be altered or amended except in writing signed by Onasco and the Consultant.
2. Both Onasco and the Consultant intend that this Compensation Agreement shall be construed as the "Compensation Agreement" contemplated by Rule 701 of the Securities and Exchange Commission.
3. Onasco shall, upon execution hereof issue to the Consultant 215,000 "unregistered" and "restricted" post-split shares of common stock of Onasco for $21,500 compensation of the Consultant and for all services, expenses and payments made for and on behalf of Onasco to date, regarding the acquisition of assets from IRC.
4. By execution hereof and acceptance of the shares set forth above, the Consultant releases Onasco and holds Onasco harmless and agrees to indemnify Onasco from any and all claims, demands, expenses and liabilities for any such services, costs or expenses incurred for or on behalf of Onasco prior to the date hereof, related to the acquisition of assets from IRC.
5. This Compensation Agreement shall be construed in accordance with the laws of the State of Utah.

IN WITNESS WHEREOF, the parties have set their hands and seals the date set forth above.
ONASCO COMPANIES, INC.

By /s/ Jeff D. Jenson
----------------------
Jeffrey D. Jenson
President

/s/ M. E. Ratliff
-----------------
M. E. Ratliff	

2

EXHIBIT 10.2(b)

COMPENSATION AGREEMENT
THIS AGREEMENT made and entered into this 2nd day of May, 1995, by and between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), of 1787 East Ft. Union Blvd., #106, Salt Lake City, Utah 84121, and Jeffrey D. Jenson, the President and a Director of Onasco (the "Director and President").
WITNESSETH:
WHEREAS, the Director and President has provided substantial services to Onasco in connection with its contemplated acquisition of certain assets from Industrial Resources, Corporation, a Kentucky corporation ("IRC"); and
WHEREAS, Onasco desires to compensate the Director and President for his efforts on behalf of Onasco estimated to be of a value of $21,500, which shall include all expenses incurred by the Director and President or paid by him for and on behalf of Onasco which were in any way related to the acquisition of these assets;
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and other good and valuable consideration, and the covenants and conditions contained herein, the parties hereto hereby agree as follows, to-wit:
1. This Compensation Agreement shall contain the entire agreement between the parties and may not be altered or amended except in writing signed by Onasco and the Director and President.
2. Both Onasco and the Director and President intend that this Compensation Agreement shall be construed as the "Compensation Agreement" contemplated by Rule 701 of the Securities and Exchange Commission.
3. Onasco shall, upon execution hereof issue to the Director and President 240,000 "unregistered" and "restricted" post-split shares of common stock of Onasco for $21,500 compensation of the Director and President and for all services, expenses and payments made for and on behalf of Onasco to date, regarding the acquisition of assets from IRC.
4. By execution hereof and acceptance of the shares set forth above, the Director and President releases Onasco and holds Onasco harmless and agrees to indemnify Onasco from any and all claims, demands, expenses and liabilities for any such services, costs or expenses incurred for or on behalf of Onasco prior to the date hereof, related to the acquisition of assets from IRC.
5. This Compensation Agreement shall be construed in accordance with the laws of the State of Utah.

IN WITNESS WHEREOF, the parties have set their hands and seals the date set forth above.
ONASCO COMPANIES, INC.

By /s/ Kathleen L. Morrison
   -------------------------
   Kathleen L. Morrison
   Secretary

   /s/ Jeffrey D. Jenson
   --------------------------
   Jeffrey D. Jenson	

2

EXHIBIT 10.2(c)

COMPENSATION AGREEMENT
THIS AGREEMENT made and entered into this 2nd day of May, 1995, by and between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), of 1787 East Ft. Union Blvd., #106, Salt Lake City, Utah 84121, and Leonard W. Burningham, Esq. (the "Consultant").
WITNESSETH:
WHEREAS, the Consultant has provided legal services to Onasco in connection with its contemplated acquisition of certain assets from Industrial Resources, Corporation, a Kentucky corporation ("IRC"), and has agreed to provide legal services to assist Onasco in preparing and filing a Registration Statement on Form 10-SB of the Securities and Exchange Commission; and
WHEREAS, Onasco desires to compensate the Consultant for his efforts on behalf of Onasco to date, which have not been paid by Onasco in cash, estimated to be of a value of $2,500, and for additional services to be rendered by the Consultant of a value of $2,500, in connection with the preparation of the Registration Statement on Form 10-SB, not including expenses, and all as outlined in the letters of the Consultant dated April 19 and April 27, 1995, copies of which are attached hereto (the "Letters"), and are incorporated herein by reference;
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and other good and valuable consideration, and the covenants and conditions contained herein, the parties hereto hereby agree as follows, to-wit:
1. This Compensation Agreement shall contain the entire agreement between the parties and may not be altered or amended except in writing signed by Onasco and the Consultant.
2. Both Onasco and the Consultant intend that this Compensation Agreement shall be construed as the "Compensation Agreement" contemplated by Rule 701 of the Securities and Exchange Commission.
3. Onasco shall, upon execution hereof issue to the Consultant 50,000 "unregistered" and "restricted" post-split shares of common stock of Onasco for $5,000 compensation of the Consultant as outlined in the Letters.
4. By execution hereof and acceptance of the shares set forth above, the Consultant releases Onasco and holds Onasco harmless and agrees to indemnify Onasco from any and all claims, demands, expenses and liabilities for any such services, costs or expenses incurred for or on behalf of Onasco prior to the date hereof, and for services to be rendered, all only to the extent outlined in the Letters.

5. This Compensation Agreement shall be construed in accordance with the laws of the State of Utah.
IN WITNESS WHEREOF, the parties have set their hands and seals the date set forth above.
ONASCO COMPANIES, INC.

By /s/ Jeffrey D. Jenson
   ----------------------------------
   Jeffrey D. Jenson
   President

   /s/ Leonard W. Burningham, Esq.
   ----------------------------------
   Leonard W. Burningham, Esq.	

LEAONARD W. BURNINGHAM
LAWYER
HERMES BUILDING o SUITE 205
455 EAST FIFTH SOUTH
SALT LAKE CITY, UTAH 84111-3323
TELEPHONE (801) 363-7411
 FAX: (801) 355-7126
April 19, 1995
Industrial Resource Corporation
FACSIMILE NO. (615) 450-9375

Attention:        The Board of Directors
                  Mike Ratliff, Consultant

Re:               Proposed acquisition of assets of Industrial Resource
                  Corporation, a Tennessee corporation ("Industrial"), by Onasco
                  Companies, Inc., a Utah corporation ("Onasco")	

Dear Ladies and Gentlemen:
Recently, you forwarded me a retainer in the amount of $5,000 for legal fees to be rendered in connection with the above referenced matter. Please be advised that I represent Onasco in connection with this proposed transaction, regardless of the fact that you have paid these fees; one of the conditions of Onasco to this proposed transaction was that you pay my fees, which will amount to $10,000, plus approximately $1,500 in costs, which should cover new stock certificates, filing fees and transfer fees.
I am enclosing herewith a copy of the Notice of Special Meeting of Stockholders of Onasco set for April 28, 1995; preliminary drafts of the
Purchase Agreement have been forwarded to you, and, subject to review by the respective Boards of Directors of Industrial and Onasco, the Purchase Agreement can be concluded prior to April 28.
On Closing, you will be required to pay the additional $6,500.
You are urged to have your own counsel review all documentation prepared and submitted to you for your review.
It is my understanding that once the Purchase Agreement is concluded and your nominees are designated to serve on the Board of Directors of Onasco, then to be known as "Tengasco," you wish me to prepare a Confidential Limited Offering Memorandum pursuant to which you may offer "unregistered" and "restricted" securities of Tengasco, and a Form 10-SB Registration Statement for filing with the Securities and Exchange Commission.

Page 2
April 19, 1995
Fees for each of these projects can run up to $15,000, for an aggregate total of $30,000.
I am willing to prepare both of these documents for the sum of $22,500, which will include all broker agreements, investor questionnaires, subscription agreements, escrow agreements and other related instruments, minutes or consents required for the Memorandum, with the exception of compliance with applicable Blue Sky laws, rules and regulations, which will be billed at a rate of $350 per state in which these securities are to be offered, and if no exemption is available in any such state, at a rate of $l75 per hour if you require registration, plus the actual filing fee required by any such state; and all documents, minutes or consents required or necessary to complete and file the Form 10-SB Registration Statement, through all Securities and Exchange Commission comments.
I will require one-half of this amount to be paid in advance, together with $2,500 for direct costs and expenses I may incur for deposit in my trust account.
The sooner I receive this retainer and deposit, the sooner I can begin.
Yours very sincerely,

/s/ Leonard W. Burningham
-----------------------------------
Leonard W. Burningham	

LWB/sr
cc: Jeff Jenson

LEAONARD W. BURNINGHAM
LAWYER
HERMES BUILDING o SUITE 205
455 EAST FIFTH SOUTH
SALT LAKE CITY, UTAH 84111-3323
TELEPHONE (801) 363-7411
 FAX: (801) 355-7126
April 27, 1995
Industrial Resources, Corporation
FACSIMILE NO. (615) 450-9375

Attention:    The Board of Directors
              Mike Ratliff, Consultant

Re:           Proposed acquisition of assets of Industrial Resources,
              Corporation, a Kentucky corporation ("Industrial"), by Onasco
              Companies, Inc., a Utah corporation ("Onasco"), and fee
              arrangements for services to be rendered as outlined in my letter
              under date of April 19, 1995	

Dear Ladies and Gentlemen:
The following is my understanding of the fee arrangements to which you and Onasco are agreeable, regarding my services related to the acquisition of assets, the preparation of a limited offering memorandum (the "Memorandum") and the preparation of a registration statement of Form 10-SB of the Securities and Exchange Commission (the "Registration Statement."
First, I have been paid the sum of $5,000 in cash for services related to the acquisition, and I will receive 25,000 post-split shares of common stock of Onasco under a written compensation agreement and in conformance with Rule 701 of the Securities and Exchange Commission, following the one for two reverse split that is contemplated to be completed at a stockholders' meeting set for April 28, 1995.
I will receive $6,500 today, $5,000 of which will be for services related to the Memorandum and all related documents and agreements as outlined in my letter of the 19th, with the exception that all "blue sky" fees and costs outlined in my letter will also be paid as such services are rendered. The $1,500 shall be for unallocated costs related to the acquisition, including federal express, filing fees for the Articles of Amendment the Certificate of Merger to change the domicile of Onasco to Tennessee, printing of new stock certificates and transfer fees related to the acquisition, but excluding mailing costs of any stockholders' letter.

Page 2
April 27, 1995
Additionally, I will receive 25,000 post-split shares under Rule 701 for the preparation of the Registration Statement, with you to pay all filing fees and my related direct out-of-pocket costs, including copies, federal express and the like.
I will prepare the necessary written compensation plan for your review and acceptance. This letter is being addressed to you because your designees will be assuming control of Onasco following the completion of the acquisition, and a copy thereof is being forwarded to Onasco.
If you have any questions, please contact me.
Yours very sincerely,

/s/ Leonard W. Burningham
-----------------------------------
Leonard W. Burningham	

Accepted:
Industrial Resources, Corporation
By ______________________________
Onasco Companies, Inc.
By ______________________________

EXHIBIT 10.3

GAS PURCHASE AND SALES AGREEMENT

                              Table of Contents

Section         Title                                                     Page

  1             Definitions                                                 1
  2             Construction of Facilities                                  2
  3             Quantity                                                    3
  4             Point of Delivery                                           3
  5             Delivery Pressure                                           3
  6             Price                                                       3
  7             Term                                                        5
  8             Title, Possession And Control                               5
  9             Taxes                                                       6
  10            Quality                                                     6
  11            Standards for Measurement and Tests                         7
  12            Billings and Payments                                       9
  13            Warranty of Title to Gas                                   10
  14            Force Majeure                                              10
  15            Defaults and Remedies                                      13
  16            Miscellaneous                                              14
                Signature Page                                             15	

GAS PURCHASE AND SALES AGREEMENT
THIS AGREEMENT made, entered into and effective this ___ day of ________________________, 1996, by and between The Natural Gas Utility District of Hawkins County, TN., hereinafter referred to as "Buyer", and TENGASCO, hereinafter referred to as "Seller".
WITNESSETH:
WHEREAS, Seller has a supply of natural gas available for sale to be produced from various wells located in Hancock County, Tennessee; and
WHEREAS, Buyer owns and operates a natural gas distribution system, located in Hawkins County, Tennessee; and
WHEREAS, Seller desires to sell and deliver to Buyer and Buyer desires to purchase and receive from Seller natural gas in the quantities and under the terms and conditions hereinafter set forth; and
WHEREAS, Seller desires to transport gas in excess of Buyer's requirements as set forth herein and Buyer agrees to transport such excess gas under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual benefits and covenants contained herein, Buyer and Seller have agreed as follows:
1.0 DEFINITIONS
Unless expressly stated otherwise, the following terms, when used in this Agreement, shall mean:
1.1 The terms "gas" and "natural gas" shall mean and include casinghead gas produced with crude oil, natural gas from gas wells, and residue gas resulting from processing casinghead gas, gas well gas, or both.
1

1.2 A day shall begin at 8:00 a.m. in the time zone at the point of delivery on each calendar day and end at 8:00 a.m. on the following calendar day; a month or year shall begin at 8:00 a.m. on the first calendar day of such period of time and end at 8:00 a.m. on the first calendar day following such period.
1.3 The term "cubic foot" shall mean the volume of gas which occupies one cubic foot when such gas is at a temperature of 60 degrees Fahrenheit and at a pressure of 14.73 pounds per square inch absolute.
1.4 The term "Mcf" shall mean one thousand (1,000) cubic feet.
1.5 The term "Btu" shall mean the quantity of heat that must be added to one pound avoirdupois of pure water to raise its temperature from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of fourteen and seventy-three hundredths pounds per square inch absolute (14.73 psia).
1.6 The term "MMBtu" shall mean one million (1,000,000) Btu's.
1.7 The term "Seller's Facilities" shall mean any and all facilities required to be constructed and installed by Seller, at its sole cost and expense, to enable Seller to deliver gas to Buyer at the Point of Delivery specified in Section 4 hereof, in the quantities provided for in Section 3 hereof and meeting the quality specifications provided for in Section 10 hereof.
1.8 The term "Buyer's Facilities" shall mean any and all facilities required to be constructed and installed by Buyer, at its sole cost and expense, to enable Buyer to commence the receipt of gas from Seller at the Point of Delivery specified in Section 4 hereof.
2.0 CONSTRUCTION OF FACILITIES
2.1 Upon the execution of this Agreement, Seller and Buyer agree to proceed in good faith and with due diligence in the construction of Seller's and Buyer's facilities, respectively, and upon completion of such facilities the parties shall commence the delivery and receipt of gas as soon as practical thereafter. In no event shall Buyer be obligated to pay for any gas hereunder prior to the time Seller's and Buyer's facilities have been constructed and made available to deliver and receive gas.
2

3.0 QUANTITY
3.1 Daily Quantity - On each day during the term of this agreement, Buyer shall have the right to purchase and receive Seller's available production up to a total quantity of 4,000 MCF/D. Seller shall be obligated to sell and deliver to Buyer from its production wells in Hancock County, Tennessee, its available production up to a total quantity of 4,000 MCF/D.
3.2 Buyer shall have first option to purchase and receive Seller's production in excess of 4,000 MCF/D. In the event Buyer chooses not to purchase such excess quantities, or does not take it's total quantity of 4,000 MCF/D, Buyer agrees to receive such quantities and transport such gas across its distribution system to the extent possible with existing facilities on behalf of Seller or third party purchaser to mutually agreeable points of delivery and at an initial transportation rate of $0.20 per MMBtu. In no event shall gas be sold by Seller or transported and delivered by Buyer or Seller to any customer or potential customer of Buyer within Buyer's service area without the written consent of Buyer. Seller shall be responsible for all facilities including compression, if necessary, to deliver gas into the ETNG pipelines or other third party facilities. In no event shall Buyer be required to install additional facilities for transporting gas for Seller. In the event facilities on Buyer's system are required for transporting Seller's excess gas, Buyer may, at it's option, construct necessary facilities and Seller hereby agrees to reimburse Buyer for the cost of such facilities.
4.0 POINT OF DELIVERY
4.1 Seller shall make deliveries of gas hereunder to Buyer at the point of delivery. The point of delivery for all gas delivered under this Agreement shall be at the interconnection of Seller's and Buyer's facilities located at a mutually agreeable point on Buyer's Distribution System in Hawkins County, Tennessee.
5.0 DELIVERY PRESSURE
5.1 Seller shall make deliveries of gas hereunder to Buyer at the pressure required by Buyer from time to time to enable the gas to enter Buyer's facilities at Buyers normal distribution pressure.
6.0 PRICE
6.1 The initial price per MMBtu to be paid by Buyer to Seller for all gas purchased and sold hereunder for the first 12 months following the commencement of deliveries hereunder shall be
3

priced at the first of the month index price as published in "Inside FERC Gas Market Report" under "prices of spot gas delivered to pipelines" for deliveries into Tennessee Gas Pipeline, On Shore La., zone 1 plus $0.20 per MMBtu. In the event that the "Inside FERC" index is no longer published, the parties shall mutually agree to utilize some other index which is representative of gulf coast gas supplies.
6.2 One hundred Eighty (180) days prior to the expiration of the first 12 months following initial deliveries hereunder, Seller and Buyer shall have the right to request that the initial price set forth above in Section 6.1 be redetermined as provided in Section 6.3 and 6.4 below.
6.3 In the event Seller or Buyer exercises its right provided in Section 6.2 above to request a redetermination of the initial contract price for gas delivered to Buyer hereunder, such request shall be made in writing and Seller and Buyer agree to negotiate in good faith to arrive at a mutually agreeable price based on current market conditions and Seller's ability to maintain a constant level of production.
In the event Seller or Buyer allows its right to request a price redetermination hereunder to lapse by failing to make timely written request as provided herein, Seller or Buyer shall thereafter next be entitled to request a price redetermination 270 days following initial deliveries.
6.4 In the event that Seller and Buyer cannot agree on a redetermined price for gas deliverable hereunder, Seller may solicit bona fide offers from third party purchasers for Seller's available gas supplies. Seller shall submit in writing to Buyer a notice setting out in reasonable detail the terms of any offer for such gas from third party purchases which is acceptable to Seller. Buyer shall have thirty (30) days after the date of Seller's Notice in which to elect in writing to continue purchasing such gas from Seller in accordance with the terms of the bona fide offer from third party purchases set out in Se11er's Notice, or to release such gas from commitment hereunder. In the event Buyer elects to release the gas, the obligations of the parties hereunder with respect to the sale and purchase of such gas shall continue for an interim period until the third party purchaser is able to accept deliveries of the released gas but in no event to exceed ninety (90) days, after which the obligations of the parties hereunder shall, except as otherwise provided herein, cease as to such
4

released gas. During such interim period, the price applicable to deliveries of gas by Seller to Buyer shall be the price determined according to Section 6.1 hereof, or such re-determined price in force and effect according to Section 6.2 and 6.3 hereof. Also, Buyer agrees to transport such released gas to the extent possible with existing facilities on behalf of Seller or such third party purchaser to mutually agreeable points of delivery and at a mutually agreeable transportation charge. In no event shall such released gas be sold by Seller and delivered by Buyer or Seller to any customer or potential customer of Buyer within Buyers service area without the written consent of Buyer. Seller shall be responsible for all facilities including compression, if necessary, to deliver gas into the ETNG pipeline or other third party facilities. In no event shall buyer be required to install additional facilities for transporting gas for Seller.
6.5 The initial transportation rate set forth in Section 3.2 herein shall be subject to re negotiation and adjustment contemporaneously with the price re determinations in this Section 6.
7.0 TERM
7.1 This agreement shall be in force and effect from the date first herein above written and continue for a term of 3 years following initial deliveries by Seller, unless terminated earlier as provided elsewhere herein, and on a year-to-year basis thereafter until terminated by either party driving 180 day prior notice to the other party to cancel this Agreement.
8.0 TITLE, POSSESSION AND CONTROL
8.1 As between the parties hereto, Seller shall be deemed to be in control and possession of the gas deliverable hereunder and responsible for any injuries, claims, liabilities or damages caused thereby prior to delivery to Buyer at the point of delivery. Buyer shall be deemed to be in exclusive control and possession thereof after receipt of gas meeting the quality specification set forth in Section 10 hereof, at the point of delivery and responsible for any injuries, claims, liabilities or damages caused by Buyer's possession and control. The party in control and possession of the gas meeting the quality specification set forth in Section 10 hereof, shall indemnify the other party with respect to any injuries, claims, liabilities, or damages occurring
5

while the gas is in it's control and possession. Title to the gas sold hereunder shall pass from Seller to Buyer at the point of delivery.
9.0 TAXES
9.1 Buyer shall not be responsible for any federal, state or local taxes on production, gathering, severance or other taxes levied on gas volumes delivered by Seller. Seller hereby agrees to indemnify Buyer for any and all losses, damages, or claims, including attorney fees, for Seller's failure to report and pay for any and all federal and state production, gathering, severance or similar taxes levied on gas volumes delivered by Seller.
10.0 QUALITY
Seller agrees that the gas delivered hereunder at the point of delivery specified in Section 4.1 will, upon delivery:
10.1 Have a total heating value of not less than one thousand (1,000) Btu's per cubic foot;
10.2 Be commercially free from dust, hydrocarbon liquids, water and any other substance that might become separated from the gas in Buyer's facilities, and Seller shall furnish, install and maintain and operate such drips, separators, heaters and other mechanical devices as may be necessary to effect compliance with such requirements;
10.3 Not contain more than twenty (20) grains of total sulfur, nor more than 1/4 of one grain of hydrogen sulfide per one hundred (100) cubic feet;
10.4 Not contain more than ten (10) parts per million by volume of oxygen, and Seller shall make every reasonable effort to keep the gas totally free of oxygen.
10.5 Not contain more than four percent (4%) by volume of a combined total of carbon dioxide and nitrogen components; provided, however, that the total carbon dioxide content shall not exceed three percent (3%) by volume.
10.6 Have a temperature of not more than one hundred (100) degrees Fahrenheit.
10.7 All gas shall have been dehydrated by Seller for removal of entrained water present therein in a vapor state, and in no event contain more than seven (7) pounds of entrained water per million cubic feet, at a pressure base of fourteen and seventy three (14.73) pounds per square inch and a
6

temperature of sixty (60) degrees Fahrenheit as determined by dew-point apparatus approved by the Bureau of Mines or such other apparatus as may be mutually agreed upon.
10.8 As to gas which fails to meet the quality specifications set forth above, Buyer, in addition to any legal remedies it may have, shall have the right to refuse delivery of such gas.
11.0 STANDARDS FOR MEASUREMENT AND TESTS
11.1 A purchase/sales meter shall be installed, maintained and operated by Seller at the point of delivery to measure all gas sold and/or delivered for transportation or displacement under this agreement. The volume shall be measured by orifice meters with linear charts, twenty-four (24) hour rotation, or other mutually agreeable measuring devices installed and operated, and computations made as prescribed in Gas Measurement Committee Report No. 3 of the American Gas Association, as such report may be amended or revised from time to time.
11.2 The unit of volume for purposes of measurement shall be one (1) cubic foot of gas at a temperature base of sixty degrees (60) Fahrenheit and at a pressure base of fourteen and seventy-three hundredths (14.73) pounds per square inch absolute.
11.3 Temperature shall be determined by a recording thermometer, when applicable, with twenty-four (24) hour chart rotation continuously used and installed so as to record properly the temperature of the gas flowing through the meter. The arithmetical average of the hourly temperatures recorded during each day shall be used to calculate volumes hereunder.
11.4 Specific gravity shall be determined with accuracy to the nearest one-thousandth (0.001) by taking samples of the gas at the point of measurement at such times as may be designated by the parties hereto, but not more often than once each month and having the specific gravity determined by the use of the Acme Senior Gravity Balance, or any other instrument mutually agreed upon.
11.5 The total heating value of the gas shall be determined by joint tests made by taking samples of gas at the point of delivery but not more than once each month. Such samples to have the Btu content per cubic foot determined by: (1) chromatographic analysis; or, (2) by calculation of gross heating value by compositional analysis. Buyer and Seller may mutually agree to utilize other
7

acceptable industry methods for determination of heating value. The Btu content shall be determined for a cubic foot of gas at a temperature of sixty degrees
(60) Fahrenheit and a pressure of fourteen and seventy-three hundredths (14.73) pounds per square inch absolute on a dry basis.
11.6 Tests to determine sulfur, hydrogen sulfide, oxygen, carbon dioxide, nitrogen and water content shall be made by approved standard methods in general use by the gas industry. Such tests shall be made at the request of either party. The cost of such test are to be paid by the requesting party.
11.7 The accuracy of the measuring and testing equipment shall be verified at least once each year and at other times upon request of Buyer or Seller. Tests for quality of the gas may be made at the time of testing equipment or at other times, but not more often than once each month. Notice of the time and nature of each test shall be given to the other party sufficiently in advance to permit convenient arrangement for a representative to be present. Tests and adjustments
shall be made in the presence of and observed by representatives of both Buyer and Seller. All tests shall be made by Buyer at Buyer's expense, except that Seller shall bear the expense of tests made at its request.
11.8 If at any time any of the measuring or testing equipment is found to be out of service or registering inaccurately in any percentage, it shall be adjusted at once to read accurately, within the limits prescribed by the manufacturer. If such equipment is out of service, or inaccurate by an amount exceeding two percent (2%) at a reading corresponding to the average rate of flow for the period since the last preceding test, the previous readings of such equipment shall be disregarded for any period definitely known or agreed upon, or if not so known or agreed upon, for a period of fifteen (15 days) or one-half of the elapsed time since the last test, whichever is shorter. The volume of gas delivered during such period shall be estimated (i) by using the data recorded by an check-measuring equipment, if installed and accurately registering, or, if not installed or registering accurately, (ii) by correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculation, or, if neither such method is feasible, (iii) by estimating the quantity or quality delivered, based upon deliveries under similar conditions during a period when the
8

equipment was registering accurately. No correction shall be made for recorded inaccuracies of two percent (2%) or less.
11.9 Buyer and Seller shall have the right to inspect equipment installed or furnished by the other, and the charts and other measurement or testing data of the other, at all times during business hours, but the calibration and adjustment of such equipment shall be done only by the party that installs or furnishes such equipment unless otherwise agreed upon. Each party shall preserve all original test data, charts and other similar records in such party's possession for a period of at least two (2) years.
12.0 BILLINGS AND PAYMENTS
12.1 On or before the 15th working day of each month after deliveries of gas are commenced, Seller shall render to Buyer an invoice for the preceding month showing the total volume and the gross heating value of gas delivered at the point of delivery hereunder.
12.2 Buyer will pay Seller on or before the 25th day of each month, or as to statements rendered after the 15th day of each month, within ten (10) days after receipt of such statements, for gas delivered during the preceding month. If the correct amount is not paid when due and such payment is not successfully disputed by Buyer, interest on any unpaid amount shall accrue at the rate of nine percent (9%) per annum. If such failure to pay continues for sixty (60) days, Seller, in addition to all other remedies, may thereafter suspend deliveries of gas hereunder and if such default continues for thirty (30) additional days, Seller may thereafter, in addition to any other rights Seller may have suspend or terminate this contract. Provided, however, if Buyer in good faith shall dispute the amount of any such invoice or part thereof and shall pay
to Seller such amounts as it concedes to be correct and shall undertake and guarantee to make payment to Seller of the amount ultimately found due upon such invoice after a final determination which may be reached either by agreement or judgment of the courts, as may be the case, then Seller shall not be entitled to suspend or terminate this contract.
12.3 Each party shall have the right to inspect and examine at all reasonable times the records and charts of the other party pertaining to the purchase and sale of gas hereunder. If any overcharge or
9

undercharge in any amount whatsoever shall be determined within 12 months from the date of the invoice and the invoice therefor has been paid, Seller shall refund the amount of any overcharge or Buyer shall pay the amount of any undercharge within thirty (30) days after the final determination thereof.
13.0 WARRANTY OF TITLE TO GAS
13.1 Seller warrants title to all gas delivered or to be delivered hereunder, that Seller has the right to sell the same, and that such gas is free from liens and adverse claims of every kind. Seller will pay, or cause to be paid, all royalties, taxes and other sums due on production, gathering, severance or handling of the gas delivered by Seller to Buyer. Seller will indemnify and save Buyer harmless against all loss, damage and expense of every character on account of adverse claims to the gas delivered by it or of royalties, taxes, payments or other charges thereon applicable before or upon delivery to Buyer. If Seller's title is questioned or involved in any action, Buyer may thereafter refuse without penalty to accept further deliveries from Seller and/or Buyer may withhold payment (without interest) of sums due hereunder up to the amount of the claim until title is free from such question or such action is finally determined, or until such time as Seller furnishes bond conditioned to save Buyer harmless with sureties satisfactory to Buyer.
14.0 FORCE MAJEURE
14.1 If either Buyer or Seller is rendered unable, wholly or in part, by force majeure to perform its obligations under this Agreement, other than the obligation to make payments then due for gas previously delivered, it is agreed that performance of the respective obligations of the parties hereto to deliver and receive gas, so far as they are affected by such force majeure, shall be suspended from the inception of any such inability until it is corrected but for no longer period. The party claiming such inability shall give notice thereof to the other party as soon as practicable after the occurrence of the force majeure. If such notice is first given by telephone or facsimile communication, it shall be confirmed promptly in writing giving full particulars. The party
10

claiming such inability shall promptly correct such inability to the extent it may be corrected through the exercise of reasonable diligence.
14.2 Neither party shall be liable to the other for any losses or damages, regardless of the nature thereof and howsoever occurring, whether such losses or damages be direct or indirect, immediate or remote, by reason of, caused by, arising out of, or in any way attributable to the suspension of performance of any obligation of either party to the extent that such suspension occurs because a party is rendered unable, wholly or in part, by force majeure to perform its obligations.
14.3 The term "force majeure" as used herein shall mean, cover and include the following:
(a) Acts of God or Acts of Providence including, without limitation, epidemics, landslides, hurricanes, floods, washouts, lightning, earthquakes, storm warnings, extreme heat or extreme cold; any other adverse weather conditions and threats of any of the foregoing, and whether preceded by, concurrent with, or followed by acts or omissions of any human agency, whether foreseeable or not, which may directly or indirectly contribute to or result in either party's inability to perform its obligations.
(b) Acts of Government including, without limitation, laws, orders, rules, decrees, judgments, judicial actions, regulations, acts of arrests or restraint, and threats of any of the foregoing, by any government (de jure or de facto), or any agency, subdivision or instrumentality thereof, having, claiming or asserting authority or jurisdiction over the severance, production, gathering, transportation, handling, sale or delivery of the subject matter of this Agreement, when any such Act of Government directly or indirectly contributes to or results in either party's inability to perform its obligations.
(c) Acts of Civil Disorder including, without limitation, acts of sabotage, acts of the public enemy, acts of war (declared or undeclared), blockades, insurrections, riots, mass protests or demonstrations and threats of any of the foregoing, and police action in connection with or in reaction to any such Acts of Civil Disorder, when any such Act of Civil Disorder directly or indirectly contributes to or results in either party's inability to perform its obligations.
11

(d) Acts of Industrial Disorder including, without limitation, strikes, lockouts, picketing and threats of any of the foregoing, when any such Acts of Industrial Disorder directly or indirectly contributes to or results in either party's inability to perform its obligations; provided, however, that the settlement of any labor dispute to prevent or end any such Acts of Industrial Disorder shall be within the sole discretion of the party to this Agreement involved in such labor dispute, and the above requirement that any inability shall be corrected with reasonable diligence shall not apply to labor disputes.
(e) Failure of Facilities including, without limitation, freezing of wells or lines of pipe, failures resulting from fires, washouts, mechanical breakdowns of, malfunctions of or necessities for making repairs or alterations to machinery, lines of pipe, pumps, compressors, valves, gauges or any of the equipment therein or thereon, and cratering, blowout, or failure of any well or wells to produce, when any such Failure of Facilities directly or indirectly contributes to or results in either party's inability to perform its obligations.
(f) Inability to obtain or acquire at reasonable cost grants, servitudes, rights-of-way, permits, licenses, or any other authorizations from third parties or agencies (private or governmental) or inability to obtain or acquire at reasonable cost necessary materials and supplies, to construct, maintain and operate any facilities required for the performance of any obligations under this Agreement, when any such inability directly or indirectly contributes to or results in either party's inability to perform its obligations.
(g) Any occurrence, condition, situation, or threat thereof, not covered by Subparagraphs (a) through (f) above, which renders either party unable to perform its obligations, provided such occurrence, condition, situation, or threat thereof is not under or within the control of the party claiming such inability, provided such party could not have prevented such occurrence, condition, situation, or threat thereof by the exercise of reasonable diligence.
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15.0 DEFAULTS AND REMEDIES
15.1 If a triggering event (as defined in Section 15.2 below) occurs at any time during the term of this agreement, then the non-defaulting party may terminate this agreement in accordance with the following:
(i) The non-defaulting party shall notify the other party in writing stating specifically the cause for terminating the agreement and declaring the intention of the non-defaulting party to terminate this agreement.
(ii) The other party shall have thirty (30) days after receipt of such notice in which to remedy or remove the cause or causes stated in the notice for termination. If within said thirty (30) day period the other party does so
remove or remedy said cause or causes and fully indemnifies the nondefaulting party for any and all consequences of such breach, then such notice shall be withdrawn and this agreement shall continue in full force and effect
(iii) If the other party does not so remedy and remove the cause or causes or does not indemnify the non-defaulting party within said thirty (30) day period, then this agreement shall terminate without waiver by the non-defaulting party of any other remedy it may have under this agreement or otherwise.
15.2 A "triggering event" shall occur when:
(i) The failure by Seller or Buyer to make, when due, any payment required under this agreement if such failure is not remedied within five (5) business days after written notice of such failure is given to the other party.
(ii) Either Seller or Buyer fails to perform a material covenant or obligation under this agreement or breeches any material provision of this agreement.
(iii) Any material representation or warranty made by Seller or Buyer in accordance with this agreement proves to be false or misleading in any material respect.
(iv) Seller or Buyer shall (1) make an assignment or any general arrangement for the benefit of creditors: (2) file a petition or otherwise commence, authorize or acquiesce in the commencement of a proceeding or cause the initiation of a proceeding under any bankruptcy or similar law for the
13

protection of creditors, or have such petition filed against it and such proceeding remains undismissed for sixty (60) days: (3) otherwise become bankrupt or insolvent (however evidenced), or (4) be unable to pay it's debts when due;
(v) Seller's unexcused failure to deliver Buyer's requested quantity for a cumulative period of 30 or more days in a twelve (12) month period.
16.0 MISCELLANEOUS
16.1 No waiver by Buyer or Seller of any default of the other under this Agreement shall operate as a waiver of any future default, whether of a like or different character.
16.2 Every notice, request, statement or invoice provided for in this Agreement shall be in writing directed to the party to whom given, made or delivered at such party's address as follows:
Buyer: The Natural Gas Utility District of Hawkins County, TN.
202 Park Blvd.
PO Box 667
Rogersville, Tennessee 37857 Phone (615) 272-8841
Fax (615) 272-4645
Seller: Tengasco
Medical Arts Building
603 Main Avenue
Suite 500
Knoxville, Tennessee 37902
Phone (423) 523-1124
Fax (423) 523-9894
or at such other address as such party shall from time to time designate as the address for such purpose by letter addressed to the other party or parties.
16.3 The parties agree that the place of execution of this Agreement is Hawkins County, Tennessee. Buyer and Seller agree that this Agreement shall be construed according to the law of the State of Tennessee.
16.4 This Agreement shall bind and inure to the respective successors and assigns of the parties hereto, but no assignment shall relieve any party's obligations hereunder without written consent of the other party.
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16.5 The parties hereto understand and agree that the total price to be paid for gas delivered hereunder is the price set forth in section 6.0 hereof inclusive of all taxes, royalties, payments or any other charges thereof applicable before or upon delivery to Buyer
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate originals as of the day and year first herein above written.
Buyer: The Natural Gas Utility District of Hawkins County, TN.

By: /s/ Tommy W. Young
    -------------------------
Title: General Manager
    -------------------------
Date: 9/26/96
    -------------------------	

Seller: TENGASCO

By:  /s/ Ted P. Scaller
    -------------------------
Title: Pres/CEO
    -------------------------
Date: 10/1/96
    -------------------------	

Signature page to Gas Purchase and Sales Agreement dated 9/26/96 , 1996, between The Natural Gas Utility District of Hawkins County, TN. Buyer, and TENGASCO Seller, relating to the purchase and sale of gas from various wells in Hancock County, Tennessee.
15

EXHIBIT 10.4

GAS PURCHASE AND SALES AGREEMENT
BETWEEN
POWELL VALLEY ELECTRIC COOPERATIVE, INC.
BUYER
AND
TENGASCO, INC.
SELLER
PRODUCTION FROM VARIOUS WELLS IN HANCOCK CO., TN

GAS PURCHASE AND SALES AGREEMENT

                                Table of Contents
Section         Title                                                       Page
-------         -----                                                       ----
 1      Definitions...........................................................1
 2      Construction of Facilities............................................3
 3      Quantity..............................................................3
 4      Point of Delivery.....................................................3
 5      Delivery Pressure.....................................................4
 6      Price.................................................................4
 7      Term..................................................................4
 8      Title, Possession and Control.........................................4
 9      Taxes.................................................................5
 10     Quality...............................................................5
 11     Standards for Measurement and Tests...................................7
 12     Billings and Payments................................................10
 13     Warranty of Title to Gas.............................................11
 14     Force Majeure........................................................12
 15     Miscellaneous........................................................15
        Signature Page.......................................................17	

GAS PURCHASE AND SALES AGREEMENT
THIS AGREEMENT, made, entered into and effective this 21st day of November, 1996, by and between Powell Valley Electric Cooperative, Inc., hereinafter referred to as "Buyer" and Tengasco, Inc., hereinafter referred to as "Seller."
WITNESSETH:
WHEREAS, Seller has a supply of natural gas available for sale to be produced from various wells located in Hancock County, Tennessee, and
WHEREAS, Buyer may install a natural gas distribution system located in Buyer's service area, and
WHEREAS, Seller desires to sell and deliver to Buyer and Buyer may purchase and receive from Seller natural gas in the quantities and under the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of the mutual benefits and covenants contained herein, Buyer and Seller have agreed as follows:
1.0 DEFINITIONS
Unless expressly stated otherwise, the following terms, when used in this Agreement, shall mean:
1.1 The terms "gas" and "natural gas" shall mean and include casinghead gas produced with crude oil, natural gas from gas wells, and residue gas from processing casinghead gas, gas well gas or
1

both.
1.2 A day shall begin at 8:00 a.m. in the time zone at the point of delivery on each calendar day and end at 8:00 a.m. on the following calendar day; a month or year shall begin at 8:00 a.m. on the first calendar day of such period of time and end at 8:00 a.m. on the first calendar day following such period.
1.3 The term "cubic foot" shall mean the volume of gas which occupies one cubic foot when such gas is at a temperature of 60 degrees Fahrenheit and at a pressure of 14.73 pounds per square inch absolute.
1.4 The term "Mcf" shall mean one thousand (1,000) cubic feet.
1.5 The term "Btu" shall mean the quantity of heat that must be added to one pound avoirdupois of pure water to raise its temperature from 58.5 degrees
Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of fourteen and seventy-three hundredths pounds per square inch absolute (14.73 psia).
1.6 The term "MMBtu" shall mean one million (1,000,000) Btus.
1.7 The term "Seller's Facilities" shall mean any and all facilities required to be constructed and installed by Seller, at its sole cost and expense, to enable Seller to deliver gas to Buyer at the Point of Delivery specified in Section 4 hereof, in the quantities provided for in Section 3 hereof and meeting the quality specifications provided for in Section 10 hereof.
1.8 The term "Buyer's Facilities" shall mean any and all facilities required to be constructed and installed by Buyer, at
2

its sole cost and expense, to enable Buyer to commence the receipt of gas from Seller at the Point of Delivery specified in Section 4 hereof.
2.0 CONSTRUCTION OF FACILITIES
2.1 Upon written request by the Buyer, Seller and Buyer agree to proceed in good faith and with due diligence in the construction of Seller's and Buyer's facilities, respectively, and upon completion of such facilities the parties shall commence the delivery and receipt of gas as soon as practical thereafter. In no event shall Buyer be obligated to pay for any gas hereunder prior to the time Seller's and Buyer's facilities have been constructed and made available to deliver and receive gas.
3.0 QUANTITY
3.1 Daily Quantity - Daily quantities shall be mutually determined by the Buyer and Seller at some future date prior to the Buy purchasing gas hereunder. Seller shall be obligated to sell and deliver to Buyer from its production wells in Hancock County, Tennessee, or from any other source interconnected to the Seller's facilities.
3.2 In no event shall gas be sold from any source by Seller or transported and delivered by Buyer or Seller to any customer of Buyer within Buyer's service area without the written consent of Buyer, within twenty years from the initial date of this Agreement.
4.0 POINT OF DELIVERY
4.1 Seller shall make deliveries of gas hereunder to Buyer at the point of delivery. The point of delivery for all gas
3

delivered under this Agreement shall be at the interconnection of Seller's and Buyer's facilities located at a mutually agreeable point on Buyer's Distribution System in Hancock County, Tennessee.
5.0 DELIVERY PRESSURE
5.1 Seller shall make deliveries of gas hereunder to Buyer at the pressure required by Buyer from time to time to enable the gas to enter Buyer's facilities at Buyer's normal distribution pressure.
6.0 PRICE
6.1 The initial price per MMBtu to be paid by Buyer to Seller for all gas purchased and sold hereunder shall be mutually determined by the Buyer and Seller at some future date prior to the Buyer purchasing gas hereunder, but in no case shall the price exceed "the inside FERC price plus 20 cents."
7.0 TERM
7.1 This agreement shall be in force and effect from the date first above written and shall continue for a term of twenty years and on a year-to-year basis thereafter until terminated by either party giving 180 day prior notice to the other party to cancel this Agreement.
8.0 TITLE POSSESSION AND CONTROL
8.1 As between the parties hereto, Seller shall be deemed to be in control and possession of the gas deliverable hereunder and responsible for any injuries, claims, liabilities or damages caused thereby prior to delivery to Buyer at the point of delivery. Buyer shall be deemed to be in exclusive control and possession thereof
4

after receipt of gas meeting the quality specification set forth in Section 10 hereof, at the point of delivery and responsible for any injuries, claims, liabilities or damages caused by Buyer's possession and control. The party in control and possession of the gas meeting the quality specification set forth in
Section 10 hereof shall indemnify the other party with respect to any injuries, claims, liabilities or damages occurring while the gas is in the former's control and possession. Title to the gas sold hereunder shall pass from Seller to Buyer at the point of delivery.
9.0 TAXES
9.1 Buyer shall not be responsible for any federal, state or local taxes on production, gathering, severance or other taxes levied on gas volumes delivered by Seller. Seller hereby agrees to indemnify Buyer for any and all losses, damages, or claims, including attorney fees, for Seller's failure to report and pay for any and all federal and state production, gathering, severance or
similar taxes levied on gas volumes delivered by Seller.
10.0 QUALITY
Seller agrees that the gas delivered hereunder at the point of delivery specified in Section 4.1 will, upon delivery:
10.1 Have a total heating value of not less than one thousand (1,000) Btus per cubic foot;
10.2 Be commercially free from dust, hydrocarbon liquids, water and any other substance that might become separated from the gas in Buyer's facilities, and Seller shall furnish, install and maintain and operate such drips, separators, heaters and other
5

mechanical devices as may be necessary to effect compliance with such requirements;
10.3 Not contain more than twenty (20) grains of total sulfur, nor more than one-fourth (1/4) of one (1) grain of hydrogen sulfide per one hundred (100) cubic feet;
10.4 Not contain more than five (5) parts per million (PPM) by volume of oxygen, and Seller shall make every reasonable effort to keep the gas totally free of oxygen;
10.5 Not contain more than four percent (4%) by volume of a combined total of carbon dioxide and nitrogen components; provided, however, that the total carbon dioxide content shall not exceed three percent (3%) by volume;
10.6 Have a temperature of not more than one hundred degrees (100 degrees) Fahrenheit;
10.7 All gas shall have been dehydrated by Seller for removal of entrained water present therein in a vapor state, and in no event contain more than seven
(7) pounds of entrained water per million cubic feet, at a pressure base of fourteen and seventy-three hundredths pounds (14.73) per square inch and a temperature of sixty degrees (60 degrees) Fahrenheit as determined by dew-point apparatus approved by the Bureau of Mines or such other apparatus as may be mutually agreed upon.
10.8 As to gas which fails to meet the quality specifications set forth above, Buyer, in addition to any legal remedies it may have, shall have the right to refuse delivery of such gas.
6

11.0 STANDARDS FOR MEASUREMENT AND TESTS
11.1 A purchase/sales meter shall be installed, maintained and operated by Seller at the point of delivery to measure all gas sold and/or delivered for transportation or displacement under this agreement. The volume shall be measured by orifice meters with linear charts, twenty-four (24) hour rotation, or mutually agreeable measuring devices installed and operated, and computations made as prescribed in Gas Measurement Committee Report No. 3 of the American Gas Association, as such report may be amended or revised from time to time.
11.2 The unit of volume for purposes of measurement shall be one (1) cubic foot of gas at a temperature base of sixty degrees (60 degrees) Fahrenheit and at a pressure base of fourteen and seventy-three hundredths (14.73) pounds per square inch absolute.
11.3 Temperature shall be determined by a recording thermometer, when applicable, with twenty-four (24) hour chart rotation continuously used and installed so as to record properly the temperature of the gas flowing through the meter. The arithmetical average of the hourly temperatures recorded during each day shall be used to calculate volumes hereunder.
11.4 Specific gravity shall be determined with accuracy to the nearest one-thousandth (0.001) by taking samples of the gas at the point of measurement at such times as may be designated by the parties hereto, but not more often than once each month and having the specific gravity determined by the use of the Acme Senior Gravity Balance, or any other instrument mutually agreed upon.
7

11.5 The total heating value of the gas shall be determined by joint tests made by taking samples of gas at the point of delivery but not more than once each month. Such samples to have the Btu content per cubic foot determined by:
(1) chromatographic analysis; or (2) by calculation of gross heating value by compositional analysis. Buyer and Seller may mutually agree to utilize other acceptable industry methods for determination of heating value. The Btu content shall be determined for a cubic foot of gas at a temperature of sixty degrees
(60 degrees) Fahrenheit and a pressure of fourteen and seventy-three (14.73) pounds per square inch absolute on a dry basis.
11.6 Tests to determine sulfur, hydrogen sulfide, oxygen, carbon dioxide, nitrogen and water content shall be made by approved standard methods in general use by the gas industry. Such tests shall be made at the request of either party. The cost of such tests are to be paid by the requesting party.
11.7 The accuracy of the measuring and testing equipment shall be verified at least once each year and at other times upon request of Buyer or Seller. Tests for quality of the gas may be made at the time of testing equipment or at other times, but not more often than once each month. Notice of the time and nature of each test shall be given to the other party sufficiently in advance to permit convenient arrangement for a representative to be present. Tests and
adjustments shall be made in the presence of and observed by representatives of both Buyer and Seller. All tests shall be made by Buyer at Buyer's expense, except that Seller shall bear the
8

expense of tests made at its request.
11.8 If at any time of the measuring or testing equipment is found to be out of service or registering inaccurately in any percentage, it shall be adjusted at once to read accurately, within the limits prescribed by the manufacturer. If such equipment is out of service, or inaccurate by an amount exceeding two percent (2%) at a reading corresponding to the average rate of flow for the period since the last preceding test, the previous readings of such equipment shall be disregarded for any period definitely known or agreed upon, or if not so known or agreed upon, for a period of fifteen (15) days or one-half of the elapsed time since the last test, whichever is shorter. The volume of gas delivered during such period shall be estimated (i) by using the data recorded by any check-measuring equipment, if installed and accurately registering, of, if not installed or registering accurately, (ii) by correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculation, or, if neither such method is feasible, (iii) by estimating the quantity or quality delivered, based upon deliveries under similar conditions during a period when the equipment was registering accurately. No correction shall be made for recorded inaccuracies of two percent (2%) or less.
11.9 Buyer and Seller shall have the right to inspect equipment installed or furnished by the other, and the charts and other measurement or testing data of the other, at all times during business hours, but the calibration and adjustment of such
9

equipment shall be done only by the party that installs or furnishes such equipment unless otherwise agreed upon. Each party shall preserve all original test data, charts and other similar records in such party's possession for a period of at least two (2) years.
12.0 BILLINGS AND PAYMENTS
12.1 On or before the 15th working day of each month after deliveries of gas are commenced, Seller shall render to Buyer an invoice for the preceding month showing the total volume and the gross heating value of gas delivered at the point of delivery hereunder.
12.2 Buyer will pay Seller on or before the 25th day of each month, or as to statements rendered after the 15th day of each month, within thirty (30) days after receipt of such statements, for gas delivered during the preceding month.
If the correct amount is not paid when due and such payment is not successfully disputed by Buyer, interest on any unpaid amount shall accrue at the rate of nine percent (9%) per annum. If such failure to pay continues for sixty (60) days, Seller, in addition to all other remedies, may thereafter suspend deliveries of gas hereunder and if such default continues for thirty (30) additional days, Seller may thereafter, in addition to any other rights Seller may have, suspend or terminate this contract. Provided, however, if Buyer in good faith shall dispute the amount of any such invoice or part thereof and shall pay to Seller such amounts as it concedes to be correct and shall undertake and guarantee to make payment to Seller
10

of the amount ultimately found due upon such invoice after a final determination which may be reached either by agreement or judgement of the courts, as may be the case, then Seller shall not be entitled to suspend or terminate this contract.
12.3 Each party shall have the right to inspect and examine at all reasonable times the records and charts of the other party pertaining to the purchases and sale of gas hereunder. If any overcharge or undercharge in any amount whatsoever shall be determined within 12 months from the date of the invoice and the invoice therefor has been paid, Seller shall refund the amount of any overcharge or Buyer shall pay the amount of any undercharge within thirty
(30) days after the final determination thereof.
13.0 WARRANTY OF TITLE TO GAS
13.1 Seller warrants title to all gas delivered or to be delivered hereunder, that Seller has the right to sell the same, and that such gas is free from liens and adverse claims of every kind. Seller will pay, or cause to be paid, all royalties, taxes and other sums due on production, gathering, severance or handling of the gas delivered by Seller to Buyer. Seller will indemnify and save Buyer harmless against all loans, damage and expense of every character on account of adverse claims to the gas delivered by it or of royalties, taxes, payments or other charges thereon applicable before or upon delivery to Buyer. If Seller's title is questioned or involved in any action, Buyer may thereafter refuse without penalty to accept further deliveries from Seller and/or Buyer may withhold payment (without interest) of sums due hereunder
11

up to the amount of the claim until title is free from such question or such action is finally determined, or until such time as Seller furnishes bond conditioned to save Buyer harmless with sureties satisfactory to Buyer.
14.0 FORCE MAJEURE
14.1 If either Buyer or Seller is rendered unable, wholly or in part, by force majeure to perform its obligations under this Agreement, other than the obligation to make payments then due for gas previously delivered, it is agreed that performance of the respective obligations of the parties hereto to deliver and receive gas, so far as they are affected by such force majeure, shall be suspended from the inception of any such inability until it is corrected but for no longer period. The party claiming such inability shall give notice thereof to the other party as soon as practicable after the occurrence of the force majeure. If such notice is first given by telephone or facsimile communication, it shall be confirmed promptly in writing giving full particulars. The party claiming such inability shall promptly correct such inability to the extent it may be corrected through the exercise of reasonable diligence.
14.2 Neither party shall be liable to the other for any losses or damages, regardless of the nature thereof and howsoever occurring, whether such losses or damages be direct or indirect, immediate or remote, by reason of, caused by, arising out of, or in any way attributable to the suspension of performance of any obligation of either party to the extent that such suspension
12

occurs because a party is rendered unable, wholly or in part, by force majeure to perform its obligations.
14.3 The term "force majeure" as used herein shall mean, cover and include the following:
(a) Acts of God or Acts of Providence including, without limitation, epidemics, landslides, hurricanes, floods, washouts, lightning, earthquakes, storm warnings, extreme heat or cold, any other adverse weather conditions and threats of any of the foregoing, and whether preceded by, concurrent with, or followed by acts of omissions of any human agency, whether foreseeable or not, which may directly or indirectly contribute to or result in either party's inability to perform its obligations.
(b) Acts of Government including, without limitation, laws, orders, rules, decrees, judgements, judicial actions, regulations, acts of arrests or restraint, and threats of any of the foregoing by any government (de jure or defacto), or any agency subdivision or instrumentality thereof, having, claiming or asserting authority or jurisdiction over the severance, production, gathering, transportation, handling, sale or delivery of the subject matter of this Agreement, when any such Act of Government directly or indirectly contributes to or results in either party's inability to perform its obligations.
(c) Acts of Civil Disorder including, without limitation, acts of sabotage, acts of the public enemy, acts of war (declared or undeclared), blockades, insurrections, riots, mass protests or demonstrations and threats of any of the foregoing, and police
13

action in connection with or in reaction to any such Acts of Civil Disorder, when any such Act of Civil Disorder directly or indirectly contributes to or results in either party's inability to perform its obligations.
(d) Acts of Industrial Disorder including, without limitation, strikes, lockouts, picketing and threats of any of the foregoing, when any such Acts of Industrial Disorder directly or indirectly contributes to or results in either party's inability to perform its obligations; provided, however, that the settlement of any labor dispute to prevent or end any such Acts of Industrial Disorder shall be within the sole discretion of the party to this Agreement involved in such labor disputes, and the above requirement that any liability shall be corrected with reasonable diligence shall not apply to labor disputes.
(e) Failure of Facilities including, without limitation, freezing of wells or lines of pipe, failure resulting from fires, washouts, mechanical breakdowns of, malfunctions of or necessities for making repairs or alterations to machinery, lines of pipe, pumps, compressors, valves, gauges or any of the equipment therein or thereon, and cratering, blowout, or failure to any well or wells to produce, when any such Failure of Facilities directly or indirectly contributes to or results in either party's inability to perform its obligations.
(f) Inability to obtain or acquire at reasonable cost grants, servitudes, rights-of-way, permits, licenses, or any other authorization from third parties or agencies (private or
14

governmental) or inability to obtain or acquire at reasonable cost necessary materials and supplies, to construct, maintain and operate any facilities required for the performance of any obligations under this Agreement, when any such inability directly or indirectly contributes to or results in either party's inability to perform its obligations.
(g) Any occurrence, condition, situation, or threat thereof, not covered by Subparagraphs (a) through (f) above, which renders either party unable to perform its obligations, provided such occurrence, condition, situation or threat thereof is not under or within the control of the party claiming such inability, provided such party could not have prevented such occurrence, condition, situation or threat thereof by the exercise of reasonable diligence.
15.0 MISCELLANEOUS
15.1 No waiver by Buyer or Seller of any default of the other under this Agreement shall operate as a waiver of any future default, whether of a like or different character.
15.2 Every notice, request, statement or invoice provided for in this Agreement shall be in writing directed to the party to whom given, made or delivered at such party's address as follows:

Buyer:    Powell Valley Electric Cooperative, Inc.
          325 Straight Creek Road
          P.O. Box 1528
          New Tazewell, TN 37825
          Telephone: (423) 626-5204
          Fax: (423) 626-0711	

15

Seller:   Tengasco, Inc.
          Suite 500, Medical Arts Building
          603 Main Avenue
          Knoxville, TN 37902
          Telephone: (423) 523-1124
          Fax: (423) 523-9894	

or at such other address as such party shall from time to time designate as the address for such purpose by letter addressed to the other party or parties.
15.3 The parties agree that the place of execution of this Agreement is Hancock County, Tennessee. Buyer and Seller agree that this Agreement shall be construed according to the law of the State of Tennessee.
15.4 This Agreement shall bind and inure to the respective successors and assigns of the parties hereto, but no assignment shall relieve any party's obligations hereunder without written consent of the other party.
15.5 The parties hereto understand and agree that the total price to be paid for gas delivered hereunder is the price set forth in Section 6.0 hereof inclusive of all taxes, royalties, payments or any other charges thereof applicable before or upon delivery to Buyer.
16

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate as of the day and year first above written.
POWELL VALLEY ELECTRIC COOPERATIVE, INC., Buyer
 By: [illegible]
Title: [illegible]
Date: 11/18/96
TENGASCO, INC., Seller

By:  /s/ Ted P. Scallon
Title: President/C.E.O.
Date:  11/15	

Signature page to Gas Purchase and Sales Agreement dated November 18th, 1996, between Powell Valley Electric Cooperative, Inc., Buyer, and Tengasco, Inc., Seller, relating to the purchase and sale of gas from various wells in Hancock County, Tennessee.
17

CONSULTING AGREEMENT
THIS AGREEMENT, made and entered into the 30th day of October, 1996, by and between Powell Valley Electric Cooperative, Inc. and ________________________ ("Consultants"), and Tengasco, Inc. ("Tengasco").
WHEREAS, Consultants agree to provide certain services pertaining to the acquisition of pipeline rights-of-way to Tengasco under the following terms and conditions:
1. Services. Tengasco hereby retains the Consultants to provide pipeline acquisition services as requested from Tengasco from time to time in Tengasco's sole discretion. The services to be performed under this Agreement shall commence upon execution of this Agreement. Title work may also be performed.
2. Fees. As full and complete compensation for all services provided hereunder during the term of this Agreement, Tengasco shall pay Powell Valley Electric Cooperative, Inc. for all billable hours worked (except title work) at a rate of $35.00 per man hour. Title work shall be at the rate of $75.00 per man hour. Consultants will record all billable hours on a daily basis. Consultants will invoice Tengasco for all services performed by Consultants during the term of this Agreement. Tengasco will pay such invoice within thirty (30) days of receipt of said invoice. Tengasco agrees to reimburse Consultants for reasonable expenses including mileage at $0.30 per mile and other miscellaneous expenses related to pipeline right-of-way acquisition. Tengasco agrees that Consultants may employ additional landsmen if necessary to obtain certain rights-of-way. Consultants agree to compensate only additional landsmen and

invoice Tengasco for same at a rate not to exceed that agreed upon above.
3. Term. The provisions of this Agreement shall be effective as of the date hereof and shall continue in full force and effect until terminated by either party without cause on five (5) days notice to the other. Provided, however, the provisions of Paragraph 4 herein shall survive termination of this Agreement consistent with the terms set out in said paragraph.
4. Confidential Information Agreement. Consultants hereby acknowledge and agree to be bound by the terms of that certain Confidential Information Agreement executed between the parties on even date herewith.
5. No other representations, written or oral, have been made by any party to this Agreement. This Agreement shall be amendable only in writing. All work done by Consultants for Tengasco shall be deemed pursuant to this Agreement unless otherwise agreed upon between the parties in writing.
6. Indemnity. To the fullest extent permitted by law, any provision hereof to the contrary notwithstanding, Consultants shall not be liable or responsible for any accident, loss, injury or damage, happening or accruing during the term of this Agreement, and Tengasco shall and does hereby fully indemnify, protect, defend, and hold harmless Consultants from and against all liens, claims of liens, demands, liabilities, causes of action, judgments, costs, claims, damages, suits, losses and expenses, including attorney fees of any nature kind, or description (collectively "Liabilities"), of the Consultants arising out of, caused by, or resulting from the performance of services provided by Consultants.
7. Should any part of this Agreement be unenforceable or ever deemed invalid, null
2

or void all remaining provisions of this Agreement shall continue in full force and effect.
8. This Agreement shall be governed by the laws of the State of Tennessee.
Executed the day and year above written.
TENGASCO, INC.

By:  /s/ Ted P. Scallon
Title: President/C.E.O.

POWELL VALLEY ELECTRIC COOPERATIVE, INC.
Consultants

By:  [illegible]
Title: President	

3

EXHIBIT 10.5

ENERGY MARKETING AGREEMENT
THIS AGREEMENT, made and entered into this 27th day of May, 1997, by and between Enserch Energy Services, Inc. ("Enserch"), and Tengasco ("Tengasco").
WHEREAS; Enserch is an energy marketer with considerable experience in the marketing of natural gas and other energy products to industrial and commercial end-users; and
WHEREAS; Enserch wishes to increase its retail and wholesale market share a joint effort with Tengasco; and
WHEREAS; Enserch has developed proprietary services and pricing programs for its existing and potential customers and wishes to maintain same as confidential between itself and its customers, and
WHEREAS; Tengasco is an energy producer and marketer and has many well- established long-term relationships with potential customers for natural gas and other energy products in the State of Tennessee, and
WHEREAS, Tengasco is interested in aligning itself with Enserch in order to develop customer leads and/or referrals to help promote Enserch's and Tengasco's natural gas marketing efforts, under a mutually beneficial arrangement,
NOW, THEREFORE, for good and valuable consideration, the parties hereby agree as follows:
1. Definitions
The term "Best Efforts" means the use of reasonable effort and due diligence, but does not require the expenditure of unreasonable amount of money or time.
The term "Market Area" shall mean the State of Tennessee.
The term "Products" shall mean natural gas, electricity, fuel oil and other energy commodities that may be sold from time to time by either Enserch or Tengasco.
The term "Referred Customer(s)" shall mean those retail and wholesale Sales Customers referred to Enserch by Tengasco wishing to enter into an agreement to purchase Products from Enserch.
The term "Sales Contact" shall mean (a) any contract for the sale of Products in the Market Area between Enserch and a Sales Customer, or between Tengasco and a Sales Customer, and (b) any contract for the sale of Products by either party outside the Market Area if, and only if, the parties hereto unanimously agree in writing to designate such contract as a Sales Contract for purposes of this agreement.
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The term "Sales Customer" shall mean (a) a customer under a Sales Contract who is an industrial and/or commercial end-user of Products and purchases Products for its own use and does not re-sell same ("retail customer"), and (b) a customer under a Sales Contract purchasing Products for the purposes of resale ("wholesale customer").
2. Term
This agreement shall be effective on the date first hereinabove written and shall continue in force and effect for a primary term ending May 31, 2002. This Agreement shall continue in effect thereafter for successive periods of one (1) year each unless terminated by either party at the end of the primary term or at the end of any one (1) year period thereafter by giving at least sixty (60) days prior written notice to the other party.
3. Scope
During the term of this Agreement, either party may enter into Sales Contracts in the Market Area without the participation of the other party. Further, Tengasco may refer potential Sales Customers to Enserch, and Enserch shall use its best efforts to market natural gas owned and/or controlled by Enserch to Referred Customer(s) within the Market Area. Neither party shall have the authority to bind the other to any agreement, and shall have no liability associated with any Sales Contract executed by the other party.
4. Referral Services of New Accounts by Tengasco.
If and when Tengasco finds a Sales Customer that it desires to refer to Enserch, Tengasco shall notify Enserch by telephone and follow-up fax transmittal ("Notice of Potential Referred Customer" - form of notice attached hereto as Exhibit "A"). The Notice of Potential Referred Customer shall specify
(1) The name, address, phone and fax numbers of the Sales Customer, (2) the name and title of the customer contact, (3) the LDC(s) serving the customer, (4) the volumes of Products required by the Sales Customer on a monthly basis, (5) the term and pricing methodology sought by the Sales Customer, and (6) any other material terms, and conditions for the sale (including without limitation whether Products will required on a firm or interruptible basis). Enserch shall, immediately upon notification of a potential Referred Customer by Tengasco, inform Tengasco of any bona fide pre-existing relationship present between Enserch and the potential Referred Customer pursuant to paragraph 8, below.
Absent the existence of such a bona fide pre-existing relationship, Tengasco shall (1) notify potential Referred Customer of Enserch's and Tengasco's relationship and of Enserch's interest in contracting with customer for its Products needs and (2) schedule an introductory meeting between Referred Customer, Tengasco and Enserch.
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5. Marketing of Natural Gas to Referred Customers
Following acceptance by Enserch of a referral by Tengasco of a potential Sales Customer, and prior to said introductory meeting, Enserch and Tengasco shall meet, at a time and location agreeable to the parties, to perform the following tasks:
o plan a sales strategy for the Referred Customer,
o establish parameters or limits on the terms of any Sales Contract and
o ascertain and agree on a recommended supply; services and pricing program for any new Referred Customer.
Enserch shall be empowered to enter into its own separate Sales Contract with the Referred Customer. Enserch will provide Tengasco with periodic progress reports with respect to the negotiation of any Sales Contract with a Referred Customer. If required, Enserch will negotiate directly with the Referred Customer's Local Distribution Company, its agents and/or representatives, on behalf of the Referred Customer with regard to the natural gas sales contract.
Enserch reserves the right, at its sole discretion, to accept or reject any potential Referred Customer, and is accordingly not obligated to sell any minimum quantity of gas under this Agreement. In addition, should the financial responsibility of any Referred Customer under a Sales Contract with Enserch become impaired or unsatisfactory to Enserch, in Enserch's reasonable judgment, Enserch shall have the right, in its sole discretion, to suspend deliveries and/or terminate any Sales Contract following written notice to the Sales Customer and Tengasco. Enserch shall provide as much notice as practicable to the Sales Customer and Tengasco in order that the Sales Customer and Tengasco may acquire a substitute supply arrangement.
6. Compensation and Administration
6.1 Revenue Distribution. The party hereto which is named as a seller under a Sales Contract shall pay to the other party hereto an amount equal to fifty percent (50%) of the Transfer Price Margin, as hereinafter defined, resulting from sales of Products under all Sales Contracts entered into by such selling party, or fifty percent (50%) of the Adjusted Gross Profits, as hereinafter defined, resulting from the sale of Products under Sales Contracts for which a Transfer Price Margin is not determined in the ordinary course of business. No payments shall be due from one party to the other hereunder with respect to the sale of any Products for which payment has not been received by the seller thereof
6.2 Definitions.
6.2.1 "Transfer Price Margin" shall be determined by Enserch, and shall
mean, for any Sales Contract, the positive difference between (a) the sales price of the applicable Product established pursuant to the Sales Contract, deducting my direct costs (e.g. taxes,
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hedging costs and transportation) relating to making the sale which are not included in the offer price hereinafter described, and (b) the offer price for such Product determined by Enserch's risk management group through established procedures. Documentation reflecting the Transfer Price Margin shall be furnished to Tengasco not later than five (5) business days after the effective date of a transaction, or in the case of Sales Contracts entered into by Tengasco, not later then five (5) business days after the date Tengasco furnishes a detailed report of such Sales Contract to Enserch.
6.2.2. "Adjusted Gross Profits" shall mean the amount or amounts determined by subtracting (a) the purchase price, if any, of the Products designated to any sale which is subject to the terms hereof, plus all additional direct costs (but not indirect costs, such as overhead) of marketing such Products, including, without limitation, transportation costs associated with movement of such Products to the delivery points and all taxes which the seller is required to bear in relation to such sale (except income taxes), from (b) the sales price the seller actually receives for such Products.
6.3 Net Present Value Payments. Either party may request for any executed Sales Contract of the other party that it be paid the net present value ("NPV") of its payments hereunder in lieu of the payments set forth above. Such request must be made in writing. Upon receipt of such request, the parties hereto shall attempt in good faith to agree within thirty (30) days thereafter upon the volumes, prices, discount rate and other variable factors affecting the NPV. In the event the parties reach such agreement, the NPV shall be paid to the party entitled to payment within thirty (30) days thereafter. In the event the parties fail to agree upon all the terms and conditions necessary to calculate the NPV within thirty (30) days after receipt of the notice as set forth above, then the payments due under the contract shall be made periodically as set forth above. In the event there is a payment made for any Sales Contract on the basis of the NPV, and thereafter there is a material adverse change in the volumes or price of gas sold under such Sales Contract, the NPV shall be adjusted to reflect the new price or volumes, as applicable, and the party that received the NPV payment shall promptly refund to the other party the difference between the amount received and the recalculated NPV, without interest.
6.4 Reports. Following execution of a Sales Contract, Enserch or Tengasco, as applicable, will provide the other with detailed contract information and account activity reports with respect to such Sales Contract. The costs of negotiating, entering into and administering and performing under any and all Sales Contracts shall be borne solely by the party selling Products thereunder, and neither party shall be responsible for any losses on a sale that the other
party may incur.
Each party shall be responsible for administering any and all Sales Contracts it enters into, including without limitation, daily balancing, billing, and general customer service.
7. Billings and Payments
By the fifteenth (15th) day of the calendar month following each calendar quarter in which natural gas was delivered under Sales Contracts, i.e., on or before the 15th day of April,
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July, October and January, the selling party shall provide the other hereunder with a written statement showing the total quantities of gas sold, the Transfer Price Margin associated with such sales and the amount due and owing the other party with respect to such sales.
Each shall pay to the other the stated total amount due by check, by the twenty-fifth (25th) day of the calendar month in which the statement was rendered, provided that if the twenty-fifth (25th) day is not a business day, payment will be due on the next business day following that date. Notwithstanding the above, for any billing period when money is owed by each party to the other hereunder, the party owing the greater amount of money shall be entitled, at its election, to effect payment by offsetting the amount due to it by the other party against amounts due to the other party, and paying the difference to the other party.
Compensation will be paid to by the parties on each Sales Contract so long as this Agreement is in force and effect and so long thereafter as said Sales Customer has remained under a Sales Contract with Enserch or Tengasco on a continuous and uninterrupted basis from inception of such Sales Contract.
Both parties shall have the right at any reasonable time, but no more often than once in any twelve(12) month period, after giving reasonable notice, to examine the books and records of the other party to the extent necessary to verify the accuracy of any statement, charge or payment made. If any such examination reveals, or if either party discovers, any error or inaccuracy in its own or the other party's statements, payments, calculations or determinations, then adjustments and corrections shall be made as promptly as practicable thereafter, provided however, that no adjustment or correction shall be made on or with respect to any error or inaccuracy which is discovered more than one (1) year after such statement, charge, computation or payment was made.
8. Exclusive Agreement
The parties hereto acknowledge that this is an exclusive services agreement and that neither party may engage in similar arrangements with other parties within the Market Area. Notwithstanding anything herein to the contrary, any contracts entered into by either party prior to the date hereof for the sale of Products in the Market Area shall not be subject to the provisions hereof, and no compensation shall be due by either party to the other hereunder with respect thereto. Further, in the event Enserch has an established Products sales relationship with a customer with whom Tengasco does not have an existing Sales Contract, and who has offices outside the Market Area, and that customer has facilities within the Market Area, then Enserch may sell Products directly to such customer's offices in the Market Area, and Tengasco shall not be entitled to any compensation with respect to such contract.
9. Notices
All notices sent under the Agreement must be sent by fax, with follow-up written copy by mail. Notices should be sent to the follow designees below:
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For Enserch:         Enserch Energy Services, Inc.
                     1301 Fannin, Suite 2300
                     Houston, Texas 77002
                     Attention: ________________________	

Ph.: (713) 651-7888 Fax: (713) 659-7505
For Tengasco:
Ph.:
Fax:
10. Change in Control
In the event of a Change in Control of Tengasco, as defined in Exhibit "B", attached hereto and made a part hereof, or in the event of a sale of all or substantially all of Tengasco's assets, Tengasco shall, at the election of Enserch, either (a) cause the acquiring or continuing entity of Tengasco to assume all the obligations of this contract or (b) purchase Enserch's rights under this contract for an amount equal to four (4) times the NPV of all Sales Contracts entered into by Tengasco and Enserch hereunder. In the event Enserch elects to have Tengasco purchase Enserch's rights under this contract, this
contract shall terminate, and each party hereto shall retain its rights to any Sales Contracts under which it is a seller. Further, in the event of a sale of all or substantially all of Tengasco's assets to an unrelated third party, Tengasco shall notify Enserch of any bona fide offer to purchase such assets and Enserch shall have the right of first refusal, to be exercised within thirty
(30) days after receipt of Tengasco's notice, to purchase such assets under the same terms and conditions as are contained in such offer.
For purposes of this Section 10 only, in the event the parties are unable to agree upon the NPV, the matter shall be settled by a major independent public accounting firm selected by mutual agreement of the parties. In the event the parties cannot agree upon the selection of a major independent public accounting firm, such firm shall be selected by Enserch from a list of four major independent accounting firms which have not represented either Enserch, Tengasco or their affiliates within the five year period preceding such selection. The decision of such accounting firm shall be final and binding, and the costs incurred in connection with retaining such accounting firm shall be shared equally by Tengasco and Enserch.
11. Miscellaneous
11.1 This document, including the Attachments constitutes the entire Agreement between the parties with respect to the subject matter thereof.
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11.2 A waiver by either party of any one or more defaults by the other in the performance of any provisions of this Agreement shall not operate as a waiver of any future default or defaults, whether a like or of a different character.
11.3 No modification, amendment, or change herein shall be enforceable unless reduced to writing and executed by both parties.
11.4 The rights and obligations under this Agreement shall inure to and be binding upon the permitted successors and assigns of the parties hereto. No assignment of this Agreement or any of the rights or obligations hereunder shall be made by either party unless the other party has consented in writing thereto, which consent shall not be unreasonably withheld.
11.5 Tengasco is not authorized to act as agent for Enserch and shall not represent to any person or entity that it is an agent for Enserch. Enserch is not authorized to act as agent for Tengasco and shall not represent to any person or entity that it is an agent for Tengasco.
11.6 The terms of this Agreement and any Sales Contract entered into pursuant hereto, including, but not limited to pricing, contract quantity, customer name and location, and all other material terms thereof shall be kept confidential by the parties hereto, except to the extant that any information must be disclosed to a third party for the purpose of effectuating
transportation of gas subject to the terms of this Agreement or to meet New York Mercantile Exchange requirements or regulatory filing requirements where necessary. Further, it is recognized that in connection with performance under this agreement, Enserch may disclose to Tengasco certain other information or material which it considers confidential or proprietary (the "Confidential Information"), which Enserch shall identify as such at the time of the disclosure. Tengasco shall treat Confidential Information confidentially and shall not disclose the same to any person or entity except those employees and professional advisors who have a need to know in connection with Tengasco's performance under this Agreement. Tengasco shall not use Confidential Information for any purpose other than the furtherance of the interest of the parties hereto under this Agreement. Tengasco shall cause any employee, professional advisor or any other individual receiving Confidential Information to be bound by the terms of this confidentiality provision, and Tengasco shall be liable for any breach of these provisions by any such party.
11.7 This Agreement shall be construed and interpreted in accordance with the laws of the State of Texas, and any litigation of such construction or interpretation issues may only be filed and maintained in federal or state court in Texas.

Tengasco Corp.                     Enserch Energy Services, Inc.
AGREED and ACCEPTED                AGREED and ACCEPTED
this 27 day of May, 1997           this 23 day of May 1997

By: /s/ [ILLEGIBLE]                By: /s/ [ILLEGIBLE]
Its: C.F.O.                        Its: Senior Vice President	

7

Exhibit "A" To Energy Marketing Agreement dated ___________, 1997 between Tengasco and Enserch Energy Services Inc.
NOTICE OF
POTENTIAL REFERRED CUSTOMER

Name of Customer:     _________________________________________________________

Address:              _________________________________________________________

Phone/fax:            Ph.: (   ) _______________     Fax: (   ) _______________

Type of Company:      _________________________________________________________

Name of LDC:          _________________________________________________________

Name of LDC Rep:      _________________________________________________________

Phone of LDC Rep:     _________________________________________________________	

Estimated load (therms,
MMBtu, etc.) Summer/mo _____ Winter/mo. _______ Annual _____
Desired Pricing: _________________________________________________________
Comments: _________________________________________________________
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Exhibit "B" To Energy Marketing Agreement dated ______________, 1997, between Tengasco and Enserch Energy Services Inc.
A Change in Control shall be deemed to have occurred upon, and shall mean:
(i) The acquisition by any individual, entity or group (within the meaning of Section l3(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (1) of the then outstanding shares of Common Stock of Tengasco (also referred to herein as the "Company") the Company (the "Outstanding Company Common Stock") or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (w) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan(s) (or related trust(s)) sponsored or maintained by the Company or any corporation controlled by the Company, or (z) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, immediately following the same, the conditions described in clauses (1), (2) and (3) of subparagraph (iii) of this section are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the Company's Board of Directors (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Company's Board of Directors, provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose any such individual whose initial assumption of office occurs as a result of either (1) an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), or an actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Company's Board of Directors or (2) a plan or agreement to replace a majority of the members of the Company's Board of Directors then comprising the Incumbent Board; or
(iii) Approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case unless, immediately following such reorganization, merger or consolidation, (1) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation (including, without limitation, a corporation which as a result of such transaction owns the Company through one or more subsidiaries) and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, to the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such
10

reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no person (excluding the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such reorganization, merger or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 40% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 40% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or
(iv) Approval by the stockholders of the Company of (1) a complete liquidation or dissolution of the Company or (2) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation with respect to which immediately following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors as then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership immediately prior to such sale or other disposition of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no person (excluding the Company and any employee benefit plan (or related trust) of the Company and/or its subsidiaries or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 40% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 40% or more of, respectively, the then outstanding shares of common stock of such corporation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Company's Board of Directors providing for such sale or other disposition of assets.
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EXHIBIT 16.1

David T.
Thomson P.C. Certified Public Accountant

Securities and Exchange Commission
459 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
I was previously the auditor for Tengasco, Inc. (Formerly Onasco Companies, Inc.) and on April 14, 1995 I reported on the financial statements of Tengasco, Inc. at December 31, 1994, 1993 and 1992 and the years then ended. I have read the statements made by Tengasco, Inc. in Form 10-SB, which I understand will be filed with the Commission, with respect to the change in accountants from my firm to Charles M. Stivers. I agree with paragraphs one, three, seven, and items
(1), (2), and (3) of paragraph six. I have little or no knowledge as to the representations in paragraphs two and five. As to paragraph four, my opinion dated April 14, 1995 had a paragraph added as to the Company's ability to continue as a going concern.
Very truly yours,

/s/ David T. Thomson P.C.

David T. Thomson P.C.

Salt Lake City, Utah
July 28, 1997	

180 South 300 West, Suite 329, Salt Lake City, Utah 84101 (801) 328-3900

EXHIBIT 16.2

CHARLES M. STIVERS
Certified Public Accountant

1106 Manchester Square Shopping Center
        MEMBER             Manchester, Kentucky 40962             MEMBER
   KENTUCKY SOCIETY OF          (606) 598-1464            AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS                        CERTIFIED PUBLIC ACCOUNTANTS

                                  July 28, 1997

Securities and Exchange Commission
459 Fifth Street
Washington, D.C. 20549	

Gentlemen:
We have read the statements made by Tengasco in Form 10-SB, which we understand will be filed with the Commission, with respect to the change in accountants from Price-Bednar, LLP to our firm and thereafter, from our firm to BDO Seidman LLP. We agree with the statements concerning our firm in such Form 10-SB.
Very truly yours,

/s/ Charles M. Stivers

Charles M. Stivers
Certified Public Accountant	

EXHIBIT 16.3

[LOGO} PRICE o BEDNAR LLP
--------------------------------------------------------------------------------
A Regional Accounting, Tax                             Fifteen East Fifth Street
  and Consulting Firm                                                 Suite 2200
                                                                 Tulsa, Oklahoma
                                                                      74103-4300
                                                                  (918) 584-4843
                                                              fax (918) 584-4838

July 28, 1997

Securities and Exchange Commission
459 Fifth Street
Washington, D.C. 20549	

Gentlemen:
We have read the statements made by Tengasco in Form 10-SB, which we understand will be filed with the Commission, with respect to the change in accountants from our firm to Charles M. Stivers. We agree with the statements concerning our firm in such Form 10-SB.
Very truly yours,

/s/ Price Bednar LLP	

Tulsa o Oklahoma City o Denver o Los Angeles

EXHIBIT 23.1

CONSENT OF ACCOUNTANTS
I consent to the reference to me under the captions "Experts" and "Changes in and Disagreements with Accountants on Accounting and Financial Disclosure" and to the use of my report for the year ended December 31, 1995 in the Registration Statement (Form 10SB) of Tengasco, Inc.

/s/ Charles M. Stivers
----------------------------
Charles M. Stivers	

EXHIBIT 23.2

David T.
Thomson P.C. Certified Public Accountant

CONSENT OF INDEPENDENT ACCOUNTANT
To The Board of Directors
Tengasco, Inc.
(Formerly Onasco Companies, Inc.)
I have issued my report dated April 14, 1995, accompanying the financial statements of Tengasco, Inc., (Formerly Onasco Companies, Inc.) for the years ended December 31, 1994, 1993, and 1992 included in the Registration Statement (Form 10-SB). I consent to the use of my report, as stated above, in the Registration Statement and I consent to the reference to me under the captions "experts" and "Changes in and Disagreements with Accounts on Accounting and Financial Disclosures".
David T. Thomson P.C.

/s/ David T. Thomson P.C.

Salt Lake City, Utah
July 31, 1997	

180 South 300 West, Suite 329, Salt Lake City, Utah 84101 (801) 328-3900

EXHIBIT 23.3

Consent of Independent Certified Public Accountants
Tengasco, Inc.
Knoxville, Tennessee
We hereby consent to the use in this Registration Statement of our report dated June 5, 1997, relating to the consolidated financial statements of Tengasco, Inc. Our report contains an explanatory paragraph regarding the Company's ability to continue as a going concern.

                                        /s/ BDO Seidman, LLP

                                        BDO SEIDMAN, LLP

Atlanta, Georgia
July 28, 1997	

EXHIBIT 23.4

CONSENT OF COUNSEL
The consent of Robson & Miller, LLP is contained in the opinion filed as Exhibit 5.1 to the Registration Statement.

EXHIBIT 99.1

EX-99.1
BEECH CREEK LEASES

                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
  1       BARGER, FRANK                       7/9/96      6/10/95     80      290          109      12.5%     84.375    100%
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  2       CITY OF MANCHESTER                11/15/96     11/15/94     79      543          315      12.5%     84.375    100%
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  3       DAVIDSON, ROSCOE                   6/30/96      5/26/95     80      249           30      12.5%     84.375    100%
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  4       DEZARN, GROVER                     8/20/96      8/29/94     79      583          300      12.5%       82.5    100%
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  5       GRAY, NANNIE                       4/27/96      4/27/95     80       66          250      12.5%       82.5    100%
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  6       GRUBB, AMOS                         7/9/96      6/10/95     80      294            7      12.5%     84.375    100%
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  7       GRUBB, HARLAN                      7/16/96      7/16/94     79      547          191      12.5%       82.5    100%
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  8       HENSLEY, CONLEY                    10/8/96      10/8/94     79      551        16.68      12.5%       82.5    100%
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  9       HENSLEY, DELBERT                   10/8/96      10/8/94     79      567        37.43      12.5%       82.5    100%
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 10       HENSLEY, EDSEL                    10/26/96     10/26/94     79      555        18.78      12.5%       82.5    100%
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 11       HENSLEY, EUGENE                    10/8/96      10/8/94     79      571        18.47      12.5%       82.5    100%
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 12       HENSLEY, HERSCHEL                  10/8/96      10/8/94     79      559        18.36      12.5%       82.5    100%
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 13       JONES, TED                         8/30/96      8/30/94     79      575        3.129      12.5%       82.5    100%
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 14       LAKES, OLLIE                       5/31/96      5/31/95     80      261         71.4      12.5%     84.375    100%
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 15       LEE, JOHN ET AL                    6/10/96      6/10/95     80      306          108      12.5%     84.375    100%
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 16       LEE, WILL ET AL                     7/9/96      6/10/95     80      298          110      12.5%     84.375    100%
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 17       SPURLOCK, HUGH                     7/11/96      5/26/95     80      245          115      12.5%     84.375    100%
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 18       STOKES, LORENE                     10/8/96      10/8/94     79      563         7.29      12.5%     84.375    100%
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 19       WEBB, DONALD ET AL                 6/27/96      6/27/95     80      466          301      12.5%       82.5    100%
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 20       WHITE, DAUGH ET AL                 7/23/96      7/23/94     79      587          462      12.5%     84.375    100%
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 21       WOOTON, DON                        6/30/96       8/3/94     79      579          300      12.5%       82.5    100%
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 22       COTTON, MARY                       5/26/96      5/26/95     80      253           55      12.5%       82.5    100%

----------------------------------------------------------------------------------------------------------------------------
 23       SMITH, VIRGIL                      6/30/96      6/21/95     80      302          168      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 24       LEWIS, HERMAN                      5/21/96      5/31/95     80      257          889      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 25       LEWIS, HERMAN                       6/7/96       6/7/95     80      454      2431.76      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 26       WEBB, DONALD                       6/30/96      6/30/95     80      470           60      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 27       HALE, GILBERT                       9/8/96       9/8/94     79      640          150      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 28       BURNETT, EDDIE                      6/4/96      6/24/95     80      458          265      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 29       COWENS, EVA                         8/5/96       8/5/95     80      536           92      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 30       GARRETT, NANNIE                    6/24/96      6/24/95     80      462          175      12.5%     85.938    100%
----------------------------------------------------------------------------------------------------------------------------
 31       BOWLING, PRESTON                   8/18/96      8/18/95     80      548          154      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------	

EXHIBIT 99.1 CONTINUED
----------------------------------------------------------------------------------------------------------------------------
 32       SIZEMORE, RALEIGH                  8/18/96      8/18/95     80      544           13      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 33       WILSON, HUBERT                     8/22/96      8/22/95     80      524           20      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 34       CAMPBELL, FRANCIS                  8/22/96      8/22/95     80      528           34      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 35       BARRETT, EARNEST                   8/17/96      8/17/95     80      532           15      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 36       MCDONALD, JOSEPH                   8/17/96      8/17/95     80      540            3      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 37       B & C PROPERTIES                   8/31/96      8/31/95     81      180          500      18.8%         80    100%
----------------------------------------------------------------------------------------------------------------------------
 38       BARRETT, IRVIN                     9/30/96      9/20/95     81      206        105.3      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 39       JACKSON, ARMIS                     9/21/96      9/21/95     81      206          135      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 40       PRINGLE, ETHLENE                    8/3/96       8/3/95     81        5            2      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
 41       WEBB, MARY                         8/26/96      8/26/95     81        1            1      12.5%     84.375    100%
----------------------------------------------------------------------------------------------------------------------------
                                                                       TOTAL ACREAGE ..   8058
----------------------------------------------------------------------------------------------------------------------------

EXHIBIT 99.2

EXHIBIT 99.2
WILDCAT LEASES

                                             NEXT        PRIMARY
LEASE #     LESSOR NAME                      RENT       XPIRATION     BOOK     PAGE    NET ACRE        LOR           NRI        WI
====================================================================================================================================
  1      GARRETT, NANNIE                    6/24/96      6/24/96       80      462          175        12.5%        84.375      100%
------------------------------------------------------------------------------------------------------------------------------------
  2      HACKER, JOE                         4/7/96       4/7/96       81      489          131        12.5%        84.375      100%
------------------------------------------------------------------------------------------------------------------------------------
  3      WEBB, DONALD                       7/29/96      7/29/96       80      466           60        12.5%        84.375      100%
------------------------------------------------------------------------------------------------------------------------------------
  4      WHITE, CARL B.                      7/2/96       7/2/96       81      618          300        12.5%        84.375      100%
------------------------------------------------------------------------------------------------------------------------------------
  5      BISHOP, PAUL & BRENDA              7/18/96      7/18/96       81      640           75        12.5%        84.375      100%
--------------------------------------------------------------------------------------------===-------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
                                                                     TOTAL ACREAGE          741	

Page 1

EXHIBIT 99.3

EXHIBIT 99.3
BURNING SPRINGS LEASES

                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
 1        ALVERAS                          12/7/92       12/7/92      77      494         260       12.5%       82.5   100
----------------------------------------------------------------------------------------------------------------------------
 2        CORNETT                         12/14/92      12/14/92      78      561           2       12.5%         80   100
----------------------------------------------------------------------------------------------------------------------------
 3        GREGORY                           8/8/92        8/8/93      78      219          85       12.5%     84.375   100
----------------------------------------------------------------------------------------------------------------------------
 4        HALE                             5/11/94       5/11/94      79      640         150       12.5%     84.375   100
----------------------------------------------------------------------------------------------------------------------------
 5        KEITH                             1/1/92        1/1/92      76      444          75       12.5%       82.5   100
----------------------------------------------------------------------------------------------------------------------------
 6        ROBINSON-ALVERAS                10/5/92        10/5/93      78      488         172       12.5%         80   100
----------------------------------------------------------------------------------------------------------------------------
          ALL PRODUCING WELLS                                   TOTAL ACREAGE             744
----------------------------------------------------------------------------------------------------------------------------	

Page 1

EXHIBIT 99.4

EXHIBIT 99.4
FENTRESS COUNTY, TN. LEASES

                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
 1        CONATSER, CHARLES F.            4/18/96        4/18/96      32      16      50            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 2        DELK, MACK                      4/25/96        4/25/96      32      10      86            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 3        DILLARD, RAY HYDER              3/30/96        3/30/96      32      13     451            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 4        DUNCAN, EUGENE                  3/31/96        3/31/96      32       7     150            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 5        DUNCAN, GWENITH                 10/3/96        10/3/96      32       1     846            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 6        DUNCAN, GUY O.                  4/21/96        4/21/96      32       4     150            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 7        FRANKLIN, JESS                   4/1/96         4/1/96      32      25      35            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 8        REAGAN, RAY                     1/14/96        1/14/96      31     626     263            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
 9        WOODS, EARNEST                  7/11/96        7/11/96      31     540      90            12.5%     87.5     100%
----------------------------------------------------------------------------------------------------------------------------
                                                                 TOTAL ACREAGE      2121
----------------------------------------------------------------------------------------------------------------------------	

Page 1

EXHIBIT 99.5

SWAN CREEK
 (Hancock County)
LEASE FEE SCHEDULE

                                                NEXT      PRIMARY                  ANNUAL
  DATE       LESSOR NAME                        RENT     EXPIRATION    ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                        ----     ----------    -------      ---            ----------------------
OCTOBER
------------------------------------------------------------------------------------------------------------------------------------
   10   Moore, Paul & Sharon                  10/10/97    10/10/99        52        $208 00    Rt. 2, Box 244B, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   10   Greene, Randell & Marjorie            10/10/97    10/10/98       105        $420.00    P.O. Box 176, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   14   Big Creek Missionary Baptist Church   10/14/97    10/14/00       0.5        $100.00    c/o Carson Moles, Rt. 2, Box 172,
                                                                                                Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   26   Hensley, William P. and Lucretia E.   10/26/97    10/26/98       125        $500.00    Rt. 4 Box 268A Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   26   Royston, Leno and Mary                10/26/97    10/26/98        65        $260.00    Rt. 4 Box 266, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   26   Sutton, Ralph and Mae Dean            10/26/97    10/26/98        30        $200.00    Box 427, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   27   Russell, Kenneth and Lois             10/26/97    10/26/98      6.25         $25.00    8216 Filson St. Brookville FL 34613
------------------------------------------------------------------------------------------------------------------------------------
   27   Brewer, Harrison                      10/27/97    10/27/98        58        $300.00    Rt. 3 Box 426, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
     TOTAL ACRES & ANNUAL FEES -OCTOBER                               441.75      $2,013.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 1

                                                NEXT      PRIMARY                ANNUAL
  DATE       LESSOR NAME                        RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                        ----     ----------  -------      ---            ----------------------
NOVEMBER
------------------------------------------------------------------------------------------------------------------------------------
   3    Cross, Brian Todd and Deanna Hodge    11/3/97     11/3/98      100 +/-    $100.00   Rt. 4 Box 339B, Sneedville TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   6    Bryant, Edmont T.                     11/6/97     11/6/98      110        $440.00   Rt. 4 Box 348, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------

   6    Lawson, Cecil                         11/6/97     11/6/98      240        $960.00   Rt. 4 Box 337, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   6    Lawson, Laura J.                      11/6/97     11/6/98      300 +/-  $1,200.00   Rt. 4 Box 332, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   6    Lawson, Steven et.al.                 11/6/97     11/6/98      302      $1,208.00   Rt. 4 Box 338, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   6    Portrum, Fred and Melisha             11/6/97     11/6/98       68        $272.00   2112 Washington Av, Morristown TN 37814
-----------------------------------------------------------------------------------------------------------------------------------
   6    Winkler, Argle                        11/6/97     11/6/98       90        $360.00   Rt. 4 Box 316, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   8    Winkler, Willie and Hester            11/8/97     11/8/96       17         $68.00   Rt. 4 Box 315, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   8    Barnard, Andy                         11/8/97     11/8/98     66.5        $266.00   Rt. 4 Box 248, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   8    Ferguson, Clarence and Teresa         11/8/97     11/8/98       50        $200.00   Rt. 4 Box 284D, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
   9    Mitchell, Ester                       11/9/97     11/9/98      100        $400.00   8588 Bobolick, Cincinn. Oh 45231
-----------------------------------------------------------------------------------------------------------------------------------
  14    Hatfield, George W. and Lona          11/14/97    11/14/98    61.5        $246.00   Rt. 2, Tazewell, TN 37879
-----------------------------------------------------------------------------------------------------------------------------------
  14    Royston, Gustava                      11/14/97    11/14/98      12         $48.00   Rt. 3, Box 461A, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
  16    Shaw, Tommy and Allica                11/16/97    11/16/98       6         $25.00   711 Morningside, Rogersville, TN 37857
-----------------------------------------------------------------------------------------------------------------------------------
  22    DePriest, Danny and Sharon            11/22/97    11/22/98      47        $188.00   Rt. 4 Box 268, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
  27    DePriest, Robert                      11/27/97    11/27/98      50        $200.00   Rt. 3 Box 428F, Sneedville, TN 37869
-----------------------------------------------------------------------------------------------------------------------------------
  28    Smith, Cheryl R., Etal                11/28/97    11/28/98      65        $260.00   8221 Sherbourne Dr., Knoxville, TN 37923
-----------------------------------------------------------------------------------------------------------------------------------
        TOTAL ACRES & ANNUAL FEES - NOV.                              1685      $6,441.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 2

                                               NEXT      PRIMARY                ANNUAL
  DATE       LESSOR NAME                       RENT     EXPIRATION  ACREAGE      FEE           LESSOR MAILING ADDRESS
  ----       -----------                       ----     ----------  -------      ---           ----------------------
DECEMBER
------------------------------------------------------------------------------------------------------------------------------------
   1   Lawson, Wiley                         12/1/97     12/1/98      11        $44.00    Rt. 4 Box 334, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   7   Mackey, George W. and Ruby            12/7/97     12/7/98      27       $108.00    Rt. 2 Box 228, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   7   Sutton, Dewey and Tavie               12/7/97     12/7/98     310     $1,240.00    Rt. 3 Box 429, Sneedville, TN 37869

------------------------------------------------------------------------------------------------------------------------------------
  10   Cantwell, Archie and Linda           12/10/97    12/10/98      44       $176.00    4398 Woodhaven  Dr. Morristown 37813
------------------------------------------------------------------------------------------------------------------------------------
  10   Cantwell, Cesil and Patti            12/10/97    12/10/98      68       $272.00    Timberlake Sub Division, Rogersville 37857
------------------------------------------------------------------------------------------------------------------------------------
  10   Cantwell, Kenneth and Katherine      12/10/97    12/10/98    38.7        156.00    Rt. 3 Box 387, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  10   Seals, Rodney and Jennie Mae         12/10/97    12/10/98      92       $368.00    Rt. 3 Box 380A, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  10   Seal, Edith, make ck. pbl:
        Deanna Trent                        12/10/97    12/10/98      90       $360.00    Rt. 3 Box 379, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  10   Trent, Ralph and Deanna              12/10/97    12/10/98      15        $60.00    Rt. 3 Box 379, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  11   Carpenter, Lucille                   12/11/97    12/11/98      25       $100.00    Rt. 2 Box 238, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  11   Jefferson, Wright                    12/11/97    12/11/98      45       $180.00    Rt. 2 Box 244, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  11   Jefferson Jr., Wright                12/11/97    12/11/98      52       $208.00    Rt. 2 Box 244A, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  11   Mackey, Jeptha and Pearl             12/11/97    12/11/98      27       $108.00    Rt. 2 Box 232, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  11   Zeller, Stanley                      12/11/97    12/11/98     108       $432.00    Rt. 2 Box 246A, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  15   Patton, Gary and Lynn                12/15/97    12/15/98      86       $344.00    360 Chaffin Rd. Roswell, GA 30075
------------------------------------------------------------------------------------------------------------------------------------
  28   Pierce, Dr. Truett H. and
        Wanda and Gary Hicks                12/28/97    12/28/00     350     $1,400.00    Box 37, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
      TOTAL ACRES AND ANNUAL FEES - DECEMBER                    1,386.70     $5,556.00	

Hancock Co. Lease Fee Schedule
Page 3

                                              NEXT      PRIMARY                ANNUAL
  DATE       LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                      ----     ----------  -------      ---            ----------------------
JANUARY
------------------------------------------------------------------------------------------------------------------------------------
   5   Bauer, Virginia and Walter W.       1/5/98      1/5/99      10.5         $42.02    504 W. Aspen, Kanab, UT 84741
------------------------------------------------------------------------------------------------------------------------------------
   5   Carr, Yvonne (trust)                1/5/98      1/5/99     15.54         $62.16    2215 Vina Del Mar, Oxnard CA 93035
------------------------------------------------------------------------------------------------------------------------------------
   5   Dixon, Richard                      1/5/98      1/5/99         5         $20.00    PO Box 249, Bean Station TN 37708

------------------------------------------------------------------------------------------------------------------------------------
   5   Fuller, James M. And Mary B.        1/5/98      1/5/99        10         $40.00    4200 Easton Dr Ste 3, Bakersfield CA 93309
------------------------------------------------------------------------------------------------------------------------------------
   5   Hart, William L.                    1/5/98      1/5/99     41.44        $165.76    3112 Solimar Beach Dr. Ventura CA 93001
------------------------------------------------------------------------------------------------------------------------------------
   5   Miller, Donna and Kevin             1/5/98      1/5/99      10.5         $42.02    1589 Wolverton Av, Camarillo CA 93010
------------------------------------------------------------------------------------------------------------------------------------
   5   Powell, Robert                      1/5/98      1/5/99      10.9         $43.60    2101 Pinebrook Dr. Kingsport, TN 37662
------------------------------------------------------------------------------------------------------------------------------------
   5   Salzeider, Gary                     1/5/98      1/5/99     20.72         $82.88    1724 13th Av Ct. NW, Puyallup, WA 98371
------------------------------------------------------------------------------------------------------------------------------------
   5   Williams, Steven and Lisa           1/5/98      1/5/99      5.25         $21.01    620 Willow Oaks Drive, Ozark, AL 36360
------------------------------------------------------------------------------------------------------------------------------------
   5   Witherspoon, Nancy and Wayne        1/5/98      1/5/99     15.54         $62.16    1375 Sweetwater Av, Camarillo, CA 93010
------------------------------------------------------------------------------------------------------------------------------------
   8   Ferguson, Hyle and Diana            1/8/98      1/8/99       100        $400.00    Rt. 2 Box 224, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   8   McCoy, Maude                        1/8/98      1/8/99       100        $400.00    Rt. 2 Box 223, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
   9   McCoy, Dale and Mary Lucille        1/9/98      1/9/99        44        $176.00    Rt. 2 Box 223, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  15   Reed, Paul and Lucille             1/15/98     1/15/99       410      $1,640.00                   Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  25   Sutton, Darnell                    1/25/98     1/25/99        8          150.00    Rt. 2 Box 160, Tazewell, TN 37860
------------------------------------------------------------------------------------------------------------------------------------
       TOTAL ACRES AND ANNUAL FEES - JANUARY                    807.39       $3,347.61
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 4

                                              NEXT      PRIMARY                ANNUAL
  DATE       LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                      ----     ----------  -------      ---            ----------------------
FEBRUARY
------------------------------------------------------------------------------------------------------------------------------------
  15     Nichols, Earl                         2/15/98     2/15/00    113         $452.00    Rt. 1 Box 289, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  15     Testerman, Henry & Joyce              2/15/98     2/15/00    191         $764.00    Rt. 1 Box 179, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  16     Gibson, Harvey Jr. & Lois             2/16/98     2/16/00     80         $320.00    Rt. 1 Box 340, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  16     Umbarger, Mary                        2/16/98     2/16/00     50         $200.00    Rt. 1 Box 194, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------

  16     Greene, John and Kathleen             2/16/98     2/16/00     25         $100.00    Rt. 1 Box 347, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  17     Kirby, Ted                            2/17/98     2/17/00      5          $20.00    Rt. 1 Box 225, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  17     Wallan, Frank & Kathy                 2/17/98     2/17/00     36         $144.00    Rt. 1 Box 201, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  17     Smith, David & Deborah                2/17/98     2/17/00     30         $120.00    Rt. 1 Box 143 Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  17     Johnson, Rickey & Delois              2/17/98     2/17/00     57         $228.00    Rt. 1 Box 329, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  17     Johnson, Hugh & Helen                 2/17/98     2/17/00     87         $348.00    Rt. 1 Box 324, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  19     Testerman, Robert                     2/19/98     2/19/00    101         $404.00    Rt. 1 Box 345, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  19     Livesay, Mattie                       2/19/98     2/19/00     63         $252.00    Rt. 1 Box 246, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  20     Johnson, Roy                          2/20/98     2/20/00     50         $200.00    Rt. 1 Box 348, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  20     Kinsler, Robert& Brenda               2/20/98     2/20/99    195         $780.00    Rt. 1 Box 76, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  20     Gray, Joe and Donna                   2/20/98     2/20/00    112         $448.00    Rt. 1 Box 353AA, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  21     Dillon, Deborah and James             2/21/98     2/21/00     52         $208.00    Rt. 1 Box 157, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  21     Gilliam, Linburgh                     2/21/98     2/21/00    114         $456.00    Rt. 1 Box 77A, Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
  21     Reed, Warren and Lillie Bell          2/21/98     2/21/99    250       $1,000.00    Rt. 3 Box 429, Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  21     Gibson, Ulyssus and Rose              2/21/98     2/21/00    115         $460.00    Rt. 1 Box 2015A, Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  21     Livesay, H.T. And Viola               2/21/98     2/21/00    435       $1,740.00    1414 Chambers St., Rogersville TN 37857
------------------------------------------------------------------------------------------------------------------------------------
  21     Albright, L.V. And Judy               2/21/98     2/21/00     34         $136.00    Rt. 1 Box 165, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  22     Holt, Charles & Maxine                2/22/98     2/22/00   1030       $4,120.00    Rt. 1 Box 97 Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
  22     Gibson, Danny and Janette             2/22/98     2/22/00     35         $140.00    Rt. 1 Box 327 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  23     Gibson, Goldie                        2/23/98     2/23/00    111         $444.00    Rt. 1 Box 338, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  23     Kinsler, Hobert & Valice              2/23/98     2/23/00     50         $200.00    Rt. 1 Box 303, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  23     Gibson, Harvey Jr. & Lois             2/23/98     2/23/00     12          $48.00    Rt. 1 Box 340, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
  23     Johnson, Ada Lee                      2/23/98     2/23/00    200         $800.00    Rt. 2 Box 36, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
  24     Nichols, Clyde                        2/24/98     2/24/00     42         $168.00    Rt. 1 Box 313, Sneedville, TN 37765
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 5

                                              NEXT         PRIMARY             ANNUAL
  DATE       LESSOR NAME                      RENT       EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
  ----       -----------                      ----       ----------  -------    ---            ----------------------
FEBRUARY (Continued)
------------------------------------------------------------------------------------------------------------------------------------
 24       Kinsler, Homer & Annette             2/24/98     2/24/00    35        $140.00      Rt. 1, Box 176, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 24       Harrell, John                        2/24/98     2/24/00   105        $420.00      Rt. 3, Box 1293, Bean Station, TN 37708
------------------------------------------------------------------------------------------------------------------------------------
 27       Mabe, Luther                         2/27/98     2/27/00    87        $348.00      Rt. 1, Box 156, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 27       Cagle, Jeannette and Cashus          2/27/98     2/27/00   150        $600.00      Rt. 1 Box 153A, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Dunsmore, Lillian                    2/28/98     2/28/00    80        $320.00      Rt. 1 Box 343, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Nichols, Oscar & Bobbie              2/28/98     2/28/00   150        $600.00      Rt. 1 Box 223, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Catron, Bee DECEASED 1996            2/28/98     2/28/00    39        $156.00      Rt. 1 Box 184, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Nichols, Lincoln and Bobby           2/28/98     2/28/00     4         $16.00      Rt. 1 Box 223, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Johnson, Allen  **payment to:
             Lois Gibson                       2/28/98     2/28/00    14         $56.00      Rt. 1 Box 340, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Nichols, Rodger                      2/28/98     2/28/00    13         $52.00      Rt. 1 Box 332, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Gibson, Gene                         2/28/98     2/28/00   130        $520.00      Rt. 1 Box 355, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 28       Baker, Johnathan & Barbara           2/28/98     2/28/00    55        $220.00      Rt. 1 #307, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 28       Lamb, Helen Nichols                  2/28/98     2/28/00    25        $100.00      Rt. 1 Box 332, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28       Weston, Barbara Ann                  2/28/98     2/28/00    14         $56.00      Rt. 1 Box 307B Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 29       Fugate, Ruby                         2-29-98     2/29/00    25        $100.00      Rt. 1 Box 292, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 29       Kinsler, Lucian & Geneva
             **payment to: Norma Flennor       2-29-98     2/29/00    25        $100.00      Rt. 1 Box 290, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 29       Jarvis, Ray                          2-29-98     2/29/00    17         $68.00      P. O. Box 125, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 29       Wallen, Fred                         2-29-98     2/29/00    30        $120.00      Rt. 1 Box 200, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------

 29       Rogers, Etta  **payment to:
             Martha Nichols                    2-29-98     2/29/00    57        $228.00      Rt. 1 Box 244A, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 29       Holt, Lillie                         2-29-98     2/29/00   150        $600.00      Rt. 1 Box 96, Eidson, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
          TOTAL ACRES AND ANNUAL FEES - FEBRUARY                    4880     $19,520.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 6

                                               NEXT     PRIMARY                ANNUAL
 DATE        LESSOR NAME                       RENT    EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
 ----        -----------                       ----    ----------  -------      ---            ----------------------
MARCH
------------------------------------------------------------------------------------------------------------------------------------
 1       Smith, Inez **payment to: David Smith  3/1/98     3/1/00     39        $156.00    Rt. 1 Box 193, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 1       Johnson, Tyler & Virginia              3/1/98     3/1/00     30        $120.00    Rt. 1 Box 221 Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 1       Wagner, G. Michael and
            Elizabeth Kartinganer               3/1/98     3/1/00     87        $348 00    Rt. 1 Box 213, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 1       Presley, Dorothy and Ruby Blair        3/1/98     3/1/00    280      $1,120.00    Rt. 1 Box 50, Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
 1       Johns, Edna                            3/1/98     3/1/00    105        $420 00    Rt. 1 Box 162, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 1       Presley, Rufus & Dorothy               3/1/98     3/1/00    275      $1,100.00    Rt. 1 Box 50, Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
 1       Belcher, Tommy & Brenda                3/1/98     3/1/00     35        $140.00    Rt. 1 Box 285, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Lula Sue                    3/2/98     3/2/00     75        $300.00    1319 Gregreen Ln Lakeland FL 33813
------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, John & Fern                 3/2/98     3/2/00     75        $300.00    8401 Malone Rd. Olive Branch MS 38654
------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Dwight & Patsy              3/2/98     3/2/00     75        $300.00    Rt. 1, Kyles Ford 37765
------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Bill & Alice                3/2/98     3/2/00     75        $300.00    212 Russell Dr. Rogersville, TN 37857
------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Dwight & Etal               3/2/98     3/2/00    100        $400.00    Rt. 1 Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 2       Lorenz, Christine & Louis Jr.          3/2/98     3/2/00     75        $300.00    Rt. 1 Box 259B, Kyles Ford, TN 37765

------------------------------------------------------------------------------------------------------------------------------------
 2       Sizemore, James                        3/2/98     3/2/00      6         $24.00    Rt. 1 Box 223, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 2       Trobaugh, James & Judy                 3/2/98     3/2/00     28        $112.00    2157 Frank Hodge Rd Talbott TN 37877
------------------------------------------------------------------------------------------------------------------------------------
 3       Gilliam, Shannon and Marie             3/3/98     3/3/00     25        $100.00    Rt. 1 Box 76 Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
 4       Stewart Nora and Ida Rimes
            **Pyble to Nora Stewart             3/4/98     3/4/00    226        $904.00    Rt. 1 Box 103 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 4       Whitney, Damnel, Edith & Ray           3/4/98     3/4/00     91        $364.00    Rt. 1 Box 76 Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
 4       Hurd, Eva                              3/4/98     3/4/00     21         $84.00    Rt. 1 Box 135 Blackwater, VA 24221
------------------------------------------------------------------------------------------------------------------------------------
 4       Johnson, John & Minnie                 3/4/98     3/4/00     13         $52.00    Rt. 1 Box 321 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 4       Willis, Douglas                        3/4/98     3/4/00      2          $8.00    Rt. 1 Box 198, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 4       Willis, Zelma                          3/4/98     3/4/00     75        $300.00    Rt. 1 Box 198A, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 5       Anderson, James & Nancy                3/5/98     3/5/00    283      $1,132.00    220 Lloyd Chapel Rd, Church Hill TN 37642
------------------------------------------------------------------------------------------------------------------------------------
 6       Maness, Sterling & Gilbertia           3/6/98     3/6/00     83        $332.00    Rt. 1 Box 216, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 6       Maness, Gilbertia & Sterling           3/6/98     3/6/00    115        $460.00    Rt. 1 Box 216, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 6       Willis, John Jr.                       3/6/98     3/6/00     18         $72.00    Rt. 1 Box 230, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 7       Kinsler, Mark Edward                   3/7/98     3/7/00     58        $232.00    Rt. 1 Box 183, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 7       Kinsler, Tyler & Jewell                3/7/98     3/2/00     15         $60.00    Rt. 1 Box 196, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 7

                                              NEXT      PRIMARY                ANNUAL
 DATE        LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
 ----        -----------                      ----     ----------  -------      ---            ----------------------
MARCH (Continued)
------------------------------------------------------------------------------------------------------------------------------------
 8       Jones, Ronald & Michael             3/8/98     3/8/00    263      $1,052.00   510 Windsor Forrest Dr., Kingsport, TN 37663

------------------------------------------------------------------------------------------------------------------------------------
 11      Johnson, Clyde, Jr. & Dorothy J.    3/11/98    3/11/00    51        $204.00   1673 Christian Bend Rd, Church Hill, TN 37642
------------------------------------------------------------------------------------------------------------------------------------
 11      Moles, Dayton & Thelma              3/11/98    3/11/00    15         $60.00   Rt. 1, Box 274, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 11      Shelburne, Thomas & Sarah           3/11/98    3/11/00    70        $280.00   P. O. Box 608, Rogersville, TN 37857
------------------------------------------------------------------------------------------------------------------------------------
 11      Stapleton, Edward & Pauline         3/11/98    3/11/00    95        $380.00   538 W. Huntington, Monttelier Ind 47359
------------------------------------------------------------------------------------------------------------------------------------
 11      Wallen, Ronnie                      3/11/98    3/11/00    52        $208.00   117 Wellington Dr. Middlesboro KY 40965
------------------------------------------------------------------------------------------------------------------------------------
 12      Goodman, Calvie
          ** Make check to John Goodman      3/12/98    3/12/00    56        $224.00   Rt. 2 Box 158 Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 12      Johnson, Ada                        3/12/98    3/12/00    45        $180.00   Box 756, Churchville VA 24421
------------------------------------------------------------------------------------------------------------------------------------
 12      Kinsler, Sonny                      3/12/98    3/12/00    20         $80.00   Rt. 1 Box 166 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 12      Seals, Naomi and Emery              3/12/98    3/12/00    38        $152.00   4218 Stansberry Rd. Morristown TN 37813
------------------------------------------------------------------------------------------------------------------------------------
 13      Collins, Margaret (administrator)   3/13/98    3/13/00   115        $460.00   Rt. 2 Box 340 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 13      Horton, Charlie                     3/13/98    3/13/00    58        $232.00   948 Melody LN Kingsport TN 37665
------------------------------------------------------------------------------------------------------------------------------------
 13      Livesay, Jerry & Nancy              3/13/98    3/13/00   173        $692.00   Rt. 1 Box 36, Eidson, TN 37731
------------------------------------------------------------------------------------------------------------------------------------
 13      Stout, Ethel                        3/13/98    3/13/00   136        $544.00   Rt. 1 Box 38 Eidson TN 37731
------------------------------------------------------------------------------------------------------------------------------------
 14      Hatfield, Lona                      3/14/98    3/14/00    40        $160.00   Rt. 2 Box 159, Tazewell TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 15      Barger, Ruth                        3/15/98    3/15/00     4         $16.00   921 Myrtle St. Kingsport, TN 37660
------------------------------------------------------------------------------------------------------------------------------------
 15      Nichols, Lee
          **payment to: Clyde Nichols        3/15/98    3/15/00    77        $308.00   Rt. 1 Box 313 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 15      Turner, Elsie                       3/15/98    3/15/00    45        $180.00   Rt. 1 Box 345, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 16      Sutton, Dayton & Julia              3/16/98    3/16/00 189.5        $758.00   Rt. 4 IDAS Chapel Rd Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 18      Cope Fred & Nancy
          *Make check to: Fred Cope          3/18/98    3/18/00    80        $320.00   Rt. 4 Box 149 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 18      Jones, Lewis & Zelma                3/18/98    3/18/00    21         $84.00   Rt. 4 Box 317A Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 19      Lawson, Ray E.                      3/19/98    3/19/00    14         $56.00   Rt. 3 Box 474 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 20      Anderson, Herbert & Maxine          3/20/98    3/20/00    70        $280.00   160 Lena Dr. Rogersville TN 37857
------------------------------------------------------------------------------------------------------------------------------------
 20      Helton, Doris                       3/20/98    3/20/00    30        $120.00   Rt. 2 Box 157 A Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 20      Sizemore, Guy & Betty               3/20/98    3/20/00   435      $1,740.00   987 Lee Valley Rd. Whitesburg TN 37891
------------------------------------------------------------------------------------------------------------------------------------
 20      Winstead, Robert & Joyce            3/20/98    3/20/00    70        $280.00   Rt. 1 Box 173 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------

 21      Greene, Rector & Fay                3/21/98    3/21/00    38        $152.00   312 E. Main St. Rt. 1 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 21      McCoy, Jeff & Polly                 3/21/98    3/21/00    24         $96.00   Rt. 2 Tazewell TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 21      Willis, Walter & Alice              3/21/98    3/21/00    40        $160.00   Rt. 1 Box 185, Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 21      Wilson, Kyle & Ina                  3/21/98    3/21/00    23         $92.00   Rt. 4 Box 280 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 22      Rogers, Jack                        3/22/98    3/22/00    26        $104.00   Rt. 1 Box 154, Eidson TN 37731
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 8

                                                NEXT      PRIMARY              ANNUAL
 DATE        LESSOR NAME                        RENT     EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
 ----        -----------                        ----     ----------  -------    ---            ----------------------
MARCH (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
 22     Reed, Kenneth, Jr. & Penny              3/22/98    3/22/00    35       $140.00     P.O. Box 82, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 24     Hechmer, Francis & Janet                3/24/98    3/24/99    60       $240.00     Rt. 4, Box 342, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 25     Clonce, John & Louise                   3/25/98    3/25/00    32       $128 00     Rt. 3, Box 457, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 26     Ogden, Sarah Elizabeth                  3/26/98    3/26/00    40       $160.00     160 Crossway Rd Brunswick GA
        ** deposit to acct. No. 0090777, Citizens Bank of Sneedville
------------------------------------------------------------------------------------------------------------------------------------
 26     Darnell, Callie Mae                     3/26/98    3/26/00    74       $296.00     1020 Fairway St. Kingsport TN 37665
------------------------------------------------------------------------------------------------------------------------------------
 27     Baker, Carl & Edith                     3/27/98    3/27/00   300     $1,200.00     Rt. 1 Box 264 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28     Livesay, Elsie (Mrs. Braten)            3/28/98    3/28/00   196       $784.00     Rt. 1 Box 315 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 28     Snodgrass, Edward & Kelly               3/28/98    3/28/00   116       $464.00     Rt 1 Box 234 Kyles Ford TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 29     Dean, Larry E. & Gail                   3/29/98    3/29/00   143       $572.00     Rt. 4 Box 288 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 29     Dodson, Earl & Betty                    3/29/98    3/29/00    40       $160.00     Rt. 3 Box 419 Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------

        TOTAL ACRES AND ANNUAL FEES - MARCH                       5834.5    $23,338.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 9

                                              NEXT      PRIMARY                ANNUAL
 DATE        LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
 ----        -----------                      ----     ----------  -------      ---            ----------------------
APRIL
------------------------------------------------------------------------------------------------------------------------------------
 2       Dodson, Clarence & Joyce               4/2/98     4/2/00     68        $272.00    Rt. 3 Box 416, Sneedville TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 8       Pierce, Dr. Truett H., et al           4/8/98     4/8/99   7650     $10,000.00    P. O. Box 37, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 9       Seal, Jones                            4/9/98     3/9/00     50        $200.00    Rt. 2 Box 168 A Tazewell TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 10      Yeary, Bobby                           4/10/98    4/10/00    40        $160.00    Rt. 2 Box 161 A2 Tazewell TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 10      Smith, Larry and Lois and Linda        4/10/98    4/10/97   133        $532.00    Rt. 2 Box 157, Tazewell TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 11      Reed, Morris & Johnny                  4/11/98    4/11/00    12         $48.00    1465 Windcrest Dr. Morristown TN 37814
         ** Johnny Reed: 13840 Bridlington Ct. Centerville VA 22020
------------------------------------------------------------------------------------------------------------------------------------
 17      Colson, William & Anita                4/17/98    4/17/00    60        $240.00    P. O. Box 27150, Panama City FL 32411
------------------------------------------------------------------------------------------------------------------------------------
 18      Sutton, Hazel                          4/18/98    4/18/00  42.5        $170.00    Rt. 2 Box 158 Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 18      Sutton, Darnell                        4/18/98    4/18/00   102        $408.00    Rt. 2 Box 160 Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 20      Lange, Orville and Doris A.            4/20/98    4/20/00   107        $428.00    5521 Deer Park Dr., Roanoke, VA 24019
------------------------------------------------------------------------------------------------------------------------------------
 22      Tillson, James and Edith               4/22/98    4/27/00    25        $100 00    Rt. 2 Box 20-1, Gore, OK 74435
------------------------------------------------------------------------------------------------------------------------------------
         TOTAL ACRES AND ANNUAL FEES - APRIL                      8289.5     $12,558.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 10

                                           NEXT      PRIMARY                ANNUAL
 DATE        LESSOR NAME                   RENT     EXPIRATION  ACREAGE      FEE           LESSOR MAILING ADDRESS
 ----        -----------                   ----     ----------  -------      ---           ----------------------
MAY
------------------------------------------------------------------------------------------------------------------------------------
 2    Drinnon, Joel                        5/2/98     5/2/00     21        $84.00    Rt. 2, Box 225, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 2    Kinsler, Edith                       5/2/98     5/2/00     71       $284.00    P.O. Box 363 Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 7    Hopkins, Debbie                      5/7/98     5/7/00      8        $32.00    P.O. Box 231, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 8    Davis, Robert J. and Glenda J.       5/8/98     5/8/00     47       $188.00    Rt. 1 Box 361, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 8    Hurst, Stan and Peggy                5/8/98     5/8/00    125       $500.00    Rt. 4 Box 316A, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 8    Wallace, W. Pearl                    5/8/98     5/8/00      6        $24.00    P.O. Box 375, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 10   Rhea, Estate of Victor               5/10/98    5/10/00   115       $460.00    c/o Jewell Brown, Box 303 Rogersville, TN 37857
------------------------------------------------------------------------------------------------------------------------------------
 10   Shelburne, Thomas D. And Sarah C.    5/10/98    5/10/00    70       $280.00    P.O. Box 608, Rogersville, TN 37857
------------------------------------------------------------------------------------------------------------------------------------
 11   Seal, Joe F. And Billie S.           5/11/98    5/11/00    20        $80.00    Rt. 2 Box 207, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 11   Roberts, Wayne and Jeanette          5/11/98    5/11/00   150       $600.00    Rt. 2 Box 212-A, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Jack, Etal                  5/13/98    5/13/00  96.5       $386.00    3775 State Highway 33, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Jack and Jackie             5/13/98    5/13/00   103       $412.00    3775 State Highway 33, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Ethel McDaniel, Etal        5/13/98    5/13/00   175       $700.00    3775 State Highway 33, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Jack                        5/13/98    5/13/00   400     $1,600.00    3775 State Highway 33, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 13   Hagan, Ronald, Etal                  5/13/98    5/13/00    86       $344.00    5757 Brights Pike, Russellville, TN 37860
------------------------------------------------------------------------------------------------------------------------------------
 14   Griffin, Janelle and James           5/14/98    5/14/00     6        $24.00    Rt. 4 Box 383, Rutledge, TN 37861
------------------------------------------------------------------------------------------------------------------------------------
 14   Stewart, Eddie and Karen Wallen
       **ck to Karen Wallen                5/14/98    5/14/00    13        $52.00    Rt. 1 Box 103, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 14   Wallen, Dennis A. And Karen          5/14/98    5/14/00    18        $72.00    Rt. 1 Box 103, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 15   Greene, Matt. D. Estate              5/15/98    5/15/00   205       $820.00    Rt. 1 Box 172, Rutledge TN 37861
------------------------------------------------------------------------------------------------------------------------------------
 15   Moles, Carson and Etta               5/15/98    5/15/97   117       $468.00    Rt. 2 Box 172, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 15   Moles, Vester Neal                              5/15/97    51       $204.00    Rt. 3 Box 1035, Bean Station, TN 37708
------------------------------------------------------------------------------------------------------------------------------------
 16   LeBlanc, Tammy                       5/16/98    5/16/00    68       $272.00    Rt. 4 Box 321A, Sneedville, TN 37869

------------------------------------------------------------------------------------------------------------------------------------
 16   Royston, Grady and Phyllis           5/16/98    5/16/00    50       $200.00    Rt. 1 Box 32, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 16   Jefferson, Carl and Wanda            5/16/98    5/16/99     2        $10.00    Rt. 4 Box 320EE, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 17   McCoy, James and Elanor              5/17/98    5/17/00   150       $600.00    Rt. 2 Box 221, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 17   Seal, Horad Seal Estate
        **payable to Myrtle Seal           5/17/98    5/17/00   150       $600.00    Rt. 2 Box 208, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 20   Sutton, James D. And George E.       5/20/98    5/20/99    92       $368.00    3328 Sheila Circle, Whitepine, TN 37890
------------------------------------------------------------------------------------------------------------------------------------
 28   Johnson, Hugh and Helen              5/28/98    5/28/00    25       $100.00    Rt. 1 Box 324, Kyles Ford, TN 37765
------------------------------------------------------------------------------------------------------------------------------------
 31   Seals, Sherwin and Linda                        5/31/97    65       $260.00    Rt. 2 Box 161A, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 31   Johns, Porter and Ruby                          5/31/97   114       $456.00    Rt. 2, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------

      TOTAL ACRES AND ANNUAL FEES - MAY                      2619.5    $10,480.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 11

                                           NEXT    PRIMARY              ANNUAL
 DATE        LESSOR NAME                   RENT   EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
 ----        -----------                   ----   ----------  -------    ---            ----------------------
JUNE
------------------------------------------------------------------------------------------------------------------------------------
 1    Turnmire J.C. and Joyce                        6/1/97     93     $372.00   6905 Mulberry Road, Knoxville, TN 37918
------------------------------------------------------------------------------------------------------------------------------------
 7    McDaniel, Jewell, Admin.,
       Est. of Jepp Shockley              6/7/98     6/7/00     60     $240.00   136 Cardwell Drive, Tazewell TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 9    Seal, Ronald W. & Kimberly          6/9/98     6/9/00     25     $100.00   Rt. 2, Box 74, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 18   Moles, Nellie                       6/18/98    6/18/98    86     $344.00   Route 2, Box 164, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
 20   Seal, Clem D. & Lois                6/20/98    6/20/99   288   $1,152.00   Route 2, Box 113, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 20   Wingo, Tom & Peggy                  6/20/98    6/20/00   110     $440.00   Rt. 3, Box 486, Briar Cr. Rd., Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------

 20   Winstead, Carl & Eveline            6/20/98    6/20/00    76     $304.00   Route 3, Box 502, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 24   Seal, Clint and Mae                 6/24/98    6/24/00   140     $560.00   Route 3, Box 292, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 24   Seal, Tony H. & Pat                 6/24/98    6/24/00   101     $404.00   Route 3, Box 483-B, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 24   Seal, Tony H., Timothy D. & Jeff S. 6/24/98    6/24/00   218     $872.00   Route 3, Box 483-B, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 24   Marion, Wilbur & Katherine          6/24/98    6/24/00    25     $100.00   Route 3, Box 506, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 24   White, Randy & Patricia             6/24/98    6/24/00    40     $160.00   Route 3, Box 395, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 25   Louthan, Euna & Charles
       on behalf Everett Sutton Est.      6/25/98    6/25/00   123     $492.00   Rt. 4, Box 239, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 28    Johnson, Kenneth & Tammy           6/28/98    6/28/00    65     $260.00   Rt. 4, Box 203, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 28    Seal, Ora M.                       6/28/98    6/28/00     8      $32.00   Rt. 3, Box 389, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
          TOTAL ACRES & ANNUAL FEES - JUNE                    1458   $5,832.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 12

                                       NEXT     PRIMARY              ANNUAL
 DATE        LESSOR NAME               RENT    EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
 ----        -----------               ----    ----------  -------    ---            ----------------------
JULY
------------------------------------------------------------------------------------------------------------------------------------
 1   Greene, Bessie Lee & Tillman, Jr. 7/1/98   7/1/99     17       $68.00         Rt. 2, Box 301, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 2   Seal, Tyler C. & Tener            7/2/98   7/2/00    420    $1,680.00         Rt. 3, Box 510, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 2   Reed, Ruby & Heirs,
         Est. Of Lawrence Reed         7/2/98   7/2/00    317    $1,268.00         Rt. 4, Box 264, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 8   Lawson, Ray & Glenda              7/8/98   7/8/00     25      $100.00         Rt. 3, Box 474, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 9   Mathis, Jeff & Barbara            7/9/98   7/90/00    70      $280.00         Rt. 3, Box 740, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------

 9   Bryant, Herman & Ethel            7/9/98   7/9/00      6       $24.00         P. O. Box 223, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 11  Tabor, Jack       Claiborne Co.   7/11/98  7/11/00   465    $1,860.00         600 Sugar Loaf Road, Brevard, NC 28712
------------------------------------------------------------------------------------------------------------------------------------
 11  Cook, Richard A., Jr. And Denese  7/11/98  7/11/00 123.3      $738.00         9449 Decatur Road, Laurel, MD 20723
------------------------------------------------------------------------------------------------------------------------------------
 11  Clonce, Estate of John               Pd.   7/11/97    34      $500.00 (Total) c/o John Clonce,Jr., Rt.3, Box 457,
                                                                                      Sneedville 37869
------------------------------------------------------------------------------------------------------------------------------------
 15  Seal, Wilma G.                       Pd.   7/15/98     4      $100.00 (Total) Rt. 3, Box 376, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 15  Seal, James & Inez                7/15/98  7/15/00    61      $244.00         4023 Old Kentucky Rd., Morristown, TN 37814
------------------------------------------------------------------------------------------------------------------------------------
 16  Pendey Jimmy & Charlotte          7/16/98  7/16/00             $24.00         Rt. 3, Box 492C, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 16  Trent, Buddy                      7/16/98  7/16/00     4       $16.00         Rt. 3, Box 493, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 17  Mills, Mattie L.                  7/17/98  7/17/00     6       $24.00         P. O. Box 346, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 17  Greene, Faye (Mrs. Rector)        7/17/98  7/17/00    36      $144.00         Rt. 1, 312 E. Main St., Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 18  Seal, Mamie Hopkins               7/18/98  7/18/00    43      $172.00         Rt. 3, Box 475, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 23  Lawson, Fay H.                    7/23/98  7/23/00    33      $132.00         Rt. 3, Box 477, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 23  Lawson, Fay H. & Ray E.           7/23/98  7/23/00    35      $140.00         Rt. 3, Box 477, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 25  Seal, Randy & Joyce               7/25/98  7/25/99   210      $840.00         Rt. 1, Box 384, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 26  Mathis, George L. & Bobbie A.     7/26/98  7/26/00    15       $60.00         3116 Westlake Dr., Rogersville, TN 37857
------------------------------------------------------------------------------------------------------------------------------------
 26  Rippy, James & Geneva J.          7/26/98  7/26/99    25      $100.00         2617 W. Crenshaw, Tampa, FL 33614
------------------------------------------------------------------------------------------------------------------------------------
 29  Johnson, Est. Of Glen
         *Chk. To Betty Johnson        7/29/98  7/29/00    44       $176.00        Rt.3, Box 507, Ferguson Rd., Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------

     TOTAL ACRES & ANNUAL FEES - JULY                  1998.3     $8,690.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 13

                                           NEXT    PRIMARY              ANNUAL
 DATE        LESSOR NAME                   RENT   EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS

 ----        -----------                   ----   ----------  -------    ---            ----------------------
AUGUST
------------------------------------------------------------------------------------------------------------------------------------
5    Hardin, E. J. & Betsey
          Claiborne Co.                  8/5/97    8/5/00      250      $1,000.00    Box 162, Tazewell, TN 37879
------------------------------------------------------------------------------------------------------------------------------------
7    Johnson, Ellis, James & Larry
          *Ck. to Ellis                  8/7/97     8/7/00       7         $28.00    Rt. 2, Box 4990, Bean Station, TN 37708
------------------------------------------------------------------------------------------------------------------------------------
8    Seal, Carl                          8/8/97     8/8/00      72        $288.00    P. O. Box 326 Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
13   Reed, Kyle & Ma Jo                  8/13/97    8/13/00     35        $144.00    1518 N. Glen Street, Morristown, TN 37814
------------------------------------------------------------------------------------------------------------------------------------
15   Smith, David & K.D.   Claiborne Co. 8/15/97    8/15/00     56        $224.00    3823 Kingston Pike, Knoxville, TN 37919
------------------------------------------------------------------------------------------------------------------------------------

     TOTAL ACRES AND ANNUAL FEES - AUGUST                      420      $1,680.00
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 14

                                        NEXT       PRIMARY               ANNUAL
 DATE        LESSOR NAME                RENT      EXPIRATION  ACREAGE     FEE           LESSOR MAILING ADDRESS
 ----        -----------                ----      ----------  -------     ---           ----------------------
SEPT.
------------------------------------------------------------------------------------------------------------------------------------
 4   Pareti, Ronald & Susan             9/4/97     9/4/00    135         $550.00    Rt. 3, Box 394 River Road, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 9   Cantwell, Jeff and Myrtle          9/9/97     9/9/98  166.5         $666.00    Rt. 3, Box 401, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------
 9   Roberts, Hugh, Bruce and J. B.     9/9/97     9/9/98    156         $624.00    2105 Brights Pike, Morristown, TN 37814
------------------------------------------------------------------------------------------------------------------------------------
 9   Roberts, Hugh                      9/9/97     9/9/98     61         $244.00    2105 Brights Pike, Morristown, TN 37814
------------------------------------------------------------------------------------------------------------------------------------
 17  Bailey, Linda S.                   9/17/97    9/17/99    26         $104.00    Route 2, Box 122, Sneedville, TN 37869
------------------------------------------------------------------------------------------------------------------------------------

     TOTAL ACRES AND ANNUAL FEES - SEPTEMBER               544.5       $2,188.00
------------------------------------------------------------------------------------------------------------------------------------

     GRAND TOTAL ACRES AND ANNUAL FEES                  30367.14     $101,643.61
------------------------------------------------------------------------------------------------------------------------------------	

Hancock Co. Lease Fee Schedule
Page 15

EXHIBIT 99.6

EXHIBIT 99.6
ALABAMA LEASES

                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
  1       ABRAMSON, EDVIN C.              11/30/96      11/30/98      2       413       497         12.5%     87.5%    100%
----------------------------------------------------------------------------------------------------------------------------
  2       ABRAMSON, VERNON                11/30/96      11/30/98      2       411       139         12.5%     87.5%    100%
----------------------------------------------------------------------------------------------------------------------------
  3       DALE, MARK F.                   12/18/96      12/18/98      2       415     100.19        12.5%     87.5%    100%
----------------------------------------------------------------------------------------------------------------------------
  4       WYLIE, RUBEN A.                 12/20/96      12/20/98      2       419       267         12.5%     87.5%    100%
----------------------------------------------------------------------------------------------------------------------------

                                                         TOTAL ACREAGE ..........    1003.19
----------------------------------------------------------------------------------------------------------------------------	

Page 1

EXHIBIT 99.7

Coburn Petroleum Engineering
R.W. Coburn
June 18, 1997
Mr. Dan Follmar, President
Tengasco, Inc.
603 Main Avenue, Suite 500
Knoxville, Tennessee 37902
RE: Tengasco, Inc. December 31, 1996
Dear Mr. Follmar:
Pursuant to your request, I have evaluated the oil and gas properties of Tengasco, Inc., as of December 31, 1996. The results of this study are as follows:

                             As of December 31, 1996
                                (All Values Net)

                                                                         Net
                                                      Net Future       Revenue
                            Oil            Gas          Undisc.       Disc @ 10%
                          (Bbls)          (Mcf)          ($)            ($)
Proved Developed          ------        ----------    ----------     ----------
  Non Producing                0         7,167,350    21,762,357     12,438,762
Proved Undeveloped        10,156        15,400,005    50,349,552     28,909,335
                          ------        ----------    ----------     ----------
                          10,156        22,567,355    72,111,909     41,348,097

Required Future Investment..........................................$ 5,775,000	

The investment figure above includes the remaining cost of building a pipeline to the Swan Creek Field. Costs of the pipeline will be recovered by a gathering charge accounted for by adjusting the gas price to be received by producing gas wells in the in the Swan Creek Field. The large increase in reserves over the report as of December 31, 1995 is due to acquisition and development of the Swan Creek Field in Hancock County Tennessee. A discussion of this field as well as the Burning Springs, Beech Creek, and Fentress properties has been covered in reports previously submitted to you.
Details by properties are shown in the following tables. All of the oil and gas properties are located in the states of Kentucky and Tennessee. In the absence of and operating cost history our
9 East 4th Street o Suite 1000 o Tulsa, Oklahoma 74103-5107 o 918-587-7585 o Facsimile 918-584-4426

best judgement was used to estimate future operating costs. Well costs are based on drilling costs in the area.
Reserve and future performance estimates were prepared utilizing standard petroleum engineering methods. These methods include decline curve analysis, volumetric calculations, pressure history, analogy, various correlations and technical judgment. Reserve definitions conform to the Securities and Exchange Commission Guidelines.
Information was obtained from interest owners, State Regulatory Agencies, commercial services, outside operators and our files.
Information furnished is accepted as true and correct. Changes in economic conditions, reservoir performance, and unforeseen mechanical problems will likely make it necessary to make future reserve revisions.
Respectfully Submitted, Coburn Petroleum Engineering

/s/ R.W. Coburn
R.W. Coburn
Registered Petroleum Engineer
Oklahoma #3449	

RWC/eaa
Coburn Petroleum Engineering

CERTIFICATE
I, R.W. Coburn, of the City of Tulsa, in the State of Oklahoma, United States of America, hereby certify:
That I am a Consulting Engineer and a principal of Coburn Petroleum Engineering, with offices at 9 East 4th Street, Suite 900, Tulsa, Oklahoma 74103.
I further certify that:
1. I am a graduate of the University of Tulsa (1943) and hold a B.S. Degree in Petroleum Engineering.
2. I have been practicing my profession for the past 51 years.
3. I am registered with the Board of Professional Engineers of Oklahoma.
(Registration #3349)
4. The information for this report was obtained from discussion with field operating personal, from examination of production data, well tests, prior engineering studies and prior geologic studies. Some state well records were available for examination as were oil and gas sales records.
5. I have no direct or indirect interest whatsoever in the properties or the company involved. All fees are based on services rendered and are not contingent on the contents of the report.
Dated at Tulsa, Oklahoma, this 18 day of June, 1997.

/s/ R.W. Coburn
------------------------------------
R.W. Coburn
Registered Petroleum Engineer #3349	

PROFESSIONAL HISTORY
R.W. COBURN
EDUCATION

1937              Graduated from Richmond Hill High School,
                  New York City, New York

1937-1939         Hofstra College, Hemstead, New York
                  Business Administration

1939-1943         Graduated from Tulsa University, Tulsa
                  Oklahoma * B.S. Petroleum Engineering

MILITARY

1943-1946         Socony-Vacuum Oil Co. - Summer work (pipe
                  fitter apprentice and control chemist)
                  Brooklyn, New York Refinery

1946-1952         The Atlantic Refinery
1946              Junior Engineer-Reservoir Engineering,
                  Dallas, Texas

1947              District Engineer-Franklin, Louisiana
1948              District Production Foreman- Franklin,
                  Louisiana
1949              Ass't Dist. Superintendent-Denver City,
                  Texas
1952              Drilling Engineer- Offshore-Corpus Christi,
                  Texas
1952-1958         Champlin Oil & Refining Company-Enid,
                  Oklahoma. Chief Engineer and Division
                  Production Supt.

1958-1962         W.E. Stiles Consulting Engineers- Vice President and Manager
                  of Field Operations. Managed and directed the operation of oil
                  and gas properties in Southwest U.S. Served as Production
                  Manager and Technical Consultant to Petrorep, French oil
                  company.

1963-1992         Consulting Engineer. Engineered and supervised drilling and
                  completion operations in the U.S., Canada, France and Algeria.
                  Developed new well completion methods which changed existing
                  completion methods and are now standard practice throughout
                  the world.	

1992-Present      Staghorn (was Buttonwood) Petroleum
                  Operations Manager	

Wrote and published numerous articles on well completions for technical journals and Engineering Societies.
Preparation of Engineering Evaluations for property purchases, sale and registration with the Securities Exchange Commission.
Registered Petroleum Engineer - Oklahoma - #3349
GEOGRAPHICAL AREAS OF KNOWLEDGE & EXPERIENCE

1. U.S.           Oklahoma          Tennessee        Indiana
                  Arkansas          Kansas           Kentucky
                  Texas             West Virginia    Mississippi
                  New Mexico        Pennsylvania     Montana
                  Louisiana         Ohio             California
                  Illinois

2.  CANADA        Alberta           Ontario

3.  EUROPE        Paris Basin

4.  AFRICA        Algeria           Sudan (Redsea)   Nigeria
                  Tunisia	

SPECIFIC AREAS OF EXPERTISE
1. Drilling-Planning-Supervision
2. Workover-Planning-Supervision
3. Production-Operation-Supervision
4. Reserve Evaluation-Securities-Banking
5. Prospect Evaluation-Drilling Programs
6. Legal Expert Witness

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

            TENGASCO INC.                         AS OF DECEMBER 31, 1996                                      UNESC. CASE
---------------------------------------------------------------------------------------------------------------------------------
                                                           SUMMARY                                                        LEVEL 2

                                         PROVED DEVELOPED NON-PRODUCING & PROVED UNDEVELOPED

                             * RESERVE  ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

PERIOD ENDING                 12-31-1997 12-31-1998 12-31-1999 12-31-2000 12-31-2001 12-31-2002 12-31-2003 12-31-2004 12-31-2005
                              ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
GROSS VALUES            UNITS
   OIL/COND             BBL                   13616      23022      18363      14648      11684       9320       7434       5930
   GAS                  MCF       369110    3635245    3647919    3237408    2684119    2228264    1052008    1541226    1204231
   OPERATING COST       $          67200     147600     162000     162000     162000     162000     162000     162000     162000
   INTANGIBLE INVES     $        1250000    1225000
   CAPITAL INVES        $        2600000     700000

NET VALUES
   OIL/COND             BBL                   11063      18705      14920      11952       9493       7573       6040       4818
   GAS                  MCF       311168    2991201    3035345    2702399    2239405    1057633    1542498     128122    1066818
   OIL/COND             $                    204997     346804     276468     220544     175985     140326     111921      80278
   GAS                  $        1022271   10874861   10909243    1562441    7910556    6549596    5427357    4501241    3736469
   REVENUE TO HI        $        1022271   11079858   11255847    9838909    8131100    6725501    5567685    4813162    3825747
   INTANGIBLE INVES     $        1250600    1225008
   CAPITAL INVES        $        2600000     700006
   OPERATING COST       $          66000     143706     158100     158100     158100     158100     158100     158100     158100
---------------------------------------------------------------------------------------------------------------------------------
   NET INCOME           $       -2893723    9011158   11097147    9660909    7973000    6587401    5409585    4455082    3667647
   CUMULATIVE INCOME    $       -2893723    6117435   17215182   26805901   34868991   41436392   46845977   51301039   54968686
CUM. P WORTH @ 10.00%   $       -2759457    5051673   13796539   20731391   25923629   29811698   32723164   34902924   36534283
---------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%  37796873             P WORTH @14.00% 34716928         P WORTH @ 15.00% 33326253       P WORTH @ 20.00% 27544471
---------------------------------------------------------------------------------------------------------------------------------

                                                       TOTAL OF

PERIOD ENDING                   12-31-2006 12/31/2006+ 85.39 YRS
                                ---------- ----------- ----------

GROSS VALUES            UNITS
   OIL/COND             BBL           4730      16253     125000
   GAS                  MCF        1071511    5848766   27419739
   OPERATING COST       $           162000    2004413    3595213
   INTANGIBLE INVES     $                                2475800
   CAPITAL INVES        $                                3300808

NET VALUES
   OIL/COND             BBL           3843      13208     181565
   GAS                  MCF         808639    4650129   22567355
   OIL/COND             $            71211     244748    1882802
   GAS                  $          3104527   15885993   79484561
   REVENUE TO HI        $          3175738   16130739   81366563
   INTANGIBLE INVES     $                                2475008
   CAPITAL INVES        $                                3300808
   OPERATING COST       $           158100    2005154    3479554
------------------------------------------------------------------
   NET INCOME           $          3017638   14125585   72111909
   CUMULATIVE INCOME    $         57986324   14125585   72111909
CUM. P WORTH @ 10.00%   $         37754499    3593598   41340097
------------------------------------------------------------------
                                        P WORTH @ 25.00% 23204705
------------------------------------------------------------------	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

            TENGASCO INC.                         AS OF DECEMBER 31, 1996                                      UNESC. CASE
---------------------------------------------------------------------------------------------------------------------------------
                                                           SUMMARY                                                        LEVEL 1

                                                  PROVED DEVELOPED NON-PRODUCING

                             * RESERVE  ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

PERIOD ENDING                 12-31-1997 12-31-1998 12-31-1999 12-31-2000 12-31-2001 12-31-2002 12-31-2003 12-31-2004 12-31-2005
                              ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------

GROSS VALUES            UNITS
   OIL/COND             BBL
   GAS                  MCF       389110    1437151    1190026     989656     626081     691854     581265     489846     414076

   OPERATING COST       $          67200      81600      81600      81600      81640      81600      81600      81600      81600
   INTANGIBLE INVES     $
   CAPITAL INVES        $        1200000

NET VALUES
   OIL/COND             BBL
   GAS                  MCF       311168    1067869     884688     735623     613622     513327     430598     362165     305425
   OIL/COND             $
   GAS                  $        1022277    3681600    3048219    2531577    2108138    1750798    1472437    1234819    1037953
   REVENUE TO HI        $        1022277    3681600    3048219    2531577    2108138    1759798    1472437    1234819    1037953
   INTANGIBLE INVES     $
   CAPITAL INVES        $        1200000
   OPERATING COST       $          66000      77700      77700      77700      77700      77700      77700      77700      77700
---------------------------------------------------------------------------------------------------------------------------------
   NET INCOME           $        -243723    3603980    2970519    2453877    2030438   16482098    1394737    1157119     960253
   CUMULATIVE INCOME    $        -243723    3360177    6338696    8704573   10815011   12497109   13891846   15048965   16009218
CUM. P WORTH @ 10.00%   $        -232381    2891423    5232150    6989986    8312263    9308109   10058765   10624917   11052035
---------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%  11446869            P WORTH @ 14.00%  10591287    P WORTH @ 15.00%  10285895       P WORTH @ 20.00%  8605662
---------------------------------------------------------------------------------------------------------------------------------

                                                       TOTAL OF
PERIOD ENDING                   12-31-2006 12/31/2006+ 85.39 YRS
                                ---------- ----------- ----------

GROSS VALUES            UNITS
   OIL/COND             BBL
   GAS                  MCF         351098   2459582    9819739
   OPERATING COST       $            81600    648148    1449748
   INTANGIBLE INVES     $
   CAPITAL INVES        $                               1200000

NET VALUES
   OIL/COND             BBL
   GAS                  MCF         258277   1684568    7167350
   OIL/COND             $
   GAS                  $           874552   5525176   24296546
   REVENUE TO HI        $           874552   5525176   24296546
   INTANGIBLE INVES     $
   CAPITAL INVES        $                               1200000
   OPERATING COST       $            77700    568689    1334189
-----------------------------------------------------------------
   NET INCOME           $           796852   4956287   21762357
   CUMULATIVE INCOME    $         16806070   4956287   21762357
CUM. P NORTH @ 10.00%   $         11374252   1064510   12436762
-----------------------------------------------------------------
                                     P WORTH @ 25.00% 7401758
-----------------------------------------------------------------	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

            TENGASCO INC.                        AS OF DECEMBER 31, 1996                                      UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
                                                               SUMMARY
                                                   PROVED DEVELOPED NON-PRODUCING

LEASE NUMBER LEASE NAME           N.I. CURRENT  F.N.R.     NET EXPEN  NET OIL  OIL PR. ULT OIL  CUN OIL  REM OIL  INITIAL LIFE
PM RANKING   OPERATOR             N.I. CURRENT  PM@ 10.00% NET INVES  NET GAS  GAS PR. ULT GAS  CUN GAS  REM GAS  RATE    NO WELL(S)
-----------  ---------------      FRACTION----- $--------- $--------  MB,MMF-  $/B,S/N MB,MMF   MB,MWF-- MB,MMF-- B/M,W/M ----------

11           Daugh White #1          .2500000     728108     27900      0.0     0.00      0.0     0.0      0.0        0   85.4 YRS
 9           Tengasco                .2187500     318276         0    262.5     3.00   1200.0     0.0   1200.0    12000   1 WELL(S)

12           Daugh White #2         1.0000000    2156484    111600      0.0     0.00      0.0     0.0      0.0        0   73.5 YRS
 5           Tengasco                .8750000     960480         0    787.5     3.00    900.0     0.0    900.0     9120   1 WELL(S)

13           Grubb #1               1.0000000    1778407    111600      0.0     0.00      0.0     0.0      0.0        0   67.1 YRS
 6           Tengasco                .8750000     800036         0    656.3     3.00    750.0     0.0    750.0     7600   1 WELL(S)

14           Dezarn                 1.0000000     833405    111600      0.0     0.00      0.0     0.0      0.0        0   47.4 YRS
 6           Tengasco                .8750000     396297         0    328.1     3.00    375.0     0.0    375.0     3800   1 WELL(S)

21           Combined Leases        1.0000000     702966    483540      0.0     0.00      0.0     0.0      0.0        0   10.1 YRS
 7           Tengasco                .8750000     547248         0    520.4     2.35    613.6    10.9    594.7    10000   6 WELL(S)

31           B. Colson #1           1.0000000    3795578    127433      0.0     0.00      0.0     0.0      0.0        0   25.8 YRS
 2           Tengasco                .8750000    2440356         0   1050.0     3.00   1200.0     0.0   1200.0    20000   1 WELL(S)

32           George Patton #2        .7500000    2049894     95576      0.0     0.00      0.0     0.0      0.0        0   25.8 YRS
 3           Tengasco                .6583000    1830406         0    787.6     3.00   1200.0     0.0   1200.0    20000   1 WELL(S)

33           Paul Reed #1           1.0000000    8261417    153600      0.0     0.00      0.0     0.0      0.0        0   32.2 YRS
 1           Tengasco                .7500000    5067365         0   2250.0     3.86   3000.0     0.0   3000.0    45000   1 WELL(S)

34           Sutton UT #1           1.0000000    1852178    111340      0.0     0.00      0.0     0.0      0.0        0   22.3 YRS
 4           Tengasco                .8750000    1202446         0    525.0     3.80    600.0     0.6    600.0    10000   1 WELL(S)

35           Gas Transmission Line  1.0000000   -1260000         0      0.0     0.00      0.0     0.0      0.0        0   0.0 YRS
10           Tengasco               1.0000000   -1144155   1200000      0.0     0.00      0.0     0.0      0.0        0   0 WELL(S)
------------------------------------------------------------------------------------------------------------------------------------	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

         TENGASCO INC.                                  AS OF DECEMBER 31, 1996                                    UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Daugh White #1                        Beech Crk/ Blg Squeal        (1)NI  25      %          NI 21.875     %            LIMIT
Tengasco                              Devonian Shale               (2)NI          %          NI            %            LIMIT
-                                     DEPTH 1100/2000 FT           (3)NI          %          NI            %            LIMIT
Clay COUNTY                           Kentucky                     (4)NI          %          NI            %            LIMIT
LEASE NO: 11                          API NO.  16-051-XXXXX        RRC/OTC NO

                             * RESERVE ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

-------------------------------------------     -------------------------------------------------     ----------------------------
CUMULATIVE: OIL =   0  BBL,   GAS =  0  MCF *** ULTIMATE:    OIL =    0 BBL,    GAS = 1200000 MCF *** FUTURE NET INCOME = $ 728106
-------------------------------------------     -------------------------------------------------     ----------------------------
FIRST PERIOD STARTS 12-31-1997   DELAY IS = 12 months (From as of date)

PERIOD ENDING                12-31- 12-31-  12-31-   12-31-  12-31-  12-31-   12-31-   12-31-  12-31-   12-31-   12-31-     TOTAL OF
                             1997   1998    1999     2000    2001    2002     2003     2004    2005     2006     2006+     85.39 YRS
                             ------ ------  ------   ------  ------  ------   ------   ------  ------   ------   -----    ----------
GROSS VALUES          UNITS
   OIL/COND           BBL
   GAS                MCF          129930   106800   89341   75848   65184    56627    49650    43889    39875    543664   1200000
   GOR                M/B
   OPERATING COST     $              3600     3600    3600    3600    3600     3600     3600     3600     3600     79200    111600
   OIL PRICES         $/B
   GAS PRICES         $/W            3.00     3.00    3.00    3.00    3.00     3.00     3.00     3.00     3.00      3.00
   INTANGIBLE INVES   $
   CAPITAL INVES      $

TAXES
   OIL SERVERANCE     $/B
   GAS SERVERANCE     $/B             .12      .12     .12     .12     .12      .12      .12      .12      .12       .12
   MISC TAXES         $/B

NET VALUES
   OIL/COND           BBL
   GAS                MCF           26422    23363   19543   16590   14259    12387    10861     9601     8548    118928    262502
   OIL/COND           $
   GAS                $             81855    67285   56284   47779   41066    35675    31280    27651    24618    342515    756000
   REVENUE TO NI      $             81855    67285   56284   47779   41066    35675    31280    27651    24618    342515    756000
   INTANGIBLE INVES   $
   CAPITAL INVES      $
   OPERATING COST     $               900      900     900     900     900      900      900      900      900     19800     27900
------------------------------------------------------------------------------------------------------------------------------------
   NET INCOME         $             80955    66385   55384   46079   40166    34715    30380    26751    23718    322715    728108
   CUMULATIVE INCOME  $             80955   147348  202724  249603  289769   324544   354924   381675   405393    322715    728108
CUM. P WORTH @ 10.00% $             70171   122481  102155  192684  216463   235180   250844   261943   271533     46743    318276
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%      288205    P WORTH @ 14.00%  263458   P WORTH @ 15.00% 252626   P WORTH @20.00% 209373  P WORTH @ 25.00% 178343
------------------------------------------------------------------------------------------------------------------------------------
REMARKS/BASIS OF RESERVE ESTIMATES .........            STARTING PRICES & COSTS              PROJECTIONS.......................

  Gas price is $3.50/Wcf adj less $ 0.50/Mcf            Gas: 3    $/W                        INITIAL RATE IS = 12000 W/N
  for gathering and compression charge.                 Oil:  0   $/B                        (1)NYP @ 19.39 %/YR TO ELG AT 1200 NWF
                                                        Operating Cost: 300 $/M              (2)
                                                                                             (3)
                                                        NUMBER OF WELL(S) =  1 GAS           (4)
                                                        ECONOMIC LIMIT =   114.3 N/M         (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

         TENGASCO INC.                                  AS OF DECEMBER 31, 1996                                    UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Daugh White #2                        Beech Crk/ Blg Squeal        (1)NI  100     %          NI 87.5       %            LIMIT
Tengasco                              Chattanooga Shale            (2)NI          %          NI            %            LIMIT
-                                     DEPTH 1100/2000 FT           (3)NI          %          NI            %            LIMIT
Clay COUNTY                           Kentucky                     (4)NI          %          NI            %            LIMIT
LEASE NO : 12                         API NO.  16-051-  XXXXX      RRC/OTC NO.

                             * RESERVE ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

-------------------------------------------     ------------------------------------------------     ----------------------------
CUMULATIVE: OIL =   0  BBL,  GAS =   0  MCF *** ULTIMATE:   OIL =    0 BBL,    GAS =  900000 MCF *** FUTURE NET INCOME = $2156484
-------------------------------------------     ------------------------------------------------     ----------------------------
FIRST PERIOD STARTS 12-31-1997   DELAY IS = 12 months (from as of date)

PERIOD ENDING                12-31- 12-31-  12-31-   12-31-  12-31-  12-31-   12-31-   12-31-  12-31-   12-31-   12-31-     TOTAL OF
                             1997   1998    1999     2000    2001    2002     2003     2004    2005     2006     2006+     73.46 YRS
                             ------ ------  ------   ------  ------  ------   ------   ------  ------   ------   -----    ----------
GROSS VALUES            UNITS
   OIL/COND             BBL
   GAS                  MCF         98774    81238    67979   57726   49630   43126     37821     33439    29776  400499    900000
   GOR                  M/B
   OPERATING COST       $            3600     3600     3600    3600    3600    3600      3600      3600     3600   79200    111600
   OIL PRICES           $/B
   GAS PRICES           $/M          3.00     3.00     3.00    3.00    3.00    3.00      3.00      3.00     3.00    3.00
   INTANGIBLE INVES     $
   CAPITAL INVES        $

TAXES
   OIL SEVERANCE        $/B
   GAS SEVERANCE        $/N           .12      .12      .12     .12     .12     .12       .12       .12      .12     .12
   MISC TAXES           $/B

NET VALUES
   OIL/COND             BBL

   GAS                  MCF         86427    70076    59482   50510   43426   37735     33093     29259    26054  350439    787501
   OIL/COND             $
   GAS                  $          248910   204699   171308  145469  125067  108677     95308     84206    75036 1019264   2260084
   REVENUE TO NI        $          248910   204699   171308  145469  125067  108677     95308     84206    75036 1019264   2260084
   INTANGIBLE INVES     $
   CAPITAL INVES        $
   OPERATING COST       $            3600     3600     3600    3600    3600    3600      3600      3600     3600   79280    111600
------------------------------------------------------------------------------------------------------------------------------------
   NET INCOME           $          245310   201099   167708  141869  121467  105077     91766     80666    71436  930084   2156404
   CUMULATIVE INCOME    $          245310   446409   614117  755986  877453  982538   1074236   1154954  1226340  930064   2156404
CUM. P WORTH @ 10.00%   $          212631   371094   491232  583621  655532  712085    756956    792836   821722  138759    960480
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%   870451        P WORTH @ 14.00% 796166  P WORTH @ 15.00% 763594  P WORTH @ 20.00% 633315  P WORTH @ 25.00% 539675
------------------------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES .........            STARTING PRICES & COSTS              PROJECTIONS.......................
  Gas price is $3.50/Wcf adj less $ 0.50/Wcf            Gas: 3   $/W                         INITIAL RATE IS = 9120 M/W
  for gathering and compression charge.                 Oil: 0   $/B                         (1)NYP @ 19.34 %/YR TO ELG AT 900 MWF
                                                        Operating Cost 300 $/N               (2)
                                                                                             (3)
                                                        NUMBER OF WELL(S) =  1 GAS           (4)
                                                        ECONOMIC LIMIT =   114.3 N/M         (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Grubb #1                 Beech Crk/Blg Squeal                    (1) NI    108      %      NI     87.5     %        LIMIT
Tengasco                 Chattanooga Shale                       (2) NI             %      NI              %        LIMIT
-                        DEPTH 1100/2000 FT                      (3) NI             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) NI             %      NI              %        LIMIT
LEASE NO:  13            API NO. 16-051-XXXXX                    ARC/OTC NO.    -

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   750000  MCF *** FUTURE NET INCOME= $    1778407
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1997    DELAY IS = 12 months (From as of date)

PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003

-------------                         ----------   ----------    ----------    ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF                      82406         67916         56938        48423        41685         36262
      GOR                      M/B
      OPERATING COST            $                        3600          3600          3600         3600         3600          3600
      OIL PRICES               $/B
      GAS PRICES               $/N                       3.00          3.00          3.00         3.00         3.00          3.00
      INTANGIBLE INVES          $
      CAPITAL INVES             $
TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/N                        .12           .12           .12          .12          .12           .12
      MISC TAXES               $/B
NET VALUES
      OIL/COND                 BBL
      GAS                      MCF                      72187         59427         49821        42370        36474         31729
      OIL/COND
      GAS                                              207668        171150        143484       122026       165045         91380
      REVENUE TO NI             $                      207668        171150        143484       122026       165045         91380
      INTANGIBLE INVES          $
      CAPITAL INVES             $
      OPERATING COST            $                        3600          3600          3600         3600         3600          3600
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                                       204068        167550        139884       118426       101445         87780
      CUMULATIVE INCOME         $                      204068        371618        511502       629928       731373        819153
CUM.  P. WORTH  AT 10.00%       $                      176883        300910        409116       486238       546296        593540
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            725256              P WORTH AT 14.00%     663472             P WORTH AT 15.06%    636366
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           67.06 YRS
-------------                 ----------        ----------      ----------          -----------           ---------
GROSS VALUES
      OIL/COND
      GAS                          31032             20168           25102              331266              750200
      GOR
      OPERATING COST                3600              3600            3600               79200              111600
      OIL PRICES
      GAS PRICES                    3.00              3.00            3.00                3.00
      INTANGIBLE INVES
      CAPITAL INVES
TAXES
      OIL SEVERANCE
      GAS SEVERANCE                  .12               .12             .12                 .12
      MISC TAXES
NET VALUES
      OIL/COND
      GAS                          27053             24647           21964              289860              656252

      OIL/COND
      GAS                          80217             70983           63256              834798             1890007
      REVENUE TO N1                80217             70983           63256              834798             1890007
      INTANGIBLE INVES
      CAPITAL INVES
      OPERATING COST                3600              3600            3600               79200              111680
-----------------------------------------------------------------------------------------------------------------------
      NET INCOME                   76617             67363           59656              755598             1778407
      CUMULATIVE INCOME           895778            963153         1022809              755598             1778407
CUM.  P. WORTH  AT 10.00%         631027            660999          685121              114915              808036
-----------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%                         P WORTH AT 20.00%   527824                          P WORTH AT 25.00%  449760
-----------------------------------------------------------------------------------------------------------------------
REMARKS / BASIS OF RESERVE ESTIMATES. . . . . . .  STARTING PRICES & COSTS         PROJECTIONS . . . . . . . . . . . . . .
Gas price is $3.50/Ncf adj less $0.50/Mcf          Gas:  3   $/N                   INITIAL RATE IS = 7600 M/W
for gathering and compression charge.              Oil:  0   $/0                   (1) HYP @ 19.13 %/YR TO ELG AT 750 MWF
                                                   Operating cost: 300 $/N         (2)
                                                                                   (3)
                                                   NUMBER OF WELL(S) =  1 GAS      (4)
                                                   ECONOMIC LIMIT =   114.3 M/W    (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Dezarn #1                Beech Crk/Blg Squeal                    (1) %1    108      %      NI     87.5     %        LIMIT
Tengasco                 Chattanooga Shale                       (2) %1             %      NI              %        LIMIT
-                        DEPTH 1100 / 2000 FT                    (3) %1             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) %1             %      NI              %        LIMIT
LEASE NO:  14            API NO.   16-015-XXXXX                  ARC/OTC NO.  -

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   375088  MCF *** FUTURE NET INCOME= $     833405
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1997    DELAY IS = 12 months (From as of date)

PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
-------------                         ----------   ----------    ----------    ----------   ----------   ----------    ----------
GROSS VALUES                 UNITS
      OIL/COND                BBL

      GAS                     MCF                        41435         34500         29171        24989        21646         16931
      GOR                     M/B
      OPERATING COST           $                          3600          3600          3600         3600         3600          3600
      OIL PRICES              $/B
      GAS PRICES              $/N                         3.00          3.00          3.00         3.00         3.00          3.00
      INTANGIBLE INVES         $
      CAPITAL INVES            $
TAXES
      OIL SEVERANCE           $/B
      GAS SEVERANCE           $/N                          .12           .12           .12          .12          .12           .12
      MISC TAXES              $/B
NET VALUES
      OIL/COND                BBL
      GAS                     MCF                        36256         36188         25525        21865        18948         16565
      OIL/COND
      GAS                      $                        104417         86941         73512        62971        54547         47707
      REVENUE TO NI            $                        104417         86941         73512        62971        54547         47707
      INTANGIBLE INVES         $
      CAPITAL INVES            $
      OPERATING COST           $                          3600          3600          3600         3600         3600          3600
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME               $                        100817         83341         69912        59371        56947         44107
      CUMULATIVE INCOME        $                        100817        184158        254070       313441       364386        488495
CUM. P. WORTH  AT 10.00%       $                         87387        153058        203140       241804       271966        295704
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%           359939                P WORTH AT 14.00%     329652             P WORTH AT 15.00%    316303
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           67.06 YRS
-------------                 ----------        ----------      ----------          -----------           ---------
GROSS VALUES
      OIL/COND
      GAS                          16697             14837          13271               159523             375000
      GOR
      OPERATING COST                3600              3600           3600                79200             111600
      OIL PRICES
      GAS PRICES                    3.00              3.00           3.00                 3.00
      INTANGIBLE INVES
      CAPITAL INVES
TAXES
      OIL SEVERANCE
      GAS SEVERANCE                  .12               .12            .12                  .12
      MISC TAXES
NET VALUES
      OIL/COND
      GAS                          14618             12982          11612               139584             328127
      OIL/COND
      GAS                          42077             37368          33443               402002             945005
      REVENUE TO NI                42077             37368          33443               402002             945005
      INTANGIBLE INVES

      CAPITAL INVES
      OPERATING COST                3600              3600           3600                79200             111608
-----------------------------------------------------------------------------------------------------------------------
      NET INCOME                   38477             33786          29843               322802             833405
      CUMULATIVE INCOME           446972            400700         510603               322802             833405
CUM. P. WORTH  AT 10.00%          314530            329559         341626                50671             396297
-----------------------------------------------------------------------------------------------------------------------
                           P WORTH AT 20.00%      262601                          P WORTH AT 25.00%          223794
-----------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES. . . . . . .   STARTING PRICES & COSTS         PROJECTIONS . . . . . . . . . . . . .
Gas price is $3.50/Mcf adj less $0.50/Mcf           Gas:  3   $/M                   INITIAL RATE IS  = 3800 M/M
for gathering and compression charge.               OIL :   0   $/B                 (1) HYP AT 18.14 %/YR TO ELG AT 375 MWF
                                                    Operating cost:  300 $/M        (2)
                                                                                    (3)
                                                    NUMBER OF WELL(S) =  1 GAS      (4)
                                                    ECONOMIC LIMIT =   114.3 M/W    (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Combined leases          Burning Springs                         (1) NI    100      %      NI     87.5     %        LIMIT
Tengasco                 Murfsboro                               (2) NI             %      NI              %        LIMIT
S - T - R                Approx 2600 ft                          (3) NI             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) NI             %      NI              %        LIMIT
LEASE NO:  21            API NO.   16-051-xxxxx                  ARC/OTC NO.

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =  0 BBL,  GAS = 18675 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   613614  MCF *** FUTURE NET INCOME = $    702966
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1996

PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
-------------                         ----------   ----------    ----------    ----------   ----------   ----------    ----------
GROSS VALUES                 UNITS
      OIL/COND                BBL
      GAS                     MCF         110756         94143         80021        68018         57815        49143         41712
      GOR                     M/B
      OPERATING COST           $           48000         48000         48000        48000         48000        48000         48000

      OIL PRICES              $/B
      GAS PRICES              $/N           2.35          2.35          2.35         2.35          2.35         2.35          2.35
      INTANGIBLE INVES         $
      CAPITAL INVES            $
TAXES
      OIL SEVERANCE           $/B
      GAS SEVERANCE           $/N            .07           .07           .07          .07           .07          .07           .07
      MISC TAXES              $/B
NET VALUES
      OIL/COND                BBL
      GAS                     MCF          96912         82375         70019        59516         50589        43000         36550
      OIL/COND                 $
      GAS                      $          220959        187815        159643       135696       115343         98040         83334
      REVENUE TO NI            $          220959        187815        159643       135696       115343         98040         83334
      INTANGIBLE INVES         $
      CAPITAL INVES            $
      OPERATING COST           $           48000         48000         48000        48000         48000        48000         48000
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                          172959        139815        111643        87696         67343        50040         35334
      CUMULATIVE INCOME        $          172959        312774        424417       512113        579456       629496        664830
CUM. P. WORTH  AT 10.00%       $          164910        286099        374072       436894        480749       510374        529391
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%           524131                P WORTH AT 14.00%     562966             P WORTH AT 15.00%    493046
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           10.07 YRS
-------------                 ----------        ----------      ----------          -----------           ---------
GROSS VALUES
      OIL/COND
      GAS                          35606             30100          25653               1732                594739
      GOR
      OPERATING COST               48000             48000          48000               3546                483540
      OIL PRICES
      GAS PRICES                    2.35              2.35           2.35               2.35
      INTANGIBLE INVES
      CAPITAL INVES
TAXES
      OIL SEVERANCE
      GAS SEVERANCE                  .07               .07            .07                .07
      MISC TAXES
NET VALUES
      OIL/COND
      GAS                          31068             26408          22446               1515                520398
      OIL/COND
      GAS                          70835             60210          51177               3454               1186506
      REVENUE TO NI                70835             60210          51177               3454               1186506
      INTANGIBLE INVES
      CAPITAL INVES
      OPERATING COST               48000             48000          48000               3548                483548
-----------------------------------------------------------------------------------------------------------------------

      NET INCOME                   22835             12210           3177                -86                702966
      CUMULATIVE INCOME           687665            699875         703052                -86                702966
CUM. P. WORTH  AT 10.00%          540564            545995         547279                -32                547248
-----------------------------------------------------------------------------------------------------------------------
                            P WORTH AT 20.00%         449119                     P WORTH AT 25.00%            412921
-----------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES. . . . . . .        STARTING PRICES & COSTS         PROJECTIONS . . . . . . . . . . . . . . . .
MAP QUAD MANCHESTER  7.5  SEC:  AC                       Gas:  2.35  $/7                 INITIAL RATE IS  = 10000 M/M
Wells included are the Alverez - Kleth 2 -               OIL:  0     $/8                 (1) CPD AT 15 %/YR TO ELG AT 613.614 MWF
  Cornett 1- Cornett 2                                   Operating cost: 4000  $/M       (2)
Glibert - Hale cumulative prod shown is 1996 prod only                                   (3)
                                                         NUMBER OF WELL(S) =  0 GAS      (4)
                                                         ECONOMIC LIMIT =   1945.3 M/W   (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
B. Colson #1             Swan Creek                              (1) NI    100      %      NI     87.5     %        LIMIT
Tengasco                 Knox Formation                          (2) NI             %      NI              %        LIMIT
11-1S-74E                4449-4523 OA                            (3) NI             %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  31            API NO.   41-067-xxxxx                  ARC/OTC   NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   1200000 MCF *** FUTURE NET INCOME= $    3799578
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)

PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------   ----------    ----------    ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF         58533        207694          169755       139149       114060        93495         76638
  GOR                          M/B
  OPERATING  COST               $           4800          4800            4800         4800         4800         4800          4800
  OIL  PRICES                  $/B

  GAS  PRICES                  $/M          3.86          3.86            3.86         3.86         3.86         3.86          3.86
  INTANGIBLE  INVES             $
  CAPITAL  INVES                $
TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M           .12           .12             .12          .12          .12          .12           .12
  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF         51216        161207          148536       121755        99803        81886         67058
  OIL/COND                      $
  GAS                           $         191548        677714          555525       455364       373263       365962        250797
  REVENUE TO NI                 $         191548        677714          555525       455364       373263       365962        250797
  INTANGIBLE INVES              $
  CAPITAL INVES                 $
  OPERATING COST                $           4800          4800            4800         4800         4800         4800          4800
------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $         186748        672914          550725       450564       368463       301162        245997
  CUMULATIVE INCOME             $         186748        859662         1410387      1860951      2229414      2536576       2776573
CUM. P WORTH @ 10.00  %         $         178057        761328         1195292      1518054      1758007      1936302       2668699
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             2272497               P WORTH @ 14.00%      2125197             P WORTH @ 15.00%   2858143
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+            25.80 YRS
                               ----------        ----------     ----------         -----------            ---------
GROSS VALUES
  OIL/COND
  GAS                               62826             51494          42210              184752             1280000
  GOR
  OPERATING  COST                    4800              4800           4800               79433              127433
  OIL  PRICES
  GAS  PRICES                        3.86              3.86           3.86                3.86
  INTANGIBLE  INVES
  CAPITAL  INVES

TAXES
  OIL SEVERANCE
  GAS SEVERANCE                       .12               .12            .12                 .12
  MISC TAXES
NET VALUES
  OIL/COND
  GAS                               54968             45057          36934              161661             1050003
  OIL/COND
  GAS                              265580            168513         138133              604612             3927011
  REVENUE TO NI                    265580            168513         138133              604612             3927011
  INTANGIBLE INVES
  CAPITAL INVES
  OPERATING COST                     4800              4800           4800               79433              127433
--------------------------------------------------------------------------------------------------------------------

  NET INCOME                       200786            163713         133833              525179             3799578
  CUMULATIVE INCOME               2977353           3141066        3274399              525179             3799578
CUM. P WORTH @ 10.00  %           2166936           2239755        2293670              146686             2440356
--------------------------------------------------------------------------------------------------------------------
                             P WORTH @ 20.00%         1775471                       P WORTH @ 25.00%         1558596
--------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES................   STARTING PRICES & COSTS        PROJECTIONS............................
July 1996 flowed 1250 Mcf/d 1/2 inch choke           Gas: 3.86 $/M                  INITIAL RATE IS = 20000 M/N
ftp=185 psi @ltp 1750 (72 hrs)  795 fnl  1000 fel    Oil: 0 $/B                     (1) CPD @ 18.02 %/YR TO ELG AT 1200 MMF
pfs 4449-55 4476-84 4492-96 4512-23                  Operating Cost: 400 $/M        (2)
Gas price $4.26/Mcf (w/Btu adj) less $0.40/Wcf                                      (3)
  Pipeline Gathering Charge                          NUMBER OF WELL(S) = 1 GAS      (4)
                                                     ECONOMIC LIMIT = 118.4 M/N     (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
George Patton #2         Swan Creek                              (1) NI    75       %      NI     65.63    %        LIMIT
Tengasco                 Knox Gas                                (2) NI             %      NI              %        LIMIT
6-15-75E                 4590-4610 OA                            (3) NI             %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  32            API NO.   41-867-xxxxx                  ARC/OTC   NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   1200606 MCF *** FUTURE NET INCOME = $   2849694
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)

PERIOD ENDING                         12-31-1997    12-31-1998     12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------    ----------     ----------    ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF         58533        207694         169755        139149       114860        93495         70638
  GOR                          M/B
  OPERATING  COST               $           4800          4800           4800          4800         4800         4800          4800
  OIL  PRICES                  $/B
  GAS  PRICES                  $/M          3.86          3.86           3.86          3.86         3.86         3.86          3.86

  INTANGIBLE  INVES             $
  CAPITAL  INVES                $

TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M           .12           .12            .12           .12          .12          .12           .12
  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF         38415        135916         111418         91323        74858        61361         50298
  OIL/COND                      $
  GAS                           $         143672        508326         416673        341548       279969       229490        188115
  REVENUE TO NI                 $         143672        508326         416673        341548       279969       229490        188115
  INTANGIBLE INVES              $
  CAPITAL INVES                 $
  OPERATING COST                $           3600          3600           3600          3600         3600         3600          3600
------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $         140072        504726         413073        337948       276369       225890        184515
  CUMULATIVE INCOME             $         140072        644798        1057871       1395819      1672180      1898078       2482593
CUM. P WORTH @ 10.00  %         $         133553        571042         696538       1138627      1318686      1452338       1551645
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             1704567               P WORTH @ 14.00%     1594016              P WORTH @ 15.00%   1543727
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+            25.80 YRS
                               ----------        ----------     ----------         -----------            ---------
GROSS VALUES
  OIL/COND
  GAS                               62820             51494          42210              184752             1280000
  GOR
  OPERATING  COST                    4800              4800           4800               79435              127435
  OIL  PRICES
  GAS  PRICES                        3.86              3.86           3.86                3.86
  INTANGIBLE  INVES
  CAPITAL  INVES

TAXES
  OIL SEVERANCE
  GAS SEVERANCE                       .12               .12            .12                 .12
  MISC TAXES
NET VALUES
  OIL/COND
  GAS                               41229             33796          27702              121251              707559
  OIL/COND
  GAS                              154196            126397         103605              453479             2945479
  REVENUE TO NI                    154196            126397         103605              453479             2945479
  INTANGIBLE INVES
  CAPITAL INVES
  OPERATING COST                     3600              3600           3600               59576               95576
--------------------------------------------------------------------------------------------------------------------

  NET INCOME                       150596            122797         100005              393903             2849894
  CUMULATIVE INCOME               2233189           2355986        2455991              393903             2849894
CUM. P WORTH @ 10.00  %           1625329           1679948        1720386              110020             1838486
--------------------------------------------------------------------------------------------------------------------
                            P WORTH @ 20.00%          1331706                      P WORTH @ 25.00%          1169040
--------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES.....................   STARTING PRICES & COSTS     PROJECTIONS............................
June 1996 fwd 1500 Mcf/day ftp = 250 1/2 inch             Gas: 3.86  $/M              INITIAL RATE IS = 20000 M/M
Choke slp 1750  72 hrs 2950 fnl  2550 fel                 Oil: 0  $/B                 (1) CPD @ 18.02 %/YR TO ELG AT 1200 MMF
Gas price $4.26/Mcf (w/Btu adj) less $0.40/Mcf Pipeline   Operating Cost: 400 $/M     (2)
  Gathering Charge                                                                    (3)
                                                          NUMBER OF WELL(S) = 1 GAS   (4)
                                                          ECONOMIC LIMIT = 118.4 M/M  (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Paul Reed #1             Swan Creek                              (1) NI    100      %      NI     75       %        LIMIT
Tengasco                 Knox Formation                          (2) NI             %      NI              %        LIMIT
18-1S-74E                4414-4624 0A                            (3) NI             %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  33            API NO.   41-867-xxxxx                  ARC/OTC   NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   3860606 MCF *** FUTURE NET INCOME = $   8261417
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)

PERIOD ENDING                         12-31-1997    12-31-1998     12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------    ----------     ----------    ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF        132017         472636        394997        336111       275885       230566        192691
  GOR                          M/B
  OPERATING  COST               $           4800           4800          4800          4800         4800         4800          4800
  OIL  PRICES                  $/B
  GAS  PRICES                  $/M          3.86           3.86          3.86          3.86         3.86         3.86          3.86

  INTANGIBLE  INVES             $
  CAPITAL  INVES                $
TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M           .12            .12           .12           .12          .12          .12           .12
  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF         99013         354477        296248        247583       206914       172925        144518
  OIL/COND                      $
  GAS                           $         370309        1325744       1107968        925968       773858       646740        540497
  REVENUE TO NI                 $         370309        1325744       1107968        925968       773858       646740        540497
  INTANGIBLE INVES              $
  CAPITAL INVES                 $
  OPERATING COST                $           4800           4800          4800          4800         4800         4800          4800
------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $         365509        1320944       1103168        921160       769058       641948        535697
  CUMULATIVE INCOME             $         365509        1686453       2769621       3710781      4479839      5121779       5657476
CUM. P WORTH @ 10.00  %         $         348499        1493473       2362753       3622626      3523458      3963503       4191818
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             4714981              P WORTH @ 14.00%      4391341              P WORTH @ 15.00%   4244963
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+            32.24 YRS
                               ----------        ----------     ----------         -----------            ---------
GROSS VALUES
  OIL/COND
  GAS                              161038            134585         112417               562997             3000608
  GOR
  OPERATING  COST                    4800              4800           4800               105608              153600
  OIL  PRICES
  GAS  PRICES                        3.86              3.86           3.86                 3.86
  INTANGIBLE  INVES
  CAPITAL  INVES
TAXES
  OIL SEVERANCE
  GAS SEVERANCE                       .12               .12            .12                  .12
  MISC TAXES
NET VALUES
  OIL/COND
  GAS                              128779            100939          84358               422250             2250004
  OIL/COND
  GAS                              451713            377512         315499              1579217             8415017
  REVENUE TO NI                    451713            377512         315499              1579217             8415017
  INTANGIBLE INVES
  CAPITAL INVES
  OPERATING COST                     4800              4800           4800               105600              153600
---------------------------------------------------------------------------------------------------------------------
  NET INCOME                       446913            372712         318699              1473617             8261417
  CUMULATIVE INCOME               6104389           8477101        6787800              1473617             8261417

CUM. P WORTH @ 10.00  %           4410482           4576263        4701898               385471             5097369
---------------------------------------------------------------------------------------------------------------------
                              P WORTH @ 20.00%        3634150                      P WORTH @ 25.00%           3172165
---------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES..........................    STARTING PRICES & COSTS      PROJECTIONS............................
Reserves are based on: Bht=124F  GasSG= .6 (drid Amoco)         Gas 3.86  $/M                INITIAL RATE IS = 45000 M/M
Net Pay=68 ft (pfs) 80 acres Pul= 1900 psl Por = .17  Su=.30    Oil: 0  $/B                  (1) CPD @ 16.42 %/YR TO ELG AT 3000 MMF
Purchased from Amoco 850 fsl 850 fel                            Operating Cost: 400 $/W      (2)
Gas price $4.26/Mcf (w/Btu adj) less $0.40/Mcf Pipeline                                      (3)
  Gathering Charge                                              NUMBER OF WELL(S) = 1 GAS    (4)
                                                                ECONOMIC LIMIT = 138.2 M/M   (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Sutton UT #1             Swan Creek                              (1)  NI   100      %      NI     87.5     %        LIMIT
Tengasco                 Knox Formation                          (2)  NI            %      NI              %        LIMIT
4 - IS - 75E             4464-4416                               (3)  NI            %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4)  NI            %      NI              %        LIMIT
LEASE NO:  34            API NO. 41-667-xxxxx                    ARC/OTC NO.--

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   600000  MCF *** FUTURE NET INCOME = $   1852178
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)

PERIOD ENDING                        12-31-1997     12-31-1998    12-31-1999    12-31-2000    12-31-2001   12-31-2002    12-31-2003
-------------                        ----------     ----------    ----------    ----------    ----------   ----------    ----------
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF        29271         103637         85852         69800         57283        47010         38588
      GOR                      M/B
      OPERATING COST            $          4800           4800          4800          4800          4800         4800          4800
      OIL PRICES               $/B
      GAS PRICES               $/N         3.86           3.86          3.86          3.86          3.86         3.86          3.86
      INTANGIBLE INVES          $
      CAPITAL INVES             $

TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/N          .12            .12           .12           .12           .12          .12           .12
      MISC TAXES               $/B
NET VALUES
      OIL/COND                 BBL
      GAS                      MCF        25612          90682         74421         61075         50123        41134        334758
      OIL/COND
      GAS                                 95789         339151        276335        228421        187460       153641        126255
      REVENUE TO NI             $         95789         339151        276335        228421        187460       153641        126255
      INTANGIBLE INVES          $
      CAPITAL INVES             $
      OPERATING COST            $          4800           4800          4800          4800          4800         4800          4800
-----------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $         90989         334351        273535        223621        182660       149641        121455
      CUMULATIVE INCOME         $         90989         425340        698675        922496       1105156      1254197       1375652
CUM. P. WORTH  AT 10.00%        $         86755         376565        592186        752297        871251       959487       1024854
-----------------------------------------------------------------------------------------------------------------------------------
P WORTH AT AT 12.00%         1120794             P WORTH AT 14.00%     1048920             P WORTH AT 15.00%    1016139
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                                         TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+           22.25 YRS
-------------                  ----------        ----------     ----------         -----------           ---------
GROSS VALUES
      OIL/COND
      GAS                           31662             25984          21324               90397              600060
      GOR
      OPERATING COST                 4800              4800           4800               63340              111340
      OIL PRICES
      GAS PRICES                     3.86              3.86           3.86                3.86
      INTANGIBLE INVES
      CAPITAL INVES
TAXES
      OIL SEVERANCE
      GAS SEVERANCE                   .12               .12            .12                 .12
      MISC TAXES
NET VALUES
      OIL/COND
      GAS                           27704             22736          18659               79100              525004
      OIL/COND
      GAS                          103613             85033          69785              295835             1963518
      REVENUE TO NI                103613             85033          69785              295835             1963518
      INTANGIBLE INVES
      CAPITAL INVES
      OPERATING COST                 4800              4800           4800               63340              111348
------------------------------------------------------------------------------------------------------------------
      NET INCOME                    98813             80233          64985              232495             1852178
      CUMULATIVE INCOME           1474465           1554898        1619683              232495             1852178
CUM. P. WORTH  AT 10.00%          1073201           1106889        1135166               67286             1202446
------------------------------------------------------------------------------------------------------------------

                             P WORTH AT 20.00%     677548              P WORTH AT 25.00%    770837
------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . .     STARTING PRICES & COSTS       PROJECTIONS . . . . . . . . . . . . . . .
Reserves are based on: Bht=124F Gas SG=.6 (drid Amoco)       Gas:  3.86   $/mM             INITIAL RATE IS  + 10000 M/M
Net Pay=$2 ft (pfs) 80 acres Pwd=1900 psi  Per=.17 Sw=.30    OIL :   0   $/0               {1} CPD AT 17.93 %/YR TO ELG AT 600 MMF
Purchased from AMOCO 400 fsl 900 fel                         Operating cost: 400 S/M       {2}
Gas price $4.26/Ncf(w/Btu adj) less $8.48/Mcf Pipeline                                     {3}
Gathering Charge                                             NUMBER OF WELL(S) =  1 GAS    {4}
                                                             ECONOMIC LIMIT =   118.4 M/M  {5}	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Gas Transmission Line    Swan Creek                              (1)  NI   100      %      NI     100      %        LIMIT
Tengasco                 --                                      (2)  NI            %      NI              %        LIMIT
xx-xxS-xxZ               --                                      (3)  NI            %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4)  NI            %      NI              %        LIMIT
LEASE NO:  35            APT NO. 41-667-xxxxx                    ARC/OTC NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,     GAS =   0    MCF *** FUTURE NET INCOME = $  -1200000
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1996    DELAY IS = 6 months (From as of date)

PERIOD ENDING                           12-31-1997     12-31-1998    12-31-1999   12-31-2000    12-31-2001   12-31-2002   12-31-2003
-------------                           ----------     ----------    ----------   ----------    ----------   ----------   ----------
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF
      GOR                      M/B
      OPERATING COST            $
      OIL PRICES               $/B
      GAS PRICES               $/N
      INTANGIBLE INVES          $
      CAPITAL INVES             $          1200000
TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/N

      MISC TAXES               $/B
NET VALUES
      OIL/COND                 BBL
      GAS                      MCF
      OIL/COND
      GAS
      REVENUE TO NI             $
      INTANGIBLE INVES          $
      CAPITAL INVES             $          1200000
      OPERATING COST            $
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $         -1200000
      CUMULATIVE INCOME         $         -1200000
CUM. P. WORTH  AT 10.00%        $         -1144155
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT AT 12.00%        -1133893          P WORTH AT 14.00%   -1123903              P WORTH AT 15.00%     1119806
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           6.06 YRS
-------------                 ----------        ----------      ----------          -----------           ---------
GROSS VALUES
      OIL/COND
      GAS
      GOR
      OPERATING COST
      OIL PRICES
      GAS PRICES
      INTANGIBLE INVES
      CAPITAL INVES                                                                                         1200000
TAXES
      OIL SEVERANCE
      GAS SEVERANCE
      MISC TAXES
NET VALUES
      OIL/COND
      GAS
      OIL/COND
      GAS
      REVENUE TO N1
      INTANGIBLE INVES
      CAPITAL INVES                                                                                         1200000
      OPERATING COST
---------------------------------------------------------------------------------------------------------------------
      NET INCOME                                                                                           -1200000
      CUMULATIVE INCOME                                                                                    -1200000
CUM. P. WORTH  AT 10.00%                                                                                   -1144155
---------------------------------------------------------------------------------------------------------------------
                         P WORTH AT 20.00%  -1895445                                P WORTH AT 25.00%        -1073313
---------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . .         STARTING PRICES & COSTS       PROJECTIONS . . . . . . . . . . .
Cost estimated to complete line 1200 N$                          Gas:    0   $/M               INITIAL RATE IS  = 6 M/M
Operating and amortization costs are accounted for by $0.40/Mcf  OIL :   0   $/B               {1}
Gathering fee charged producing wells.                           Operating cost:  0  $/M       {2}
                                                                                               {3}
                                                                 NUMBER OF WELL(S) =  0 GAS    {4}
                                                                 ECONOMIC LIMIT =   0.0 M/M    {5}	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------

                                                            S U M M A R Y                                                   LEVEL 1
                                                         PROVED UNDEVELOPED
                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *

PERIOD ENDING                           12-31-1997   12-31-1998     12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                        ----------   ----------     ----------    ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
      OIL/COND                 BBL                        13616          23022         18363        14648        11684          9320
      GAS                      MCF                      2198094        2457893       2247744      1858838      1536350       1270743
      OPERATING COST            $                         66000          80400         80400        80400        80400         80400
      INTANGIBLE INVES          $          1250000      1225000
      CAPITAL INVES             $          1400000       700000
NET VALUES
      OIL/COND                 BBL                        11053          16705         14920        11902         9493          1573
      GAS                      MCF                      1923332        2150657       1966776      1825783      1344306       1111900
      OIL/COND                  $                        204997         346604        276466       220544       175905        140328
      GAS                       $                       7193261        7661824       7030864      5802418      4789798       3954920
      REVENUE TO NI             $                       7398258        8207626       7307332      6022962      4965703       4095248
      INTANGIBLE INVES          $          1250000      1225000
      CAPITAL INVES             $          1400000       700000
      OPERATING COST            $                         66000          80400         80400        80400        80400         80400
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $         -2650000      5407258        8127228       7226932      5942562      4885303       4014848
      CUMULATIVE INCOME         $         -2650000      2757258       10884486      10111418     24053980     28939283      32954131
CUM. P WORTH AT 10.00 %         $         -2526676      2160250        8564389      13741485     17611366     20503589      22664399
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            26358084             P WORTH AT 14.00%     24125641            P WORTH AT 15.00%   23120358
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                   12-31-2004        12-31-2005     12-31-2006          12-31-2006+          28.58 YRS
-------------                   ----------        ----------     ----------          -----------          ---------
GROSS VALUES
      OIL/COND                        7434              5938           4730                16253             125000
      GAS                          1051380            870161         720413              3369164           17600000
      OPERATING COST                 80400             80400          80400              1436265            2145465
      INTANGIBLE INVES                                                                                      2475000
      CAPITAL INVES                                                                                         2100000
SET VALUES
      OIL/COND                        6040              4818           3843                13208             101565
      GAS                           919957            701391         630362              2965541           15400005
      OIL/COND                      111921             89278          71211               244746            1882002
      GAS                          3266422           2698516        2229975             10360817           55180015
      REVENUE TO NI                3378343           2787194        2301186             10665563           57076017
      INTANGIBLE INVES                                                                                      2475000
      CAPITAL INVES                                                                                         2100000
      OPERATING COST                 80400             80400          80400              1436265            2145465
---------------------------------------------------------------------------------------------------------------------
      NET INCOME                   3297943           2707394        2220786              9169290           58349552
      CUMULATIVE INCOME           36252074          38959468       41180254              9169290           58349552
CUM. P WORTH AT 10.00 %            2428007          25482248       26388247              2529080           28989335
---------------------------------------------------------------------------------------------------------------------
                              P WORTH AT 20.00%       18930889                      P WORTH AT 25.00%        15802947
---------------------------------------------------------------------------------------------------------------------	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------

                                                              SUMMARY
                                                         PROVED UNDEVELOPED

LEASE NUMBER LEASE NAME             N.I. CURRENT F.H.R.      NET EXPEN  NET OIL OIL PR. ULT OIL  CUM OIL REN OIL  INITIAL LIFE
PW RANKING   OPERATOR               N.I. CURRENT PW@ 16.66%  NET INVES  NET GAS GAS PR. ULT GAS  CUM GAS REN GAS  RATE    NO WELL(S)
------------ ---------------------- FRACTION---- $---------  $--------  MB,MNF- $/B,$/N NB,NMF-  NB,NWF- NB,NWF-  B/N,M/N ----------
1 PUD        4 Well Group            1.0000000     7152012     432000       0.0   0.00      0.0    0.0       0.0        0  28.5 YRS
 3           Tengasco                 .8750000     3454697     488008    2880.0   3.08   3200.0    0.0    3200.0    42000  4 WELL(S)

2 PUD        Offse Franklin #1       1.0000000     1601734     160268     101.6  19.10    125.0    0.0     125.0     2400  17.5 YRS
 4           Tengesco                 .8125000      996283     120000       0.0   0.00      0.0    0.0       0.0        0  1 WELL(S)

3 PUD        1997 Knox Drilling Prg  1.0000000    27736933    1029005       0.0   0.80      0.0    0.0       0.0        0  26.0 YRS

 1           Tengasco                 .6750000    16506212    2650000    6400.0   3.86   9600.8    0.0    9600.8   160000  8 WELL(S)

4 PUD        1998 Knox Drilling Prg  1.0000000    13858873     524132       0.0   0.88      0.0    0.0       0.0        0  25.5 YRS
 2           Tengesco                 .8750000     7949946    1325000    4200.0   3.86   4800.0    0.0    4800.0    80000  4 WELL(S)

                                     -----------------------------------------------------------------------------------------------
      TOTALS                         4.0000000    50349552    2145465     101.6           125.0    0.0     125.0     2400  28.5 YRS
                                     3.4375000    28909336    4575000   15400.0         17600.8    0.0   17600.8   282000  17 WELLS	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
4 Well Group             Beech Crk/Big Squeal                    (1) NI    100      %      NI     87.5     %        LIMIT
Tengasco                 Chattanooga Shale                       (2) NI             %      NI              %        LIMIT
-                        Depth 1100/2000 ft                      (3) NI             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) NI             %      NI              %        LIMIT
LEASE NO:  1 PUD          API NO.      16-051-XXXXX               ARC/OTC NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   3200000 MCF *** FUTURE NET INCOME= $    7152012
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 07-3-1999    DELAY IS = 30 months (From as of date)

PERIOD ENDING                           12-31-1997    12-31-1998  12-31-1999     12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                        ----------    ----------  ----------     ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF                                    242435         431731       369458       316154        270547
  GOR                          M/B
  OPERATING  COST               $                                      14400          14400        14400        14400         14400
  OIL  PRICES                  $/B
  GAS  PRICES                  $/M                                      3.00           3.00         3.00         3.00          3.00
  INTANGIBLE  INVES             $                        480000
  CAPITAL  INVES                $

TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M                                       .12            .12          .12          .12           .12

  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF                                    212131         377765       323269       276635        236729
  OIL/COND                      $
  GAS                           $                                     616937        1087963       931015       796709        681780
  REVENUE TO NI                 $                                     616937        1087963       931015       796709        681780
  INTANGIBLE INVES              $                        480000
  CAPITAL INVES                 $
  OPERATING COST                $                                      14460          14400        14400        14400         14400
------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $                       -480000       598537        1673563       916615       782389        667380
  CUMULATIVE INCOME             $                       -480000       116537        1190100      2106715      2889624       3556404
CUM. P WORTH @ 10.00  %         $                       -416056        54006         823054      1419979      1883125       2242313
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             3057298                P WORTH @ 14.00%   2728649               P WORTH @ 15.00%   2571361
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006          12-31-2006+           67.06 YRS
                               ----------        ----------     ----------          -----------           ---------
GROSS VALUES
  OIL/COND
  GAS                              231518            198126         169540               970505            3200080
  GOR
  OPERATING  COST                   14400             14400          14400               316808             432000
  OIL  PRICES
  GAS  PRICES                        3.00              3.00           3.00                 3.00
  INTANGIBLE  INVES                                                                                         406606
  CAPITAL  INVES

TAXES
  OIL SEVERANCE
  GAS SEVERANCE                       .12               .12            .12                  .12
  MISC TAXES
NET VALUES
  OIL/COND
  GAS                              202578            173355         148348               149194            2800804
  OIL/COND
  GAS                              583425            499282         427242              2445679            8064012
  REVENUE TO NI                    583425            499282         427242              2445679            8064012
  INTANGIBLE INVES                                                                                          480000
  CAPITAL INVES
  OPERATING COST                    14400             14400          14400               316800             432098
--------------------------------------------------------------------------------------------------------------------
  NET INCOME                       569025            484862         412842              2128879            7152012
  CUMULATIVE INCOME               4125429           4610291        5023133              2128879            7152012
CUM. P WORTH @ 10.00  %           2520723           2736389        2903326               551571            3454897
--------------------------------------------------------------------------------------------------------------------
                              P WORTH @ 20.00%        1970930                       P WORTH @ 25.00%         1544712
--------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES.............................. STARTING PRICES & COSTS     PROJECTIONS............................
Forecast assumes initial rates of 360 Mcf/D/Well Ultimate        Gas: 3  $/M                 INITIAL RATE IS = 42000 M/M
Recovery of 600 MMF/Well & operating costs of $300/well/month.   Oil: 0  $/B                 (1) CPD @ 14.42 %/YR TO ELG AT 3200 MMF
$3.50/Mcf adj less $0.50/Mcf for gathering & compression charge. Operating Cost: 1260 $/M    (2)
                                                                                             (3)
                                                                 NUMBER OF WELL(S) = 4 GAS   (4)
                                                                 ECONOMIC LIMIT = 674.8 M/M  (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
Offse Franklin #1        Fentress fld7                           (1) NI   100       %      NI     81.25    %        LIMIT
Tengasco                 Wells Creek/Knox                        (2) NI             %      NI              %        LIMIT
-                        DEPTH 2000 FT                           (3) NI             %      NI              %        LIMIT
Fentress COUNTY          Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  2 PUD         API NO.   41-049-xxxxx                  ARC/OTC  NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   125000 BBL,    GAS =   0 MCF *** FUTURE NET INCOME= $    1601734
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 07-1-1998    DELAY IS = 18 months (From as of date)

PERIOD ENDING                         12-31-1997    12-31-1998    12-31-1999    12-31-2000   12-31-2001    12-31-2002    12-31-2003
                                      ----------    ----------    ----------    ----------   ----------    ----------    ----------
GROSS VALUES                  UNITS
  OIL/COND                     BBL                       13616         23022         18363        14648         11684          9320
  GAS                          MCF
  GOR                          M/B
  OPERATING  COST               $                         8400          8400          8400         8400          8400          8400
  OIL  PRICES                  $/B                       19.10         19.10         19.10        19.10         19.10         19.10
  GAS  PRICES                  $/M
  INTANGIBLE  INVES             $                       120000
  CAPITAL  INVES                $

TAXES
  OIL SEVERANCE                $/B                         .57           .57           .57          .57           .57           .57
  GAS SEVERANCE                $/M

  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL                       11063         18705         14928        11902          9493          7573
  GAS                          MCF
  OIL/COND                      $                       204997        346604        276460       220544        175905        140328
  GAS                           $
  REVENUE TO NI                 $                       204997        346604        276460       220544        175905        140328
  INTANGIBLE INVES              $                       120000
  CAPITAL INVES                 $
  OPERATING COST                $                         8400          8400          8400         8400          8400          8400
------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $                        76597        338204        268068       212144        167505        131928
  CUMULATIVE INCOME             $                        76597        414801        682869       895013       1002518       1194446
CUM. P WORTH @ 10.00  %         $                        60393        332896        524924       663078        762245        883249
------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             917700                P WORTH @ 14.00%     848263              P WORTH @ 15.00%     816536
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                         TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+           67.06 YRS
                               ----------        ----------     ----------         -----------           ---------
GROSS VALUES
  OIL/COND                           7434              5930           4730               16253              125808
  GAS
  GOR
  OPERATING  COST                    8400              8400           8400               84668              160268
  OIL  PRICES                       19.10             19.10          19.10               19.10
  GAS  PRICES
  INTANGIBLE  INVES                                                                                         120000
  CAPITAL INVES

TAXES
  OIL SEVERANCE                       .57               .57            .57                 .57
  GAS SEVERANCE
  MISC TAXES
NET VALUES
  OIL/COND                           6040              4818           3843               13288              101565
  GAS
  OIL/COND                         111921             89278          71211              244746             1882002
  GAS
  REVENUE TO NI                    111921             89278          71211              244746             1882002
  INTANGIBLE INVES                                                                                          120000
  CAPITAL INVES
  OPERATING COST                     8400              8400           8400                84600             168260
--------------------------------------------------------------------------------------------------------------------
  NET INCOME                       103521             80878          62811              160678             1601734
  CUMULATIVE INCOME               1297967           1378845        1441656              160678             1601734
CUM. P WORTH @ 10.00  %            883988            919874         945272               51008              996280
--------------------------------------------------------------------------------------------------------------------
                              P WORTH @ 20.00%         682274                       P WORTH @ 25.00%          579244
--------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES................     STARTING PRICES & COSTS              PROJECTIONS...........................
Reserve is based on analogy Franklin $1Np > 100 MB     Gas 0 $/M                            INITIAL RATE IS = 2400 B/M
                                                       Oil: 19.1 $/B                        (1) CPD @ 20.23 %/YR TO ELG AT 125 WBF
                                                       Operating Cost: 708 $/M              (2)
                                                                                            (3)
                                                       NUMBER OF WELL(S) = 1 Oil            (4)
                                                       ECONOMIC LIMIT = 36.0 B/M            (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
1997 Knox Dribling Prg   Swan Creek                              (1) NI    100      %      N1     87.5     %        LIMIT
Tengasco                 Knox Formation                          (2) NI             %      N1              %        LIMIT
S-1S-75E                 4500 ft                                 (3) NI             %      N1              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      N1              %        LIMIT
LEASE NO :  3 PUD        API NO.  41-067- xxxxx                  ARC/OTC NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   9600000 MCF *** FUTURE NET INCOME = $  27736933
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1997    DELAY IS = 12 months (From as of date)

PERIOD ENDING                         12-31-1997     12-31-1998    12-31-1999     12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------     ----------    ----------     ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF                      1741181       1427248        1169917       958982       786078        644349
      GOR                      M/B
      OPERATING COST            $                         38400         30400          38400        38400        38400         38400
      OIL PRICES               $/B
      GAS PRICES               $/M                         3.86          3.86           3.86         3.86         3.86          3.86
      INTANGIBLE INVES          $        1250000
      CAPITAL INVES             $        1400000
TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/M                          .12           .12            .12          .12          .12           .12
      MISC TAXES               $/B

NET VALUES
      OIL/COND                 GBL
      GAS                      MCF                      1523533       1248042        1023677       839109       687818        563805
      OIL/COND                  $
      GAS                       $                       5698013       4670669        3628552      3138268      2572439       2108631
      REVENDUE TO NI            $                       5698013       4670669        3628552      3138268      2572439       2108631
      INTAGIBLE INVES           $        1250000
      CAPITAL INVES             $        1400000
      OPERATING COST            $                         38400         38400          38400        38400        38400         38400
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $       -2650000        5659613       4632269        3790152      3099868      2534039       2676231
      CUMULATIVE INCOME         $       -2650000        3009613       7641882       11432034     14531902     17065941      19136172
CUM. P WORTH AT 10.00%          $       -2526676        2378967       6029148        8744226     18762946     12263104      13377369
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            15131640               P WORTH AT 14.00%  13927847              P WORTH AT 15.00%  13379930
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                           TOTAL OF
PERIOD ENDING                   12-31-2004        12-31-2005     12-31-2006         12-31-2006+            26.00 YRS
                                ----------        ----------     ----------         -----------            ---------
GROSS VALUES
      OIL/COND
      GAS                           528174            432944         354885             1556242             9600000
      GOR
      OPERATING COST                 38400             38400          38400              683465             1029065
      OIL PRICES
      GAS PRICES                      3.86              3.86           3.86                3.86
      INTANGIBLE INVES                                                                                      1250000
      CAPITAL INVES                                                                                         1400000
TAXES
      OIL SEVERANCE
      GAS SEVERANCE                    .12               .12            .12                 .12
      MISC TAXES
NET VALUES
      OIL/COND
      GAS                           462152            378026         310524             1361714             8406000
      OIL/COND
      GAS                          1728448           1416809        1161360             5092809            31415990
      REVENDUE TO NI               1728448           1416809        1161360             5092809            31415990
      INTAGIBLE INVES                                                                                       1250000
      CAPITAL INVES                                                                                         1400000
      OPERATING COST                 38460             38400          38400              683465             1629065
---------------------------------------------------------------------------------------------------------------------
      NET INCOME                   1690048           1378409        1122960             4409344            27736933
      CUMULATIVE INCOME           20626220          22204629       23327589             4409344            27736933
CUM. P WORTH AT 10.00%            14264271          14817384       15271465             1236747            16508212
---------------------------------------------------------------------------------------------------------------------
                             P WORTH AT 20.00%        11083749                    P WORTH AT 25.00%           9336507
---------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . . . .   STARTING PRICES & COSTS       PROJECTIONS . . . . . . . . . . . . . .

Reserve estimate 1200 MMcf/w - analogy with completed wells    Gas: 3.66 $/m                 INITIAL RATE IS = 100000 M/M
8 GW w/ gathering line + 2 dn per program                      Oil:   8      $/m             (1)CPD AT 18.82 $/YR TO ELG AT 9600 MMF
Tangible: B(125+50) = 1400 MS  Intangible:  10(125)= 1250 MS   Operating Cost:  3200 $/m     (2)
Gas price $4.26/Mcf (w/Btu adj)  less $6.40/mcf Pipeline                                     (3)
  Gathering Charge                                             NUMBER OF WELL(S) = 8 Gas     (4)
                                                               ECONOMIC LIMIT =   776.6 M/M  (5)	

                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
------------------------------------------------------------------------------------------------------------------------------------
1998 Knox Drilling Prg   Swan Creek                               (1) WI   108      %      N1     87.5     %        LIMIT
Tengasco                 Knox Formation                           (2) WI            %      N1              %        LIMIT
S-1S-75E                 4500 ft                                  (3) WI            %      N1              %        LIMIT
Hancock COUNTY           Tennessee                                (4) WI            %      N1              %        LIMIT
LEASE NO :  4 PUD        API NO.  41-067- xxxxx                   ARC/OTC NO.  --

                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
-------------------------------------------     ------------------------------------------------     -------------------------------
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  GBL,  GAS =   4806900 MCF *** FUTURE NET INCOME = $  13858873
-------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 07-1-1996    DELAY IS = 18 months (From as of date)

PERIOD ENDING                         12-31-1997     12-31-1998    12-31-1999     12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------     ----------    ----------     ----------   ----------   ----------    ----------
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF                       456913        768210         646096      529606        434116       355647
      GDR                      M/B
      OPERATING COST            $                         19200         19200          19200       19200         19200        19200
      OIL PRICES               $/B
      GAS PRICES               $/M                         3.86          3.86           3.86        3.86          3.86         3.86
      INTANGIBLE INVES          $                        625000
      CAPITAL INVES             $                        700000
TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/M                          .12           .12            .12         .12           .12          .12
      MISC TAXES               $/B
NET VALUES
      OIL/COND                 BBL
      GAS                      MCF                       399799        689684         565334      463405        379853       311366

      OIL/COND                  $
      GAS                       $                       1495246       2579416        2114349     1733135       1420650      1164509
      REVENUE TO NI             $                       1495246       2579416        2114349     1733135       1420650      1164509
      INTAGIBLE INVES           $                        625000
      CAPITAL INVES             $                        700000
      OPERATING COST            $                         19200         19200          19200       19200         19200        19200
------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $                        151048       2500218        2695149     1713935       1461450      1145389
      CUMULATIVE INCOME         $                        151048       2711206        4800415     6520350       7921600      9067169
CUM.  P WORTH AT 10.00%         $                        136926       2148341        3649202     4765364       5595058      6211469
------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            7243366               P WORTH AT 14.00%    6629682             P WORTH AT 15.00%    6352531
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                           TOTAL OF
PERIOD ENDING                   12-31-2004        12-31-2005     12-31-2006         12-31-2006+            25.50 YRS
                                ----------        ----------     ----------         -----------            ---------
GROSS VALUES
      OIL/COND
      GAS                           291686            239697         195986              862437             4800000
      GDR
      OPERATING COST                 19200             19200          19200              351332              524132
      OIL PRICES
      GAS PRICES                      3.86              3.86           3.86                3.86
      INTANGIBLE INVES                                                                                       625000
      CAPITAL INVES                                                                                          700000
TAXES
      OIL SEVERANCE
      GAS SEVERANCE                    .12               .12            .12                 .12
      MISC TAXES
NET VALUES
      OIL/COND
      GAS                           255227            209210         171490              754633             4200001
      OIL/COND
      GAS                           954549            762445         641373             2822329            15700005
      REVENUE TO NI                 954549            762445         641373             2822329            15700005
      INTAGIBLE INVES                                                                                        625000
      CAPITAL INVES                                                                                          700000
      OPERATING COST                 19200             19200          19200              351332              524132
---------------------------------------------------------------------------------------------------------------------
      NET INCOME                    935340            763246         622173             2470997            13856873
      CUMULATIVE INCOME           10002458          10765703       11387870             2470997            13856873
CUM.  P WORTH AT 10.00%            6869114           7000603        7260160              689761             7949946
---------------------------------------------------------------------------------------------------------------------
                             P WORTH AT 20.00%         5201856                      P WORTH AT 25.00%       4342464
---------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . . . .  STARTING PRICES & COSTS        PROJECTIONS . . . . . . . . . . . . . .
Reserve estimate 1200 MMcf/w - analogy with completed wells   Gas: 3.66 $/m                  INITIAL RATE IS = 00000 M/M
4 GW w/ gathering line +1 DH per program                      Oil:   0  $/m                  (1)CPD AT 18.82 $/YR TO ELG AT 9600 MMF
Tangible: 4(125+50) = 700 MS  Intangible: 5(125)= 625 MS      Operating Cost:  1600 $/m      (2)

Gas price $4.26/Mcf (w/Btu adj)  less $0.40/Ncf Pipeline                                     (3)
  Gathering Charge                                            NUMBER OF WELL(S) = 4 Gas      (4)
                                                              ECONOMIC LIMIT =  388.3 M/M    (5)