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<SEC-DOCUMENT>0001001614-03-000002.txt : 20031014
<SEC-HEADER>0001001614-03-000002.hdr.sgml : 20031013
<ACCEPTANCE-DATETIME>20031014154629
ACCESSION NUMBER:		0001001614-03-000002
CONFORMED SUBMISSION TYPE:	10-Q/A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20030303
FILED AS OF DATE:		20031014

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TENGASCO INC
		CENTRAL INDEX KEY:			0001001614
		STANDARD INDUSTRIAL CLASSIFICATION:	CRUDE PETROLEUM & NATURAL GAS [1311]
		IRS NUMBER:				870267438
		STATE OF INCORPORATION:			TN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15555
		FILM NUMBER:		03939550

	BUSINESS ADDRESS:	
		STREET 1:		603 MAIN AVE
		STREET 2:		SUITE 500
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37902
		BUSINESS PHONE:		4235231124

	MAIL ADDRESS:	
		STREET 1:		630 MAIN AVENUE
		STREET 2:		SUITE 500
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37902
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<FILENAME>tenqamendoct11.htm
<DESCRIPTION>MARCH 31, 2003 10-Q AMENDMENT
<TEXT>


<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>
<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>U.S. Securities and
Exchange Commission<br>Washington, D.C. 20549 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form 10-Q/A </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF<br>THE SECURITIES
EXCHANGE ACT OF 1934  </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the Quarterly
period ended March 31, 2003 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Commission File No.
0-20975 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=5><b><u>Tengasco, Inc. and
Subsidiaries</u></b></font> <br><FONT FACE="Times New Roman, Times, Serif" SIZE=2> (Exact name of small business
issuer as specified in its charter)</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u><b>Tennessee</b></u><br>State
or other jurisdiction of<br>incorporation
or organization </FONT></P><P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u><b>87&#150;0267438</b></u><br>(IRS Employer Identification No.)</font></p>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</I></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><u>603 Main Avenue, Suite
500, Knoxville, TN 37902</u><br> </FONT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Address of principal
executive offices) </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>(865-523-1124)</u><br>(Issuer&#146;s
telephone number, including area code) </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 3-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the past </B> <B>12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such </B>
<B>filing requirements for the past 90 days. Yes <U> X </U> No&nbsp;_ <U></U></B> </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transitional
Small Business Disclosure Format (check one): Yes &nbsp;_ No <U>X</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
This
amendment on Form 10-Q/A amends the previously filed quarterly report on Form 10-Q of
Tengasco, Inc. and subsidiaries for the three month period ended March 31, 2003 to correct
the effect of applying Statement of Financial Accounting Standard No. 143, &#147;SFAS
143&#148; as of January 1, 2003, as more fully discussed in Note 10 to the condensed
financial statements. </FONT></TD>
</TR>
</TABLE>
<BR>








<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AND
SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS</FONT></H1>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
     <TH>PART I.</TH>
     <TH></TH>
     <TH>FINANCIAL INFORMATION&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Page</TH>
     <TH></TH>
     <TH></TH>
     <TH><p align=center></p> </TH>

     <TH></TH></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD>ITEM 1. </TD>
     <TD>FINANCIAL STATEMENTS</TD>

     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub> p </sub></TD>
     <TD>Condensed Consolidated Balance Sheets as of March 31, 2003<br> (unaudited) and
      December 31, 2002..................................................................................................................3-4 </TD>

     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub> p </sub></TD>
     <TD> Consolidated Statements of Operations for the three months ended March 31,
          2003 and 2002 (unaudited) ...........................................................................................................................................................5</TD>

     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub> p </sub></TD>
     <TD>Consolidated Statements of Stockholders' Equity for the three months ended
         March 31, 2003 (unaudited)............................................................................................................................................................6 </TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD>  </TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub> p </sub></TD>
     <TD>Consolidated Statements of Cash Flows for the three months ended March 31,
         2003 and 2002 (unaudited) .................................................................................................................... ...................................... 7</TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub> p </sub></TD>
     <TD>Notes to Condensed Consolidated Financial Statements ......................................................................................................................................................8-13</TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD>ITEM 2.</TD>
     <TD>MANAGEMENT'S DISCUSSION AND ANALYSIS OF<br>FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................................................................................................................................13-16 </TD>

     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD>ITEM 3</TD>
     <TD>QUANTITATIVE AND QUALITATIVE DISCLOSURE<br> ABOUT MARKET RISK..................................................................................................................................16</TD>

     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD>ITEM 4.</TD>
     <TD>CONTROLS AND PROCEDURES .................................................................................................................17</TD>

     <TD></TD></TR>

<TR VALIGN="TOP">
     <TD>PART II. </TD>
     <TD></TD>
     <TD>OTHER INFORMATION ................................................................................................................................17</TD>
     </TR>






<TR VALIGN="TOP">
     <TD></TD>
     <TD>ITEM 1.</TD>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LEGAL PROCEEDINGS .....................................................................................................................17-18</TD>            <TD></TD>

     <TD></TD></TR>


<TR VALIGN="TOP">
     <TD></TD>
     <TD>ITEM 2. </TD>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CHANGES IN SECURITIES AND USE OF PROCEEDS .....................................................................................................................................................18</TD>

     <TD></TD></TR>


<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub>p</sub></TD>
     <TD>SIGNATURES .................................................................................................................................................19</TD>

     <TD></TD></TR>



<TR VALIGN="TOP">
     <TD></TD>
     <TD><sub>p</sub></TD>
     <TD>CERTIFICATIONS ....................................................................................................................................20-23</TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
     <TD></TD>
        <TD></TD>
<TD></TD>
<TD></TD>
<TD></TD></tr></table> <PAGE>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AND SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONDENSED CONSOLIDATED
BALANCE SHEETS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ASSETS </FONT></H1>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>March 31, 2003</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>December 31, 2002</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(Unaudited) </FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=62% ALIGN=LEFT>Current Assets:</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;176,620</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;184,130</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,142,386</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>730,667</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Participant receivable</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>71,850</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>70,605</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>262,748</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>262,748</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of loan fees, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>312,802</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>323,856</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,000,906</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,606,506</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Oil and gas properties, net (on the basis of</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>full cost accounting)</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>13,740,070</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>13,864,321</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Completed pipeline facilities, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15,573,375</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>15,372,843</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Other property and equipment, net</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,616,202</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,685,950</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Loan fees, net of accumulated amortization</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>40,158</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Other</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14,613</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>14,613
</TD>

        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$32,945,166</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$32,584,391</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AND
SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONDENSED CONSOLIDATED
BALANCE SHEETS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>LIABILITIES AND
STOCKHOLDERS&#146; EQUITY </FONT></H1>









<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>March 31, 2003<BR>
(Unaudited)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>December 31, 2002</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=65% ALIGN=LEFT>Current liabilities</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current maturities of long-term debt</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   7,971,776</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>7,861,245</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable-trade</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,335,530</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,396,761</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>46,317</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>61,141</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued dividends payable</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>229,675</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>254,389</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current Long term debt to related parties</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,250,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>750,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>297,170</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>31,805</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>11,130,468</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>10,355,341</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset Retirement Obligation</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>629,737</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>--</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long term debt, less current maturities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>451,443</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,256,209</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>12,211,648</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>11,611,550</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative convertible redeemable preferred;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Redemption value $7,072,000 and $7,072,000;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;70,720 and 70,720 shares outstanding; respectively</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>6,857,427</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>6,762,218</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders' Equity</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, $.001 per value, 50,000,000 shares</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>11,951</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>11,460</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>42,791,007</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>42,237,276</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(28,665,480</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(27,776,726</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(115,500</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(115,500</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury stock, at cost</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(145,887</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(145,887</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>13,876,091</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>14,210,623</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT><br><br>$</TD><TD ALIGN=RIGHT>  32,945,166</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  32,584,391</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>





<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AND
SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR"  -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSOLIDATED
STATEMENTS OF LOSS </FONT></H1>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>For the Three<BR>
Months Ended<BR>
March 31, 2003<br>(Unaudited)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>For the Three<BR>
Months Ended<BR>
March 31, 2002<br>(Unaudited)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=65% ALIGN=LEFT>Revenue and other income</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Oil and gas revenues</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  1,923,915</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  1,175,444</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pipeline transportation revenues</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>47,504</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>77,707</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest increase</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>184</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,038</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues and other income</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,971,603</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,254,189</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs and other deductions</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Production costs and taxes</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>769,909</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>723,799</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depletion, depreciation and amortization</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>630,942</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>487,348</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>153,356</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>153,367</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative costs</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>511,337</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>640,230</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Public Relations</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>4,779</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>--</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional fees</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>209,426</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>117,313</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs and other deductions</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>2,279,749</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>2,122,057</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss before cumulative effect of</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;change in accounting principle</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(308,146</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(867,868</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative Effect of a change in</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;accounting Principle</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(351,204</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>--</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Loss</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(659,350</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(867,868</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends on preferred stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(134,195</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(112,458</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss attributable to common shareholders</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(793,545</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(980,326</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Earnings per share- basic and diluted<br>
         Net loss before cumulative effect of change<br>
         in accounting principle per share basic
         and diluted operations&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>(0.03)&nbsp;&nbsp;&nbsp;&nbsp;   (0.08)</u> </FONT></P>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>

<TR VALIGN=Bottom>
     <TD WIDTH=56% ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Cumulative effect of a change in</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=16% ALIGN=RIGHT></TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=16% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>accounting principle</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.03</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>&nbsp;-</TD>
        <TD ALIGN=LEFT></TD></TR>

<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>




<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Net loss</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.06</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.08</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Dividends on Preferred stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.01</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.01</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Total- basic and diluted</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.07</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(0.09</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Weighted average Common shares outstanding</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT><br><br>11,764,321</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>10,642,541</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
accompanying notes to condensed consolidated financial statement </FONT></P>


<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>






















<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AND
SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSOLIDATED
STATEMENTS OF Stockholders&#146; Equity </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>
               </U></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>            </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
            </FONT></H1>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>              </FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=1010>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Common Stock</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=9><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Treasury Stock</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>

     </TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Additional Paid<BR>
in Capital</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Accumulated Other<br>Comprehensive Loss</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Accumulated Deficit</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Total</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=26% ALIGN=LEFT>Balance December 31, 2002</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=6% ALIGN=RIGHT>11,459,279</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=6% ALIGN=RIGHT>      11,460</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=6% ALIGN=RIGHT>  42,237,276</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=6% ALIGN=RIGHT>    (115,500</TD>
        <TD WIDTH=2% ALIGN=LEFT>)</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=6% ALIGN=RIGHT> (27,776,726</TD>
        <TD WIDTH=2% ALIGN=LEFT>)</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=6% ALIGN=RIGHT>14,500</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=6% ALIGN=RIGHT>    (145,887</TD>
        <TD WIDTH=2% ALIGN=LEFT>)</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=6% ALIGN=RIGHT>  14,210,623</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net Loss</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(659,350</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>

     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(659,350</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Common Stock Issued in</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>227,275</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>227</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>249,773</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>250,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Privates Placements Net of</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Related Expenses</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Common Stock Issued in</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>60,528</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>61</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>69,538</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>69,599</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Conversion of Debt</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Common Stock Issued for</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>144,461</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>144</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>158,765</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>158,909</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Preferred Dividend in Arrears</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Common Stock Issued for Charity</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>3,571</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>4</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>5,710</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>5,714</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Retained Earnings-Accretion of</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(95,209</TD>
        <TD ALIGN=LEFT>)</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(95,209</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Issue Cost on Preferred Stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common Stock Issued for</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>55,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>55</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>69,945</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>

     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>70,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Services</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends on Convertible</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
<TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(134,195</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(134,195</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redeemable Preferred Stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=Black SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Net Loss for the Three Months</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>11,950,114</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      11,951</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  42,791,007</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>    (115,500</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> (28,665,480</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>14,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>    (145,887</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  13,876,091</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ended March 31,2003</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>





















<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements </FONT></P>


<!-- MARKER PAGE="sheet: 2; page: 2" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>






<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AND
SUBSIDIARIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSOLIDATED
STATEMENTS OF CASH FLOWS </FONT></H1>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>For the three<BR>
Months Ended<BR>
March 31, 2003<BR>
</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>For the three<BR>
Months Ended<BR>
March 31, 2002</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(Unaudited)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(Unaudited)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=69% ALIGN=LEFT>Operating activities</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=10% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=10% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> (659,350</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> (867,868</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;used in operating activities:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Cumulative effect of change in accounting principle</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>351,204</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Depletion, depreciation and amortization</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>630,942</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>487,348</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Charitable donation and services paid in stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>75,714</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(411,719</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>100,994</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Participant receivables</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(1,245</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable-trade</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(61,231</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(83,142</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;Accrued interest payable</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(14,824</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(889</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(31,805</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>9,602</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(112,712</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(363,557</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Investing activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Additions to property and equipment</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(118,357</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net additions to oil and gas properties</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(365,475</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net additions to pipeline facilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(37,362</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(171,713</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in restricted cash</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(497</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>26,800</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(14,949</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(10,562</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(670,991</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Financing activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Repayments of borrowings</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(634,236</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(238,116</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>500,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>518,356</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Dividends on convertible redeemable preferred stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(112,458</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from private placements of common stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>250,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>632,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>115,764</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>799,782</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Net change in cash and cash</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;equivalents</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(7,510</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(234,766</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents, beginning of period</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>184,130</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>393,451</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents, end of period</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  176,620</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  158,685</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>




<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tengasco, Inc. And
Subsidiaries </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Condensed Notes to Consolidated
Financial Statements </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Unaudited) </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>(1)</b> <u> Basis of Presentation</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 10-Q and Item 210 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting
principles for complete<B> </B>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 three months ended March 31,
2003 are not necessarily indicative of the results that may be expected for the year ended
December 31, 2003. For further information, refer to the Company&#146;s consolidated
financial statements and footnotes thereto for the year ended December 31, 2002 included
in the Company&#146;s annual report on Form 10-K. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
amendment on Form 10-Q/A amends the previously filed quarterly report on Form 10-Q of
Tengasco, Inc. and subsidiaries for the three month period ended March 31, 2003 to correct
the effect of applying Statement of Financial Accounting Standard No. 143, &#147;SFAS
143&#148; as of January 1, 2003 as more fully discussed in Note 10 to the Condensed
Consolidated Financial Statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b>(2)</b> <u>Going Concern
Uncertainty</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern and assume realization of
assets and the satisfaction of liabilities in the normal course of business. The Company
has incurred continuous losses since commencing its operations and has an accumulated
deficit of $28,665,480 and a working capital deficit of $9,129,562 as of March 31, 2003.
During 2002, the Company was informed by its primary lender that the entire amount of its
outstanding credit facility was immediately due and payable, as provided for in the Credit
Agreement. These circumstances raise substantial doubt about the Company&#146;s ability to
continue as a going concern. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has disputed its obligation to make this payment and is attempting to resolve the
dispute or to obtain alternate refinancing arrangements to repay this current obligation.
There can be no assurance that the Company will be successful in its plans to obtain the
financing necessary to satisfy its current obligation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <b>(3)</b> <u>Earnings Per Share</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
accordance with Statement of Financial Accounting Standards (SFAS) No. 128, &#147;Earnings
Per Share&#148;, basic and diluted loss per share are based on 11,764,321 and 10,642,541
weighted average shares outstanding for the quarters ended March 31, 2003 and 2002,
respectively. During the three months period ended March 31, 2003 and year ended December
31, 2002 potential weighted average stock equivalents outstanding were approximately
1,473,000. These shares are not included in the computation of the diluted loss per share
amount because the Company was in a net loss position and their effect would have been
antidilutive. This amendment on Form 10-Q/A amends the previously filed quarterly report
on Form 10-Q of Tengasco, Inc. and subsidiaries for the three month period ended March 31,
2003 to correct the effect of applying SFAS 143 as of January 1, 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company adopted the disclosure provision of the Statement of Financial Accounting
Standards (SFAS or Statement) No. 148, &#147;Accounting for Stock-Based Compensation-
Transition and Disclosure,&#148; which amends SFAS No. 123, &#147;Accounting for
Stock-Based Compensation,&#148; SFAS No. 148 provides alternative methods of transition
for a voluntary change to the fair value based method of accounting for stock-based
employee compensation, which was originally provided under SFAS No. 123. The Statement
also improves the timeliness of disclosures by requiring the information be included in
interim, as well as annual, financial statements. The adoption of these disclosure
provisions did not have a material affect on the Company&#146;s 2002 consolidated results
of operations, financial position, or cash flows. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No. 123 encourages but does not require companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company has chosen to continue
to account for stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, &#147;Accounting for Stock Issued to
Employees&#148;, and related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of the
Company&#146;s stock at the date of the grant over the amount an employee must pay to
acquire the stock. The option price of all the Company&#146;s stock options is equal to
the market value of the stock at the grant date. As such, no compensation expense is
recorded in the accompanying consolidated financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Had
compensation cost been determined based upon the fair value at the grant date for awards
under the stock option plan consistent with the methodology prescribed under SFAS No. 123,
the Company&#146;s pro forma net income (loss) and net income (loss) per share would have
differed from the amounts reported as follows: </FONT></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1> Three Months <br>March 3, 2002</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Three Months <br> March 31, 2003</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=59% ALIGN=LEFT>Net loss as reported</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   (980,326</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   (793,545</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Stock-based employee compensation expense</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>determined under fair value basis</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   (194,446</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>    (47,209</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Pro forma net loss</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> (1,174,772</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   (840,754</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Earning per share:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Basic and diluted as reported</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      (0.09</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      (0.07</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Basic and diluted pro forma</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      (0.11</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      (0.07</TD>
        <TD ALIGN=LEFT>)</TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(4)</b>&nbsp;&nbsp;&nbsp;&nbsp;
          <u>New Accounting Pronouncements:</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001,
the Financial Accounting Standards Board (&#147;FASB&#148;) issued Statement Of Financial
Accounting Standards (&#147;SFAS&#148;) No. 143, &#147;Accounting for Asset Retirement
Obligations,&#148; SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement cost. This statement requires companies to record the present
value of obligations associated with the retirement of tangible long-lived assets in the
period in which it is incurred. The liability is capitalized as part of the related
long-lived assets carrying amount. Over time, accretion of the liability is recognized as
an operating expense and the capitalization cost is depreciated over the expected useful
life of the related asset. The Company&#146;s asset retirement obligations relate
primarily to the plugging, dismantlement, removal site reclamation and similar activities
of its oil and gas properties. Prior to adoption of this statement, such obligations were
accrued ratably over the productive lives of the assets through its depreciation,
depletion and amortization for oil and gas properties without recording a separate
liability for such amounts. The impact of applying this standard as of January 1, 2003 and
March 31, 2003 is discussed in Note 10 to the condensed consolidated financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
July 2002, FASB issued SFAS No. 146, &#147;Accounting for Costs Associated with Exit or
Disposal Activities.&#148; The standard requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date of
commitment to an exit or disposal plan. Examples of costs covered by the standard include
lease termination costs and certain employee severance costs that are associated with
restructuring, discontinued operation, plant closing, or other exit or disposal activity.
Previous accounting guidance was provided by EITF Issue No. 94-3, &#147;Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring).&#148; Statement 146 replaces Issue
94-3. Statement 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. The Company does not currently have any plans for exit
or disposal activities and therefore, does not expect this standard to have a material
effect on the Company&#146;s consolidated financial statements upon adoption. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
November 2002, the FASB issued FASB Interpretation (&#147;FIN&#148;)
No.45,&#147;Guarantor&#146;s Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others&#148;, which clarifies disclosure
and recognition/measurement requirements related to certain guarantees. The disclosure
requirements are effective for financial statements issued after December 15, 2002 and the
recognition/measurement requirements are effective on a prospective basis for guarantees
issued or modified after December 31, 2002. The application of the requirements of FIN 45
did not have an impact on our financial position or results of operations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December 2002, the FASB issued SFAS No. 148, &#147;Accounting for Stock-Based Compensation
&#151; Transition and Disclosure&#148; an amendment of FASB Statement No. 123
(&#147;Statement 148&#148;). This amendment provides two additional methods of transition
for a voluntary change to the fair value based method of accounting for stock-based
employee compensation. Additionally, more prominent disclosures in both annual and interim
financial statements are required for stock-based employee compensation. The transition
guidance and annual disclosure provisions of Statement 148 are effective for fiscal years
ending after December 15, 2002. The interim disclosure provisions are effective for
financial reports containing financial statements for interim periods beginning after
December 15, 2002. The adoption of Statement 148 did not have an impact on the
Company&#146;s consolidated financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January 2003, the FASB issued FASB Interpretation No. (FIN) 46, &#147;Consolidation of
Variable Interest Entities.&#148; This interpretation of Accounting Research Bulletin
No.51 &#147;Consolidated Financial Statements&#148; consolidation by business enterprises
of variable interest entities which possess certain characteristics. The Interpretation
requires that if a business enterprise has a controlling financial interest in a variable
interest entity, the assets, liabilities, and results of the activities of the variable
interest entity must be included in the consolidated financial statements with those of
the business enterprise. This Interpretation applies immediately to variable interest
entities created after January 31, 2003 and to variable interest entities in which an
enterprise obtains an interest after that date. The Company does not have any ownership in
any variable interest entities as of March 31, 2003. The Company will apply the
consolidation requirement of FIN 46 in future periods if we should own any interest in any
variable interest entity. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>(5)</b> <u>Letter of Credit
Agreement</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 8, 2001, the Company signed a credit facility with the Energy Finance Division of
Bank One, N.A. in Houston, Texas whereby Bank One extended to the Company a revolving line
of credit of up to $35 million. The initial borrowing base under the facility was $10
million. The interest rate is the Bank One base rate plus one-quarter percent, which at
the present time is 5.25%. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 9, 2001, funds from this credit line were used to (1) refinance existing
indebtedness on the Company&#146;s Kansas properties, (2) to repay the internal financing
provided by directors and shareholders on the Company&#146;s completed 65-mile Tennessee
intrastate pipeline system (3) to repay a note payable to Spoonbill, Inc. (4) to repay a
purchase money note due to M.E. Ratliff, who at the time was the Company&#146;s Chief
Executive Officer and Chairman of the Board of Directors, for purchase by the Company of a
drilling rig and related equipment, (5) to repay in full the remaining principal of the
working capital loan due December 31, 2001 to Edward W.T. Gray III, who at that time was a
director of the Company. All of these obligations incurred interest at a rate
substantially greater than the rate being charged by Bank One under the credit facility. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 5, 2002, the Company received a notice from Bank One stating that it had
re-determined and reduced the borrowing base under the Credit Agreement by $6,000,000 to
$3,101,766. Bank One demanded that the Company pay the $6,000,000 within thirty days of
the notice. The Company filed a lawsuit in Federal Court to prevent Bank One from
exercising any rights under the Credit Agreement. The Company has been paying $200,000 per
month toward the outstanding balance of the credit facility and any accrued interest until
this situation is resolved. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(6)</B>&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Supplemental Disclosure of Non-Cash Investing and Financing Activities:</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March 31, 2003, the Company converted $60,000 of debt and $9,600 of
accrued interest owed to holders of convertible notes into 60,528 shares of common stock. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March 31, 2003, the Company converted $158,909 of accrued dividends
payable into 144,461 shares of common stock. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March 31, 2003, the Company issued 55,000 shares of common stock
for payment for consulting services performed in the amount of $70,000. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March 31, 2003, the Company donated 3,571 shares of stock as a
charitable contribution valued at $5,713. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March 31, 2003, the Company capitalized $260,191 into oil and gas
properties associated with estimated future obligations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>(7)</b> <u> Notes Payable</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February 3, 2003 and February 28, 2003, Dolphin Offshore Partners, LP which owns more than
10% of the Company&#146;s outstanding common stock and whose general partner, Peter E.
Salas, is a Director of the Company, loaned the Company the sum of $250,000 on each such
date (cumulatively, $500,000) which the Company used to pay the principal and interest due
to Bank One for February and March 2003 and for working capital needs. Each of these loans
is evidenced by a separate promissory note each bearing interest at the rate of 12% per
annum, with payments of interest only payable quarterly and the principal balance payable
on January 4, 2004. Each promissory note is secured by an undivided 10% interest in the
Company&#146;s Tennessee and Kansas pipelines. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>(8)</b> <u>Reclassifications</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
prior period amounts have been reclassified to conform to the current period&#146;s
presentation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>(9)</b> <u> Law Suit Settlement</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
</B>On April 2, 2003 and by agreed order filed May 5, 2003, all claims were settled and
the lawsuit was dismissed in the Caddum lawsuit. The settlement provides that the amount
claimed to be owed by the Company to Caddum was reduced to $297,000 which is to be paid by
note due May 1, 2004, with interest only payable monthly at an annual interest rate of
4.75 percent. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>(10)</b> <u> Cumulative Effect of
a Change in Accounting Principle</u> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
January 1, 2003, the Company implemented the requirements of Statement of Financial
Accounting Standards No. 143 (SFAS 143), &#147;Accounting for Asset Retirement
Obligations&#148;. Among other things, SFAS 143 requires entities to record a liability
and corresponding increase in long-lived assets for the present value of material
obligations associated with the retirement of tangible long-lived assets. Over the passage
of time, accretion of the liability is recognized as an operating expense and the
capitalized cost is depleted over the estimated useful life of the related asset.
Additionally, SFAS 143 requires that upon initial application of these standards, the
Company must recognize a non-cash charge related to the cumulative effect of a change in
accounting principle corresponding to the accumulated accretion and depletion expense that
would have been recognized had this standard been applied at the time the long-lived
assets were acquired or constructed. The Company&#146;s asset retirement obligations
relate primarily to the plugging, dismantling and removal of wells drilled to date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Using
a credit-adjusted risk free rate of 12%, an estimated useful life of wells ranging from 30
&#150; 40 years, and estimated plugging and abandonment costs ranging from $5,000 per well
to $10,000 per well, the Company has recorded a cumulative effect of a change in
accounting principle of $351,204 in its statement of operations for the three month period
ended March 31, 2003. Oil and gas properties were increased by $260,191, which represents
the present value of all future obligations to retire the wells at January 1, 2003, net of
accumulated depletion on this cost through that date. A corresponding obligation totaling
$611,395 has also been recorded as of January 1, 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three-month period ended March 31, 2003, the Company recorded accretion and depletion
expenses of $25,984 associated with this liability and its corresponding asset. These
expenses are included in depletion, depreciation, and amortization in the consolidated
statements of loss. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Had
the provisions of this statement been reflected in the financial statements for the year
ended December 31, 2002, an asset retirement obligation of $476,536 would have been
recorded as of January 1, 2002. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following is a roll-forward of activity impacting the asset retirement obligation for the
three months ended March 31, 2003: </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=78% ALIGN=LEFT>Balance, January 1, 2003:</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=14% ALIGN=RIGHT> 611,395</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Accretion expense through March 31, 2003</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>18,342</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Balance, March 31, 2003</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> <br><br>629,737</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>ITEM 2
MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION <BR>AND RESULTS OF
OPERATIONS </b></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR"  -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Results of Operations
and Financial Condition</b> </FONT></H1>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR"  -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Kansas </FONT></H1>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR"  -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the first quarter of 2003, the Company produced and sold 32,807 barrels of oil and 64,438
Mcf of natural gas from its Kansas Properties comprised of 149 producing oil wells and 59
producing gas wells. January production was 10,986 barrels of oil and 22,577 Mcf of gas;
February production was 10,621 barrels and 19,278 Mcf; and, March production was 11,200
barrels and 22,583 Mcf of gas. The first quarter production of 32,807 barrels of oil
compares to 35,806 barrels produced in the first quarter of 2002. The first quarter
production of 64,438 Mcf of gas compares to 76,849 Mcf produced in the first quarter of
2002. In summary, the first quarter production reflected expected continued stable
production levels from the Kansas Properties, which have been in production for many
years. The decrease in production reflects a normal decline curve for the Kansas
properties. The revenues from the Kansas properties were $1,131,627 in the first quarter
of 2003, as compared to $692,974 in 2002. The increase in revenues is due to an increase
in the price of oil and gas for 2003. </FONT></P>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR"  -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tennessee </FONT></H1>



<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the first quarter of 2003, the Company produced gas from 23 wells in the Swan Creek field,
which it sold to its two industrial customers in Kingsport, Tennessee, BAE SYSTEMS
Ordnance Systems Inc. as operator of the Holston Army Ammunition Plant (&#147;BAE&#148;)
and Eastman Chemical Company (&#147;Eastman&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Natural
gas production from the Swan Creek field for the first quarter of 2003 was an average of
1.241 million cubic feet per day during that period. The first quarter production
reflected expected natural decline in production from the existing Swan Creek gas wells
which were first brought into production in mid-2001 upon completion of the Company&#146;s
pipeline. This natural decline is normal for any producing well, and this decline as
experienced on existing wells in Swan Creek was not unexpected; however, volumes were not
replaced as expected as a result of additional drilling. In order for overall field
production to remain steady or grow, new wells must be brought online. Any of the new
wells drilled by the Company would also experience the same harmonic (i.e. a relatively
steep initial decline curve followed by longer periods of relatively flat or stable
production) decline as does every natural well in a formation similar to the Knox
formation, so continuous drilling is vital to maintaining or increasing earlier levels of
production. No new gas wells have been drilled by the Company to date in 2003 due to the
destabilized lending arrangements caused by the actions of Bank One and ongoing litigation
regarding that matter. The Company anticipates that the natural decline of production from
existing wells is now predictable in Swan Creek, that the total volume of the
Company&#146;s reserves remains largely intact, and that these reserves can be extracted
through existing wells and also by steady additional drilling brought on by reliable
financial arrangements to fund drilling. Upon conclusion of the Bank One litigation, the
Company expects that additional or replacement financing may more easily be obtainable to
allow drilling to increase; however, no assurances can be made that such financing will be
obtained. See, Liquidity and Capital Resources discussion, below. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Comparison of the
Quarters Ending March 31 2003 and 2002</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company recognized $1,923,915 in oil and gas revenues from its Kansas Properties and the
Swan Creek Field during the first quarter of 2003 compared to $1,175,444 in the first
quarter of 2002. The increase in revenues was due to an increase in price from oil and gas
sales. Oil prices averaged $31.53 per barrel in 2003 as compared to $19.12 in 2002. Gas<B>
</B>prices averaged<U> </U>$6.41 per Mcf in 2003 as compared to $2.33 for 2002. The Swan
Creek Field produced 111,667 Mcf and 215,633 Mcf in the first quarter of 2003 and 2002,
respectively. This decrease was due to natural declines in production which could not be
offset as the Company did not have the funds to continue drilling new wells, due to
it&#146;s dispute with it&#146;s primary lender, Bank One NA. The decrease in pipeline
transportation revenues is directly related to the decrease in gas volumes. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company realized a net loss attributable to common shareholders of $793,545 (($0.07) per
share of common stock) during the first quarter of 2003 compared to a net loss in the
first quarter of 2002 to common shareholders of $980,326 (($0.09) per share of common
stock). A non-cash charge of $351,204 was recognized as a cumulative effect of a change in
accounting principle, resulting from the implementation of SFAS 143. See Note 10. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Production
costs and taxes in the first quarter of 2003 of $769,902 were consistent with production
costs and taxes of $723,799 in the first quarter of 2002. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation,
Depletion, and Amortization expense for the first quarter of 2003 was $630,942 compared to
$487,348 in the first quarter of 2002. The December 31, 2002, Ryder Scott reserve reports
were used as a basis for the 2003 estimate. The Company reviews its depletion analysis and
industry oil and gas prices on a quarterly basis to ensure that the depletion estimate is
reasonable. The depletion taken in the first quarter of 2003 was approximately $358,000 as
compared to $250,000 in the first quarter of 2002. The Company also amortized $51,211 of
loan fees relating to the Bank One note and convertible notes. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the first quarter, the Company reduced its general and administrative costs significantly
($128,893) from the first quarter of 2002. Management has made an effort to control costs
in every aspect of its operations. Some of these cost reductions included the closing of
the Company&#146;s New York office and a reduction in personnel from 2002 levels. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional
fees in the first quarter of 2003 have increased dramatically ($92,113) from the first
quarter of 2002, primarily due to costs incurred for legal and accounting services as a
result of the Bank One lawsuit. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends
on preferred stock have increased from $112,458 in 2002 to $134,195 in 2003, as a result
of the increase in the amount of preferred stock outstanding from new private placements
occurring during the second quarter of 2002. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Liquidity and
Capital Resources </U></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 8, 2001, the Company signed a credit facility agreement (the &#147;Credit
Agreement&#148;) with the Energy Finance Division of Bank One, N.A. in Houston Texas
(?Bank One?). Litigation was instituted by the Company in May 2002 based on certain
actions taken by Bank One under the agreement. </FONT></P>

                       In November  2002,  the Company and Bank One  concluded  a series of  meetings  and  correspondence  by reaching
<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>preliminary agreement upon the basic
terms of a potential settlement. Any settlement is conditioned upon execution of final
settlement documents and the parties agreed to attempt to close the settlement by November
29, 2002. The principal element of the settlement proposal is for Bank One and<B> </B>the
Company to enter into an amended and restated agreement for a new term loan to replace the
prior revolving credit facility. As of the date of this report, the Company and Bank One
continue to negotiate the terms of a mutually satisfactory settlement agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even
if the Company concludes a settlement with Bank One, the Company does not anticipate that
it will be able to borrow any additional sums from Bank One. To fund additional drilling
and to provide additional working capital, the Company would be required to pursue other
options. Such options would include debt financing, sale of equity interests in the
Company, a joint venture arrangement, the sale of oil and gas interests, etc. The
inability of the Company to obtain the necessary cash funding on a timely basis would have
an unfavorable effect on the Company&#146;s financial condition and would require the
Company to materially reduce the scope of its operating activities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
harmful effects upon operations of the Company caused by the actions of Bank One and the
ongoing litigation with Bank One in 2002 have been dramatic. First, the action of Bank One
in April 2002 had the effect of totally cutting off any additional funds to the Company to
support Company operations. Further, the funds loaned to the Company by Bank One had been
used to refinance the Company&#146;s indebtedness and no funds were then available to pay
this large repayment obligation to Bank One, even if such action by the Bank was proper,
which the Company has vigorously and continually denied. The principal reason the Company
had entered into the Bank One Credit Agreement was to provide for additional funds to
promote the growth of the Company. Consequently, as a result of Bank One&#146;s
unwarranted<B> </B>actions, no additional funds under<B> </B>the credit facility agreement
were available in 2002 for additional drilling that the Company had anticipated performing
in the Swan Creek Field and which were critical to the development of that Field. In order
for overall field production to remain steady or grow in a field such as the Swan Creek
Field, new wells must be brought online. Only two gas wells were added by the Company in
2002 due to the destabilized lending arrangements caused by the actions of Bank One and
ongoing litigation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Second,
the existence of the dispute with Bank One, compounded by the fact that an effect of Bank
One&#146;s action was to cause the Company&#146;s auditors to indicate that their was an
uncertainty over the Company&#146;s ability to continue as a going concern, has
significantly discouraged other institutional lenders from considering a variety of
additional or replacement financing options for<U> </U>drilling and other purposes that
may have ordinarily been available to the Company. Third, the dispute has caused Bank One
to fail to grant permission under the existing loan agreements with the Company to permit
the Company to formulate drilling programs involving potential third party investors that
may have permitted additional drilling to occur. Finally, the dispute has caused the
Company to incur significant legal fees to protect the Company&#146;s rights. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
no assurances can be made, the Company believes that it will either be able to resolve the
Bank One dispute or obtain additional or replacement financing to allow drilling to
increase, and that once new wells are<B> </B>drilled, production from the Swan Creek Field
will increase. However, no assurances can be made that such financing will be obtained or
that overall produced volumes will increase. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Similarly,
when funding for additional drilling becomes available, the Company plans to drill wells
in five new locations it has identified in Ellis and Rush Counties, Kansas on its existing
leases in response to drilling activity in the area establishing new areas of oil
production. Although the Company successfully drilled the Dick No. 7 well in Kansas in
2001 and completed the well as an oil well, the Company was not able to drill any new
wells in Kansas in 2002 due to lack of funds available for such drilling caused by the
Bank One situation. As with Tennessee, the Company is hopeful that once the Bank One
matter is resolved it will be able to resume drilling and well work-overs in Kansas to
maximize production from the Kansas Properties. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>ITEM 3 QUANTITATIVE AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISKS</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Commodity
Risk</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
</B> The Company&#146;s major market risk exposure is in the pricing applicable to its oil
and gas production. Realized pricing is primarily driven by the prevailing worldwide price
for crude oil and spot prices applicable to natural gas production. Historically, prices
received for oil and gas production have been volatile and unpredictable and price
volatility is expected to continue. Monthly oil price realizations ranged from a low of
$18.56 per barrel to a high of $27.49 per barrel during 2002. Gas price realizations
ranged from a monthly low of $1.91 per Mcf to a monthly high of $4.01 per Mcf during the
same period. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Interest
Rate Risk</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
December 31, 2002, the Company had debt outstanding of approximately $9.9 million. The
interest rate on the revolving credit facility of $7.5 million is variable based on the
financial institution&#146;s prime rate plus 0.25%. The remaining debt of $2.4 million has
fixed interest rates ranging from 6% to 11.95%. As a result, the Company&#146;s annual
interest costs in 2002 fluctuated based on short-term interest rates on approximately 78%
of its total debt outstanding at December 31, 2002. The impact on interest expense and the
Company&#146;s cash flows of a 10 percent increase in the financial institution&#146;s
prime rate (approximately 0.5 basis points) would be approximately $32,000; assuming
borrowed amounts under the credit facility remain at $7.5 million. The Company did not
have any open derivative contracts relating to interest rates at March 31, 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Forward-Looking
Statements And Risk</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>
</B>Certain statements in this report, including statements of the future plans,
objectives, and expected performance of the Company, are forward-looking statements that
are dependent upon certain events, risks and uncertainties that may be outside the
Company&#146;s control, and which could cause actual results to differ materially from
those anticipated. Some of these include, but are not limited to, the market prices of oil
and gas, economic and competitive<B> </B>conditions, inflation rates, legislative and
regulatory changes, financial market conditions, political and economic uncertainties of
foreign governments, future business decisions, and other uncertainties, all of which are
difficult to predict. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are numerous uncertainties inherent in estimating quantities of proved oil and gas
reserves and in projecting future rates of production and the timing of development
expenditures. The total amount or timing of actual future production may vary
significantly from reserves and production estimates. The drilling of exploratory wells
can involve significant risks, including those related to timing, success rates and cost
overruns. Lease and rig availability, complex geology and other factors can also affect
these risks. Additionally, fluctuations in oil and gas prices, or a prolonged period of
low prices, may substantially adversely affect the Company&#146;s financial position,
results of operations and cash flows. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>ITEM 4 CONTROLS AND
PROCEDURES</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Evaluation
of Disclosure Controls and Procedures.</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of
our disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934, as amended (the &#147;Exchange
Act&#148;)) as of the end of the period covered by this quarterly report (the
&#147;Evaluation Date&#148;). Based on such evaluation, such officers have concluded that
, as of the Evaluation Date, our disclosure controls and procedures are effective in
alerting them on a timely basis to material information relating to our Company (including
our consolidated subsidiary) required to be included in our reports filed or submitted
under the Exchange Act. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Changes in Internal
Controls</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the period covered by this quarterly report, there have not been any changes in our
internal controls that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>PART II OTHER INFORMATION</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>ITEM 1 LEGAL PROCEEDINGS</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(1).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Company and its subsidiary, Tengasco Pipeline Corporation (&#147;TPC&#148;),
          were named as defendants in an action commenced on June 4, 2001 by C.H.
          Fenstermaker &amp; Associates, Inc. (&#147;Fenstermaker&#148;) in the United
          States District Court for the Eastern District of Tennessee entitled <U>C.H.
          Fenstermaker &amp; Associates, Inc. v. Tengasco, Inc., No. 3:01-CV-283.</U> The
          action sought to recover approximately $365,000 in charges billed to TPC for
          engineering services in connection with the planning and construction of Phase
          II of the Company&#146;s pipeline. On June 25, 2001, the Company and TPC filed
          an answer to the complaint denying liability, and counterclaiming against
          Caddum, Inc. (&#147;Caddum&#148;), a division of Fenstermaker. On February 27,
          2003, the parties reached an agreement in principle for the settlement of this
          action. The settlement was concluded on April 2, 2003 and by agreed order filed
          May 5, 2003, all claims were settled and the lawsuit was dismissed. The
          settlement that provides the amount claimed to be owed by the Company to Caddum
          was reduced to $297,000, which is to be paid by note due May 1, 2004, with
          interest only payable monthly at an annual interest rate of 4.75 percent. Each
          party is to bear its own attorney&#146;s fees and court costs. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(2).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          <U>Tengasco Pipeline Corporation v. James E. Larkin and Kathleen A.
          O&#146;Connor</U>, No. 4929J in the Circuit Court for Hawkins County, Tennessee.
          This is a condemnation proceeding brought by Tengasco Pipeline Corporation to
          acquire a temporary construction easement and permanent right of way to maintain
          and operate a portion of Phase I of the Company&#146;s pipeline in Hawkins
          County, Tennessee. The court granted an order of possession to the Company in
          January 1998 and the pipeline has been constructed across approximately 3,000
          feet of the property concerned in a rural and very steep locale. The Company has
          had the right of way appraised at $4,000. The landowners, Mr. Larkin and
          Kathleen A. O Connor who both live on the property, contest the appraised value
          of the property and claim incidental damages to certain fish ponds located on
          their property. The landowners, despite a lack of evidence of any fish raising
          or aquaculture business actually being or having been operated on the premises
          or of any actual losses to such business, have counterclaimed for $867,585 in
          compensatory damages and $2.6 million in punitive damages arising from trespass
          and other legal theories. The Court required the parties to attempt<B> </B>to
          mediate this dispute and the mediation occurred in December, 2000. The parties
          were unable to reach a mediated settlement and the matter had most recently been
          scheduled for trial on January 29, 2003. The January 29, 2003 trial date was
          continued by the Court to an unspecified future date. The Court has ordered the
          parties to a second mediation session, which will occur on June 2, 2003. If
          settlement is not reached at mediation, the Company intends to vigorously defend
          the allegations of the counterclaim because trial preparations have not
          disclosed any fact that reasonably suggests a substantial adverse result in this
          matter and the allegations of the counterclaim appear to be without any credible
          basis. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
other legal proceedings disclosed in the Annual Report on Form 10-K for the year ended
December 31, 2002 remain materially unchanged at March 31, 2003. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>ITEM 2 CHANGES IN
SECURITIES AND USE OF PROCEEDS</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January 8, 2003, Bill L. Harbert, a Director of the Company, purchased 227,275 shares of
the Company&#146;s Common Stock from the Company in a private placement at a price of
$1.10 per share. The proceeds from this sale were used by the Company to pay the principal
and interest due to Bank One for January, 2003 and to provide working capital for the
Company&#146;s operations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February 3, 2003 and February 28, 2003, Dolphin Offshore Partners, LP
(&#147;Dolphin&#148;) which owns more than 10% of the Company&#146;s outstanding common
stock and whose general partner is Peter E. Salas, a Director of the Company, loaned the
Company the sum of $250,000 on each such date which the Company used to pay the principal
and interest due to Bank One for February and March 2003 and for working capital. Each of
these loans is evidenced by a separate promissory note each bearing interest at the rate
of 12% per annum, with payments of interest only payable quarterly and the principal
balance payable on January 4, 2004 which are secured by an undivided 10% interest in the
Company&#146;s Tennessee pipelines. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>SIGNATURES</b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities and Exchange Act of 1934, the registrant duly caused
this report to be signed on its behalf by the undersigned hereto duly authorized. </FONT></P>






<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <th></th>
     <TD><p align=left>Dated: May 20, 2003</TD></tr></table>




<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">

     <TD width=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;:<u>s/ Richard T. Williams</u><br>
Richard T. Williams<br>
Chief Executive Officer<br><br><br><br>
</font></TD></TR></TABLE>



<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">

     <TD width=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;:<u>s/ Mark A. Ruth</u><br>
Mark A. Ruth<br>
Chief Financial Officer
</font></TD></TR></TABLE>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 31 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Richard T. Williams, certify
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          I have reviewed this quarterly report on Form 10-Q of Tengasco, Inc. and
          Subsidiaries. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;
          Based on my knowledge, the financial statements, and other information included
          in this quarterly report, fairly present in all material respects the financial
          condition, results of operations and cash flows of the Registrant as of, and
          for, the periods presented in this quarterly report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.&nbsp;&nbsp;&nbsp;&nbsp;
          The Registrant&#146;s other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules (13a-15e and 15d-15e) for the Registrant and we have: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          designed such disclosure controls and procedures or caused such disclosure
          controls and procedures to be designed under our supervision to ensure that
          material information relating to the Registrant, including its consolidated
          subsidiaries, is made known to us by others within those entities, particularly
          during the period in which this quarterly report is being prepared; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          evaluated the effectiveness of the Registrant&#146;s disclosure controls and
          procedures and presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures as of the end of the
          period covered by this report based on such evaluation;: and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          disclosed in this report any change in the registrant&#146;s internal control
          over financial reporting that the occurred during the registrant&#146;s most
          recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case
          of an annual report) that has materially affected, or is reasonably likely to
          materially affect the registrant&#146;s internal control over financial
          reporting; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.&nbsp;&nbsp;&nbsp;&nbsp;
          The Registrant&#146;s other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting to the
          Registrant&#146;s auditors and the audit committee of the Registrant&#146;s
          board of directors (or persons performing the equivalent functions); </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          all significant deficiencies and material weaknesses the design or operation of
          internal control over financial reporting which are reasonably likely to
          adversely affect the Registrant&#146;s ability to record, process, summarize and
          report financial information; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          any fraud, whether or not material that involves the management or other
          employees who have a significant role in the Registrant&#146;s internal control
          over financial reporting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: August 14, 2003 </FONT></P>



<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">

     <TD width=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;:<u>s/ Richard T. Williams</u><br>
Richard T. Williams<br>
Chief Executive Officer<br><br><br><br>
</font></TD></TR></TABLE>








<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 31 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Mark A. Ruth, certify pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          I have reviewed this quarterly report on Form 10-Q of Tengasco, Inc. and
          Subsidiaries. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;
          Based on my knowledge, the financial statements, and other information included
          in this quarterly report, fairly present in all material respects the financial
          condition, results of operations and cash flows of the Registrant as of, and
          for, the periods presented in this quarterly report; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.&nbsp;&nbsp;&nbsp;&nbsp;
          The Registrant&#146;s other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules (13a-15e and 15d-15e) for the Registrant and we have: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          designed such disclosure controls and procedures or caused such disclosure
          controls and procedures to be designed under our supervision to ensure that
          material information relating to the Registrant, including its consolidated
          subsidiaries, is made known to us by others within those entities, particularly
          during the period in which this quarterly report is being prepared; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          evaluated the effectiveness of the Registrant&#146;s disclosure controls and
          procedures and presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures as of the end of the
          period covered by this report based on such evaluation;: and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          disclosed in this report any change in the registrant&#146;s internal control
          over financial reporting that the occurred during the registrant&#146;s most
          recent fiscal quarter (the registrant&#146;s fourth fiscal quarter in the case
          of an annual report) that has materially affected, or is reasonably likely to
          materially affect the registrant&#146;s internal control over financial
          reporting; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.&nbsp;&nbsp;&nbsp;&nbsp;
          The Registrant&#146;s other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting to the
          Registrant&#146;s auditors and the audit committee of the Registrant&#146;s
          board of directors (or persons performing the equivalent functions); </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          all significant deficiencies and material weaknesses the design or operation of
          internal control over financial reporting which are reasonably likely to
          adversely affect the Registrant&#146;s ability to record, process, summarize and
          report financial information; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          any fraud, whether or not material that involves the management or other
          employees who have a significant role in the Registrant&#146;s internal control
          over financial reporting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: August 14, 2003 </FONT></P>

<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">

     <TD width=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;:<u>s/ Mark A. Ruth</u><br>
Mark A. Ruth<br>
Chief Financial Officer
</font></TD></TR></TABLE>






<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 32 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 I hereby certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(10)&nbsp;&nbsp;&nbsp;&nbsp;
          I have reviewed the Quarterly Report on Form 10-Q(i); </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To the best of my knowledge this
Quarterly Report on Form 10-Q (i) fully complies with the requirements of section 13(a) or
15(d) of the Securities and Exchange Act of 1934(U.S.C. 78m(a) or 78o(d)); and, (ii) the
information contained in this Report fairly present, in all material respects, the
financial condition and results of operations of Tengasco, Inc. and its Subsidiaries
during the period covered by this report. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: August 14, 2003 </FONT></P>


<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">

     <TD width=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;:<u>s/ Richard T. Williams</u><br>
Richard T. Williams<br>
Chief Executive Officer<br><br><br><br>
</font></TD></TR></TABLE>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>Exhibit 32 </b></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><u>CERTIFICATION</u></b> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 I hereby certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Project" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(11)&nbsp;&nbsp;&nbsp;&nbsp;
          I have reviewed the Quarterly Report on Form 10-Q(i); </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 5-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=25%>&nbsp;</TD>
<TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
To
the best of my knowledge this Quarterly Report on Form 10-Q (i) fully complies with the
requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934(U.S.C.
78m(a) or 78o(d)); and, (ii) the information contained in this Report fairly present, in
all material respects, the financial condition and results of operations of Tengasco, Inc.
and its Subsidiaries during the period covered by this report.</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: August 14, 2003 </FONT></P>

<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">

     <TD width=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></font></TD>
     <TD width=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By&nbsp;:<u>s/ Mark A. Ruth</u><br>
Mark A. Ruth<br>
Chief Financial Officer
</font></TD></TR></TABLE>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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