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<SEC-DOCUMENT>0001001614-04-000047.txt : 20040624
<SEC-HEADER>0001001614-04-000047.hdr.sgml : 20040624
<ACCEPTANCE-DATETIME>20040624163459
ACCESSION NUMBER:		0001001614-04-000047
CONFORMED SUBMISSION TYPE:	PRE 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040812
FILED AS OF DATE:		20040624

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:		PRE 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15555
		FILM NUMBER:		04879922

	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>PRE 14A
<SEQUENCE>1
<FILENAME>noticeofannualcorrect.htm
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>

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<A NAME=A001></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>TENGASCO, INC.<br>  603
MAIN AVENUE<br> KNOXVILLE, TENNESSEE 37902 </b> </FONT></P>


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<A NAME=A003></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS <BR> TO BE HELD ON<br>AUGUST 12, 2004  </FONT></H1>



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<A NAME=A005></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TO THE STOCKHOLDERS: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
is hereby given that the 2004 annual meeting of stockholders (the &#147;Annual
Meeting&#148;) of Tengasco, Inc. (the &#147;Company&#148;) has been called for and will be
held at the Club LeConte, First Tennessee Plaza, 800 South Gay Street, Knoxville,
Tennessee 37929 10:00 A.M., local time, on Thursday, August 12, 2004 for the following
purposes: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To elect Clarke H. Bailey, John A. Clendening, Bill L. Harbert, Neal F. Harding,
          Carlos P. Salas, Peter E. Salas and Richard T. Williams to the Board of
          Directors to hold office until their successors shall have been elected and
          qualify; </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To approve an amendment to the Company&#146;s Charter which will increase the
          number of authorized shares of common stock from 50,000,000 to 100,000,000; </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;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To ratify the appointment by the Board of Directors of BDO Seidman, LLP to serve
          as the independent certified public accountants for the current fiscal year; 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;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To consider and transact such other business as may properly come before the
          Annual Meeting or any adjournments thereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has fixed the close of business on June 28, 2004 as the record date for
the determination of the stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments thereof. The list of stockholders entitled to vote at the
Annual Meeting will be available for examination by any stockholder at the Company&#146;s
offices at 603 Main Avenue, Knoxville, Tennessee 37902, for ten (10) days prior to August
12, 2004. </FONT></P>




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<A NAME=A006></A>
<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By Order of the Board of Directors&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br><br>Richard T. Williams,
<i>Chief Executive Officer </I></FONT></P>

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<A NAME=A007></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: July 9, 2004 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE FILL IN, SIGN, AND DATE THE PROXY
SUBMITTED HEREWITH AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE. THE GRANTING OF SUCH
PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY IN PERSON SHOULD YOU LATER DECIDE TO
ATTEND THE MEETING. THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS.</B> </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 1; page: 1" -->




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<A NAME=A008></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC.PROXY
<BR>STATEMENT </FONT></H1>

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<A NAME=A009></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
proxy statement is furnished by the Board of Directors of Tengasco, Inc., a Tennessee
corporation (sometimes the &#147;Company&#148; or &#147;Tengasco&#148;), with offices
located at 603 Main Avenue, Knoxville, Tennessee 37902, in connection with the
solicitation of proxies to be used at the annual meeting of stockholders of the Company to
be held on August 12, 2004 and at any adjournments thereof (the &#147;Annual
Meeting&#148;). This proxy statement will be mailed to stockholders beginning
approximately July 9, 2004. If a proxy in the accompanying form is properly executed and
returned, the shares represented thereby will be voted as instructed on the proxy. Any
proxy may be revoked by a stockholder prior to its exercise upon written notice to the
President of the Company, or by a stockholder voting in person at the Annual Meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
properly executed proxies received prior to the Annual Meeting will be voted at the Annual
Meeting in accordance with the instructions marked thereon or otherwise as provided
therein. Unless instructions to the contrary are indicated, proxies will be voted FOR the
election of the directors named therein, FOR the proposed increase in the number of shares of authorized common stock and
FOR the ratification of the selection by the Board of Directors of BDO Seidman, LLP, as
the independent certified public accountants of the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
copy of the annual report of the Company for the fiscal year ended December 31, 2003
(&#147;Fiscal 2003&#148;), which contains financial statements audited by the
Company&#146;s independent certified public accountants, accompanies this proxy statement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
cost of preparing, assembling and mailing this notice of meeting, proxy statement, the
enclosed annual report and proxy will be borne by the Company. In addition to solicitation
of the proxies by use of the mails, some of the officers and regular employees of the
Company, without extra remuneration, may solicit proxies personally or by telephone, fax
transmission, e-mail or cable. The Company may also request brokerage houses, nominees,
custodians and fiduciaries to forward soliciting material to the beneficial owners of the
common stock. The Company will reimburse such persons for their expenses in forwarding
soliciting material. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

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<A NAME=A010></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VOTING SECURITIES AND PRINCIPAL
<BR>HOLDERS THEREOF </FONT></H1>









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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has fixed the close of business on June 28, 2004 as the record date
(the &#147;Record Date&#148;) for the determination of stockholders entitled to notice of,
and to vote at the Annual Meeting. Only stockholders on the Record Date will be able to
vote at the Annual Meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of the Record Date, 48,677,828 shares of the Company&#146;s common stock, $.001 par value
per share are outstanding, and each share will be entitled to one (1) vote, with no shares
having cumulative voting rights. Holders of shares of common stock are entitled to vote on
all matters. Unless otherwise indicated herein, a majority of the votes represented by
shares present or represented at the Annual Meeting is required for approval of each
matter which will be submitted to stockholders. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
knows of no business other than that specified in Items 1, 2 and 3 of the Notice of Annual
Meeting which will be presented for consideration at the Annual Meeting. If any other
matter is properly presented, it is the intention of the persons named in the enclosed
proxy to vote in accordance with their best judgment. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the share holdings of those persons who own more than 5% of the
Company&#146;s common stock as of June 28, 2004 with these computations being based upon
48,677,828 shares of common stock being outstanding as of that date and as to each
shareholder, as it may pertain, assumes the exercise of options or warrants or the
conversion of convertible debt or preferred stock granted or held by such shareholder as
of June 28, 2004. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 3; page: 3" -->


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<A NAME=A011></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Five Percent
Stockholders<SUP>1</SUP> </FONT></H1>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH align=left COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Name and Address</u></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Title</u></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of Shares<BR>
<u>Beneficially Owned</u></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Percent of<BR>
Class</u><BR>
</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=45% ALIGN=LEFT>Dolphin Offshore</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=17% ALIGN=RIGHT>Stockholder</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=17% ALIGN=RIGHT>16,540,1402</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=7% ALIGN=RIGHT>33.9</TD>
        <TD WIDTH=2% ALIGN=LEFT>%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Partners, L.P.</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>129 East 17th Street</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10003</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>SC Fundamental Value</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>Stockholder</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>4,767,8003</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>9.79</TD>
        <TD ALIGN=LEFT>%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Fund, L.P.</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>747 Third Avenue, 27th Fl.</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10017</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>





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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>1</SUP>
Unless otherwise stated, all shares of Common Stock are directly held with sole voting and
dispositive power. The shares set forth in the table reflect shares issued in connection
with the Company&#146;s recently completed Rights Offering. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>2</SUP>
 Consists of 16,244,452 shares held directly by Dolphin Offshore Partners, L.P.
(&#147;Dolphin&#148;) of which Peter E. Salas, a Director of the Company, is the controlling person; a warrant held by Dolphin to purchase 10,500 shares at
$7.98 per share; 117,188 shares underlying 9,000 shares of the Company&#146;s Series B 8%
Cumulative Convertible Preferred Stock held directly by Dolphin; and, 168,000 shares held
directly by Peter E. Salas.</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>3</SUP>
 Ownership of shares reported on Schedule 13G filed with the SEC by a group consisting of
SC Fundamental Value Fund , L.P., SC Fundamental LLC, SC-BVI Partners, PMC-BVI, Inc., SC
Fundamental Value BVI, Inc., Peter M. Collery and Neil H. Koffler.</FONT></P>






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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>


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<A NAME=A012></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROPOSAL NO. 1: </FONT></H1>

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<A NAME=A013></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTION OF DIRECTORS </FONT></H1>

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<A NAME=A014></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Article
III, paragraph number 2 of the Company&#146;s By-Laws provides that the number of
directors of the Company shall be a minimum of three (3) and a maximum of ten (10). The
members of the Board of Directors are each elected for a one-year term or until their
successors are elected and qualify with a plurality of votes cast in favor of their
election. The Board of Directors consisted of nine (9) persons during Fiscal 2003 and
seven (7) nominees for the Board are put forth before the stockholders for the Annual
Meeting. Four (4) of the nominees, Messrs. John A. Clendening, Bill L. Harbert, Peter E.
Salas and Richard T. Williams are all presently directors of the Company who were elected
at the Company&#146;s last annual meeting of stockholders held on June 27, 2003 and are up
for re-election. One of the remaining three (3) nominees, Mr. Neal F. Harding, formerly
served as a director of the Company and the other two (2) nominees, Messrs. Clarke H.
Bailey and Carlos P. Salas are up for election as directors of the Company for the first
time. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
directors will serve until the next annual meeting of stockholders and thereafter until
their successors shall have been elected and qualified. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
authority is withheld, the proxies in the accompanying form will be voted in favor of the
election of the nominees named above as directors. If any nominee should subsequently
become unavailable for election, the persons voting the accompanying proxy may in their
discretion vote for a substitute. </FONT></P>

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<A NAME=A015></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOARD OF DIRECTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has the responsibility for establishing broad corporate policies and
for the overall performance of the Company. Although only one (1) member of the Board is
involved in day-to-day operating details, the other members of the Board are kept informed
of the Company&#146;s business by various reports and documents sent to them as well as by
operating and financial reports made at Board meetings. The Board of Directors held
thirteen (13) meetings in Fiscal 2003. All directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and of the committees on which such
directors served during Fiscal 2003. Although it has no formal policy requiring
attendance, the Company encourages all of its directors to attend the annual meeting of
stockholders. All but one of the Company&#146;s directors (who had a prior</font> </p>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 5; page: 5" -->









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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;commitment for the date of the meeting) attended last year&#146;s annual meeting and it is anticipated
that all of the director-nominees will attend this year&#146;s Annual Meeting. </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
believes that a majority of the seven director-nominees are independent directors in
accordance with the definition of that term under the Rules of the American Stock
Exchange. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
is no understanding or arrangement between any director or any other persons pursuant to
which such individual was or is to be selected as a director or nominee of the Company. </FONT></P>

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<A NAME=A016></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Committees</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;The
Company&#146;s Board has operating compensation, audit, and stock option committees. It
does not presently have a nominating committee or a committee performing the functions of
a nominating committee. The Company also does not presently have a nominating committee
charter or other written document regarding either the qualifications required or the
method of selecting nominees for the Board of Directors. The Company also presently has no
policy with regard to the consideration of any director candidates recommended by security
holders. However, the Company will consider director candidates recommended by security
holders. The Company believes that it is appropriate not to have such a policy because any
policy may render more difficult the already-difficult process of locating suitable
nominees willing to serve in view of the Company&#146;s history of earnings and inability
to pay for services as a director or, until recently, to fund by insurance or otherwise
the Company&#146;s indemnity obligations owed to persons serving as a director of the
Company. Any person recommended by a security holder to serve on the Board of Directors is
considered by the Company upon the same terms as candidates recommended by any other
party. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
specific minimum qualifications that the Company believes must be met by a recommended
nominee for a position on the Company&#146;s Board of Directors include, but are not
limited to the following: a background or experience in oil and gas exploration,
production, transportation, geology, transportation, construction, finance or in another
business, government service, or profession that would reasonably enable the nominee to
provide seasoned and reputable service to the shareholders of the Company in the
performance of the duties of a member of the Board of Directors. In addition to these
qualifications, a nominee must be willing to serve without compensation for such service. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has no existing process for identifying and evaluating nominees for director,
including nominees recommended by security holders. The Company does consider whether a
nominee meets the definition of an independent director under laws and regulations of the
Securities Acts and the rules of the American Stock Exchange in</font></p>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6 </FONT></P>
<P STYLE="page-break-after:always">
</P>


<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 6; page: 6" -->







<!-- 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 process of identifying
and evaluating nominees for director and anticipates that such consideration will continue
to exist in the future. The Company does not pay any fee to any third party to identify or
evaluate or assistance in identifying or evaluations of potential nominees. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
present directors of the Company who participated in the consideration of
director-nominees included in this proxy statement included Peter E. Salas, Richard T.
Williams, Jeffrey R. Bailey, John Clendening, and Bill Harbert. For each nominee for
election to the Board of Directors listed on the proxy card other than nominees who are
directors standing for re-election, the person was recommended by the following categories
of persons: </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;Clarke
H. Bailey &#151; recommended by a security holder/non-management director. </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;Neal
F. Harding- recommended by the Company&#146;s Chief Executive Officer. </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;Carlos
P. Salas &#151; recommended by a security holder/non-management director. </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;Prior
to the end of the current fiscal year (2004), the Company intends to form a nominating
committee of the Board of Directors consisting of independent directors and that such
committee will adopt a nominating committee charter that will be in full compliance with
laws and regulations of the Securities Act and the rules of the American Stock Exchange. </FONT></P>

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<A NAME=A017></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Committee </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
Fiscal 2003, the members of the Compensation Committee were Stephen W. Akos, John A.
Clendening and Charles M. Stivers with Mr. Clendening acting as Chairman. The Compensation
Committee&#146;s functions, in conjunction with the Board of Directors, are to assist in
the implementation of, and provide recommendations with respect to, general and specific
compensation policies and practices of the Company for directors, officers and other
employees of the Company. The Compensation Committee expects to periodically review the
approach to executive compensation and to make changes as competitive conditions and other
circumstances warrant and will seek to ensure the Company&#146;s compensation philosophy
is consistent with the Company&#146;s best interests and is properly implemented. The
Compensation Committee met one time in Fiscal 2003. Beginning in 2004, pursuant to the
Rules of the American Stock Exchange the Compensation Committee will determine or
recommend to the Board of Directors for determination the compensation of the
Company&#146;s Chief Executive Officer and all of the Company&#146;s other officers. The
Chief Executive Officer may not be present during the voting or deliberations with respect
to his compensation. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER PAGE="sheet: 7; page: 7" -->







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<A NAME=A018></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Compensation
Committee Interlocking<br>And Insider
Participation </I></FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
interlocking relationship existed or exists between any member of the Company&#146;s
Compensation Committee and any member of the compensation committee of any other company,
nor has any such interlocking relationship existed in the past. No member or nominee of
the Compensation Committee is an officer or an employee of the Company. </FONT></P>





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<A NAME=A020></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>

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<A NAME=A021></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit Committee </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee during Fiscal 2003 was comprised of Messrs. Stivers, Akos and Clendening.
Mr. Stivers was the Chairman of the Committee and was also designated by the Company as
the financial expert of the Committee. Each of the members of the Audit Committee met the
independence and experience requirements of the applicable laws, regulations and stock
market rules, including the Sarbanes-Oxley Act, regulations and rules promulgated by the
Securities and Exchange Commission (&#147;SEC&#148;) and the American Stock Exchange. The
Audit Committee adopted an Audit Committee Charter during fiscal 2001. The Board recently
adopted an amended Audit Committee Charter, a copy of which is included in this proxy
statement as Appendix A. The Audit Committee&#146;s functions are to review with
management and the Company&#146;s independent auditors, the scope of the annual audit and
quarterly statements, significant financial reporting issues and judgments made in
connection with the preparation of the Company&#146;s financial statements; to review
major changes to the Company&#146;s auditing and accounting principles and practices
suggested by the independent auditors; to monitor the independent auditor&#146;s
relationship with the Company; to advise and assist the Board of Directors in evaluating
the independent auditor&#146;s examination; to supervise the Company&#146;s financial and
accounting organization and financial reporting, and, to nominate, for approval of the
Board of Directors, a firm of certified public accountants whose duty it is to audit the
financial records of the Company for the fiscal year for which it is appointed. In
addition, the Audit Committee has the responsibility to review and consider fee
arrangements with, and fees charged by, the Company&#146;s independent auditors. The Audit
Committee met four times in Fiscal 2003 with the Company&#146;s auditors, including to
discuss the audit of the Company&#146;s year end financial statements for 2003. It is
intended that if elected as a director, Clarke H. Bailey will serve as a member of the
audit committee and will be designated as the financial expert of the committee in 2004.
Mr. Bailey meets all of the requisites to qualify as such financial expert. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 8; page: 8" -->





<!-- MARKER FORMAT-SHEET="Head Center Italic-TNR" FSL="Project" -->
<A NAME=A022></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Audit Committee
Report </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<A NAME=A023></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has:</FONT></P>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;
           Reviewed and discussed the Company&#146;s unaudited financial statements for
          the first three quarters of Fiscal 2003 and the Company&#146;s audited financial
          statements for the year ended December 31, 2003 with the management of the
          Company and the Company&#146;s independent auditors. </FONT></TD>
          </TR>
          </TABLE>
          <BR>




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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;
           Discussed with the Company&#146;s independent auditors the matters required to
          be discussed by Statement of Auditing Standards No. 61, as the same was in
          effect on the date of the Company&#146;s financial statements; and </FONT></TD>
          </TR>
          </TABLE>
          <BR>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;
           Received the written disclosures and the letter from the Company&#146;s
          independent auditors required by Independence Standards Board Standard No. 1
          (Independence Discussions with Audit Committees), as the same was in effect on
          the date of the Company&#146;s financial statements. </FONT></TD>
          </TR>
          </TABLE>
          <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
on the foregoing materials and discussions, the Audit Committee recommended to the Board
of Directors that the unaudited financial statements for each of the first three quarters
of Fiscal 2003 be included in the Quarterly Reports on Form 10- Q for those quarters and
that the audited financial statements for the year ended December 31, 2003 to be included
in the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2003. The
Audit Committee also recommended the reappointment of the Company&#146;s independent
auditors, BDO Seidman LLP, and the Board of Directors concurred in such recommendation. </FONT></P>


<TABLE align=center BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="TOP">
     <TD>Members of the Audit Committee</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD><br>Charles M. Stivers</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD>Stephen W. Akos</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD>John A. Clendening</TD>
     <TD></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<A NAME=A024></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Option Committee </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;The
Stock Option Committee was formed to administer the Tengasco, Inc. Stock Incentive Plan
which was adopted by the Board of Directors on October 25, 2000. During Fiscal 2003 the
Stock Option Committee was comprised of Messrs. Akos, Clendening and Robert L. Devereux
with Mr. Devereux acting as Chairman. Each member of the</FONT></P>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9 </FONT></P>
<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 9; page: 9" -->



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock Option Committee during
Fiscal 2003 was a &#147;non-employee director within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended. The Stock Option Committee has
complete discretionary authority with respect to the awarding of options and Stock
Appreciation Rights (&#147;SARs&#148;), under the Tengasco, Inc. Stock Incentive Plan,
including, but not limited to, determining the individuals who shall receive options and
SARs; the times when they shall receive them; whether an option shall be an incentive or a
non-qualified stock option; whether an SAR shall be granted separately, in tandem with or
in addition to an option; the number of shares to be subject to each option and SAR; the
term of each option and SAR; the date each option and SAR shall become exercisable;
whether an option or SAR shall be exercisable in whole, in part or in installments and the
terms relating to such installments; the exercise price of each </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>option and the base price of each
SAR; the form of payment of the exercise price; the form of payment by the Company upon
the exercise of an SAR; whether to restrict the sale or other disposition of the shares of
common stock acquired upon the exercise of an option or SAR; to subject the exercise of
all or any portion of an option or SAR to the fulfillment of a contingency, and to
determine whether such contingencies have been met; with the consent of the person
receiving such option or SAR, to cancel or modify an option or SAR, provided such option
or SAR as modified would be permitted to be granted on such date under the terms of the
Tengasco, Inc. Stock Incentive Plan; and to make all other determinations necessary or
advisable for administering the Plan. During Fiscal 2003 the Stock Option Committee met
one time and granted options to purchase 436,000 shares of the Company&#146;s common stock
to sixteen (16) individuals including options to the following former and current
directors and officers of the Company: options to purchase 24,000 shares to Stephen W.
Akos, Joseph E. Armstrong, John Clendening, Bill L. Harbert, Robert L. Devereux, Peter E.
Salas, and Charles M. Stivers; 60,000 shares to Jeffrey R. Bailey, Mark A. Ruth and
Richard T. Williams; 40,000 shares to Cary V. Sorensen; 12,000 shares to Robert M. Carter;
and, 8,000 shares to Sheila Sloan. </FONT></P>

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<A NAME=A025></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Other Committees</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&#146;s Board also has operating field safety, finance and frontier exploration
committees. Messrs. Joseph E. Armstrong, Jeffrey R. Bailey, Bill L. Harbert and Richard T.
Williams comprised the field safety committee which met one time in Fiscal 2003. The
finance committee in 2003 was comprised of Messrs. Akos, Peter E. Salas, Stivers and
Williams. This committee met three (3) times in 2003 to discuss the Company&#146;s
financial condition and in particular, the problems arising from the Company&#146;s
lawsuit with its primary lender, Bank One, N.A. which has now been resolved. Messrs.
Bailey, Clendening and Williams comprised the frontier exploration committee which met
eight (8) times in Fiscal 2003 to discuss new areas of potential development for the
Company. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>
<!-- MARKER PAGE="sheet: 10; page: 10" -->




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<A NAME=A026></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial
Ownership</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth information, as of the Record Date with respect to the
beneficial ownership of the Company&#146;s common stock by the current
directors who are up for re-election, other director-nominees and executive officer of the Company and the
current directors up for re-election, the other director-nominees and executive officers of the Company as a group.<SUP>4</SUP> </FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="760">
<TR VALIGN=Bottom>
     <TH align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Name and Address</u></FONT></TH>
     <TH ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Title</u></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of Shares<BR>
<u>Beneficially Owned</u></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Percent<BR>
of Class</u></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="47%" ALIGN="LEFT">Clarke H. Bailey</TD>
     <TD WIDTH="21%" ALIGN="left">Director-&nbsp;</TD>
     <TD WIDTH="24%" ALIGN="CENTER">None&nbsp;</TD>
     <TD WIDTH="8%" ALIGN="RIGHT">0%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>1865 Palmer Avenue</TD>
     <TD ALIGN="left">Nominee&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Larchmont, NY 10538</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>John A. Clendening</TD>
     <TD ALIGN="left">Director&nbsp;</TD>
     <TD ALIGN="CENTER">100,000<SUP>5</SUP>&nbsp;</TD>
     <TD ALIGN=RIGHT>Less&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>1031 Saint Johns Drive</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Maryville, TN 37801</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Bill L. Harbert</TD>
     <TD ALIGN="left">Director&nbsp;</TD>
     <TD ALIGN="CENTER">1,513,496<SUP>6</SUP>&nbsp;</TD>
     <TD ALIGN=RIGHT>3.1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>820 Shaders Creek Pkwy.</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Birmingham, AL 35209</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Neal F. Harding</TD>
     <TD ALIGN="left">Director-&nbsp;</TD>
     <TD ALIGN="CENTER">792,109<SUP>7</SUP>&nbsp;</TD>
     <TD ALIGN=RIGHT>1.6%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>2509 Plantside Drive</TD>
     <TD ALIGN="left">Nominee&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Louisville, KY 40299</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Carlos P. Salas</TD>
     <TD ALIGN="left">Director-&nbsp;</TD>
     <TD ALIGN="CENTER">None&nbsp;</TD>
     <TD ALIGN=RIGHT>0%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>129 East 17th Street</TD>
     <TD ALIGN="left">Nominee&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10003</TD></TR>
</table>


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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>4</SUP>
Unless otherwise stated, all shares of common stock are directly held with sole voting and
dispositive power. The shares set forth in the table reflect shares issued in connection
with the Company&#146;s recently completed Rights Offering. </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;<SUP>5</SUP> Consists of shares held directly.</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>6</SUP> Consists of 1,428,942 shares held directly, 71,429 shares underlying 5,000 shares of the Company's Series A 8% Cumulative Convertible Preferred Stock held directly and an option to purchase 13,125 shares.
</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>7</SUP> Consists of 635,180 shares held directly, 156,929 shares underlying 10,985 shares of the Company's Series A 8% Cumulative Convertible Preferred Stock held directly.
</FONT></P>




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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11 </FONT></P>
<P STYLE="page-break-after:always">
</P>


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<HR SIZE=5 COLOR=GRAY NOSHADE>







<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="760">
<TR VALIGN=Bottom>
     <TH align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Name and Address</u></FONT></TH>
     <TH ALIGN="left"><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Title</u></FONT></TH>
     <TH ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number of Shares<BR>
<u>Beneficially Owned</u></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1><u>Percent<BR>
of Class</u></FONT></TH></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Peter E. Salas</TD>
     <TD ALIGN="left">Director&nbsp;</TD>
     <TD ALIGN="CENTER">16,540,140<SUP>8</SUP>&nbsp;</TD>
     <TD ALIGN=center>33.9%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>129 East 17th Street</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10003</TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="44%" ALIGN="LEFT">Richard T. Williams</TD>
     <TD WIDTH="28%" ALIGN="left">Director;</TD>
     <TD WIDTH="14%" ALIGN="CENTER">263,125<SUP>9</SUP></TD>
     <TD WIDTH="14%" ALIGN="LEFT">Less than 1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">4477 Deer Run Drive</TD>
     <TD ALIGN="left">Chief</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Louisville, TN</TD>
     <TD ALIGN="left">Executive Officer</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><br>Jeffrey R. Bailey</TD>
     <TD ALIGN="left">President</TD>
     <TD ALIGN="CENTER">149,412<SUP>10</SUP></TD>
     <TD ALIGN=LEFT>Less than 1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">2306 West Gallaher Ferry</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Knoxville, TN 37932</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><br>Robert M. Carter</TD>
     <TD ALIGN="left">President</TD>
     <TD ALIGN="CENTER">20,921<SUP>11</SUP></TD>
     <TD ALIGN=LEFT>Less than 1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">441 Glen Abbey Blvd.</TD>
     <TD ALIGN="left">Tengasco</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Knoxville, TN 37922</TD>
     <TD ALIGN="left">Pipeline Corporation</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><br>Mark A. Ruth</TD>
     <TD ALIGN="left">Chief</TD>
     <TD ALIGN="CENTER">69,287<SUP>12</SUP></TD>
     <TD ALIGN=LEFT>Less than 1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">9400 Hickory Knoll Lane</TD>
     <TD ALIGN="left">Financial</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Knoxville, TN 37931</TD>
     <TD ALIGN="left">Officer</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><br>Cary V. Sorensen</TD>
     <TD ALIGN="left">Vice-</TD>
     <TD ALIGN="CENTER">47,875<SUP>13</SUP></TD>
     <TD ALIGN=LEFT>Less than 1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">5517 Crestwood Drive</TD>
     <TD ALIGN="left">President; General</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Knoxville, TN 37919</TD>
     <TD ALIGN="left">Counsel; Secretary</TD></TR>
</table>


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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>8</SUP>  Consists of 168,000 shares held directly, 16,244,452 shares held directly by Dolphin Offshore Partners, L.P. ("Dolphin") of which Peter E. Salas is the  controlling person; a warrant
 held by Dolphin to purchase 10,500 shares; and, 117,188 shares underlying 9,000 shares
 of the Company's Series B 8% Cumulative Convertible Preferred Stock held by Dolphin which is convertible into the Company's Common Stock.</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>9</SUP> Consists of 250,000 shares held directly and options to purchase 13,125 shares.</font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>10</SUP> Consists of 76,287 shares held directly and an option to purchase 73,125 shares.</font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>11</SUP> Consists of 7,796 shares held directly and options to purchase 13,125 shares.</font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>12</SUP> Consists of 100 shares held directly and options to purchase 69,187shares.</font></p>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>13</SUP> Consists of shares underlying options.</font></p>














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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>


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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="760">
<TR VALIGN=Bottom>
     <TH ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><br>Sheila F. Sloan</TD>
     <TD ALIGN="left">Treasurer</TD>
     <TD ALIGN="CENTER">6,037<SUP>14</SUP></TD>
     <TD ALIGN="LEFT">Less than 1%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">121 Oostanali Way</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Loudon, TN 37774</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><br>All Officers, Directors</TD>
     <TD ALIGN="CENTER"></TD>
     <TD ALIGN="CENTER">19,502,409<SUP>15</SUP>&nbsp;</TD>
     <TD ALIGN=LEFT>39.6</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">and Director-Nominees as a group</TD></TR>
</TABLE>







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<A NAME=A028></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; Changes in Control</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as indicated below, to the knowledge of the Company&#146;s management, there are no
present arrangements or pledges of the Company&#146;s securities which may result in a
change in control of the Company. </FONT></P>

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<A NAME=A029></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Background of Directors</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following is a brief account of the experience, for at least the past five (5) years, of
each nominee for director. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clarke
H. Bailey is 50 years old. He is currently Chairman of the Board and Chief Executive Officer of Glenayre Technologies, Inc. (NasdaqNM:GEMS), a company engaged in the
development and sale of software and equipment in the wireless communications industry. He has been a director of Glenayre since December 1990, Chairman since October 1999, and CEO
since October 2003. From January 1999 to March 2002 he was Chairman and CEO of ShipXact.com, Inc. From February 1995 to January 1998 he was Chairman and CEO of United
Acquisition Company and its parent, United Gas Holding Corporation until their acquisition by Iron Mountain Incorporated (NYSE:IRM), a records and information management services
company, in 1998. He has served on the Board of Directors of Iron Mountain since January 1998. He also served as Chairman of Arcus, Inc. from July 1995 to January 1998, and
Co-Chairman of Highgate Capital L.L.C. from February 1995 to March 2002. He holds a Bachelor&#146;s degree in Economics and a Bachelor&#146;s degree in Rhetoric from the
University of California, Davis and a Master of Business Administration degree from The Wharton School, University of Pennsylvania. </FONT></P>

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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>14</SUP>Consists of 2,100 shares held directly and options to purchase 3,937 shares. </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>15</SUP>Consists of shares held directly and indirectly by management, shares held by Dolphin, 233,499
 shares underlying options, 10,500 shares underlying warrants and 345,546 shares underlying convertible preferred stock. </font></p>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 13; page: 13" -->













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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Dr. John A. Clendening is 72 years old. He received B.S. (1958), M.S. (1960) and Ph.
          D. (1970) degrees in geology from West Virginia University. He was employed as a  Palynologist-Coal Geologist at the West Virginia Geological Survey from 1960
          until 1968. He joined Amoco in 1968 and remained with Amoco as a senior geological associate until 1972. Dr. Clendening has served as President and
          other offices of the American Association of Stratigraphic Palynologists and the Society of Organic Petrologists. From 1992 to 1998 he was engaged in
          association with Laird Exploration Co., Inc. of Houston, Texas, directing exploration and production in south central Kentucky. In 1999 he purchased all
          the assets of Laird Exploration in south central Kentucky and operates independently. While with Amoco Dr. Clendening was instrumental in Amoco&#146;s
          acquisition in the early 1970&#145;s of large land acreage holdings in Northeast Tennessee, based upon his geological studies and recommendations. His work led
          directly to the discovery of what is now the Company&#146;s Paul Reed # 1 well. He further recognized the area to have significant oil and gas potential and is
          credited with discovery of the field which is now known as the Company&#146;s Swan Creek Field. Dr. Clendening previously served as a director of the Company
          from September 1998 to August 2000. He was again elected to the Board of Directors of the Company on February 28, 2003.</FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bill L. Harbert is 80 years old. He earned a B.S. degree in civil engineering from Auburn
University in 1948. In 1949 he was one of the founders of Harbert Construction Company. He managed that company&#146;s construction operations, both domestic and foreign, and served
as its Executive Vice-President until 1979. From 1979 until July, 1990 he served as President and Chief Operating Officer and from July 1990 through December 1991 he served
as Vice Chairman of the Board of Harbert International, Inc. He then purchased a majority of the international operations of Harbert International, Inc. and formed Bill Harbert
International Construction, Inc. He served as Chairman and Chief Executive Officer of that corporation until retiring from the company in 2000. Mr. Harbert&#146;s companies built
pipeline projects in the United States and throughout the world. They also built many other projects including bridges, commercial buildings, waste water treatment plants,
airports, including an air base in Negev, Israel and embassies for the United States government in, among other places, Tel Aviv, Hong Kong, and Baku. Mr. Harbert has also
served as president (1979) and Director (1980) of the Pipe Line Contractors Association, USA and for seven years as Director, Second Vice-President and First Vice-President
(2001-2002) of the International Pipe Line Contractors Association. Mr. Harbert has been active in service to a variety of business associations, charities and the arts in the
Birmingham area for many years. He was elected to the Board of Directors of the Company on April 2, 2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neal F. Harding is 62 years old. He received a Bachelors of Science degree in Social Sciences
from Campbellsville University in 1964. He is the Chairman and Chief Executive Officer of the Heritage Companies based in Cocoa Beach, Florida which are</font></p>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>
<!-- MARKER PAGE="sheet: 14; page: 14" -->












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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> three management companies
specializing in the development, construction, and management of more than 6,000 single and multi-family affordable housing units. Mr. Harding through various partnerships,
currently owns in excess of 16,000 affordable housing units throughout the country. He is the owner of R.M.D. Corp., the largest franchisee of Hooters restaurants. He is also the
majority shareholder of World Wide Wings, a Hooters franchisee which owns and manages six international units located in Canada and England. Mr. Harding is also the majority
shareholder in F &amp; H Development Company, which owns and operates a semi-public PGA-designed 18-hole golf course in Sikeston, Missouri. Additionally, Mr. Harding is the
sole shareholder of Harding Construction Services, Inc., a real estate company specializing in the acquisition and development of commercial and residential properties.
Mr. Harding is the exclusive franchisee of Qdoba Mexican Grill Restaurants in south Florida. Mr. Harding previously served as a director of the Company from August 31, 1999
to August 7, 2000. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Carlos P. Salas is 33 years old. He is a principal of Dolphin Advisors, L.L.C., which manages a
private-equity investment fund focused on middle-market opportunities. Before joining Dolphin Advisors, Mr. Salas led an investor group in the acquisition of a private engineering and manufacturing firm in 2001, and joined the company to lead a financial and operating restructuring as
CFO in 2002. Previously, Mr. Salas led corporate finance and mergers and acquisitions advisory assignments for middle-market clients as an investment banker with the Los
Angeles office of Donaldson, Lufkin &amp; Jenrette (&#147;DLJ&#148;), and when DLJ was acquired by Credit Suisse First Boston Corporation (&#147;CSFB&#148;), joined CSFB&#146;s
mergers and acquisitions group. Prior to joining DLJ in 1999, Mr. Salas practiced law with Cleary, Gottlieb, Steen &amp; Hamilton in New York, advising financial sponsors and
corporate clients in connection with financings and cross-border mergers and acquisitions transactions. Mr. Salas received his J.D. from The University of Chicago in 1996, and his
B.A. in Philosophy from New York University in 1992. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peter E. Salas is 49 years old. He has been President of Dolphin Asset Management Corp. and its
related companies since he founded it in 1988. Prior to establishing Dolphin, he was with J.P. Morgan Investment Management, Inc. for ten years, becoming Co-manager, Small Company
Fund and Director-Small Cap Research. He received an A.B. degree in Economics from Harvard in 1976. Mr. Salas was elected to the Board of Directors on October 8, 2002. </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;Dr.&nbsp;Richard T. Williams is 53 years old, and has been involved in geologic studies
          in the Appalachian Overthrust region for more than 25 years. He received a B.S.degree in Mathematics and Physics from Eastern Kentucky University in 1973. He
          earned his M.S. (1976) and Ph.D. (1979) degrees in Geophysics from Virginia Polytechnic Institute in 1979 for work done in Antarctica. He was a member of
          the Geology faculty at West</font></p>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER PAGE="sheet: 15; page: 15" -->





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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Virginia University from 1979 through 1982, where he worked on gas production from Devonian shales for the US Department of Energy.
          He was a member of the Geology faculty at the University of South Carolina from 1983 through 1986, and has been a member of the Earth and Planetary Science
          faculty at The University of Tennessee since 1987. In the central and southern Appalachian region he has used reflection seismology, gravity and magnetic
          methods to produce images of subsurface geologic structures from Ohio and Pennsylvania to Alabama and Georgia. He is registered as a Professional
          Geologist in Tennessee. He was elected to the Board of Directors of the Company in June 2002, and was elected Chief Executive Officer of the Company in February
          2003. </FONT></P>

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<A NAME=A030></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section 16(a) Beneficial Ownership Reporting Compliance</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2003, Peter E. Salas, a director of the Company, failed to timely file one Form 4
Report involving one transaction. Charles M. Stivers, a director of the Company, and Robert M. Carter, President of the Company&#146;s wholly owned subsidiary, Tengasco
Pipeline Corporation, each filed a Form 5 Report which indicated they each failed to file one Form 4 Report for fiscal 2003 involving six transactions and one transaction,
respectively. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2003, Malcolm E. Ratliff, the Company&#146;s former Chief Executive Officer and Chairman,
owned more than 10% of the Company&#146;s outstanding stock. During 2003, it is believed that Mr. Ratliff entered into transactions with respect to the acquisition and/or
disposition of the Company&#146;s stock that he owned or controlled directly or indirectly. However, the Company is not aware of the exact nature of these transactions
since Mr. Ratliff, to the Company&#146;s knowledge, neither filed any reports on Form 4 or Form 5 disclosing these transactions, nor communicated the nature or extent of such
transactions to the Company. Thus, the Company is not able to specify the number of Forms 4 and 5 that Mr. Ratliff failed to file, timely or otherwise, or the number of
transactions not reported. </FONT></P>

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<A NAME=A031></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Family and Other Relationships</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no family relationships between any of the present directors or executive officers of
the Company except that director-nominee Carlos P. Salas is the second cousin of Peter E.Salas, a director of the Company who is running for re-election. Mr. Carlos P. Salas is
also one of seven members of Dolphin Advisors, LLC which serves as the managing general partner of Dolphin Direct Equity Partners, L.P., a private company investment fund that is
not a shareholder of the Company. The majority owner of Dolphin Advisors, LLC is Dolphin Management, Inc, the sole shareholder of which is Peter E. Salas. Dolphin Management, Inc.
is also the managing partner of Dolphin Offshore Partners, L.P. which directly owns 16,244,452 shares of the Company&#146;s common stock.</font></p>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;Peter E. Salas is the controlling person of Dolphin Offshore Partners, L.P. Although Carols P. Salas has no direct or indirect ownership interest in Dolphin Offshore Partners, L.P., he
nonetheless may be deemed an affiliate of Dolphin Offshore Partners, L.P. and Peter E.Salas. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no family or other relationship between director-nominee Clarke H. Bailey and Jeffrey
R. Bailey, the President and a director of the Company who is not running for re-election. Mr. Clarke H. Bailey owns an approximately 1.5% investment interest in Dolphin Offshore
Partners, L.P. and in Dolphin Direct Equity Partners, L.P. Management believes that Mr. Bailey is not an affiliate of either of these entities as a result of his minor investment
in those companies. </FONT></P>

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<A NAME=A032></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Involvement in Certain Legal Proceedings</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the knowledge of management, during the past five years, no present or former director,
executive officer, affiliate or person nominated to become a director or an executive officer of the Company: </FONT></P>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;

           Filed a petition under the federal bankruptcy laws or any state insolvency law,
          nor had a receiver, fiscal agent or similar officer appointed by a court for the
          business or property of such person, or any partnership in which he or she was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he or she was an
executive officer at or within two years before the time of such filing;</FONT></TD>
</TR>
</TABLE>
<BR>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;

           Was convicted in a criminal proceeding or named the subject of a pending
          criminal proceeding (excluding traffic violations and other minor offenses); </FONT></TD>
          </TR>
          </TABLE>
          <BR>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;

           Was the subject of any order, judgment or decree, not subsequently reversed,
          suspended or vacated, of any court of competent jurisdiction, permanently or
          temporarily enjoining him or her from or otherwise limiting his or her
          involvement in any type of business, commodities, securities or banking
          activities; </FONT></TD>
          </TR>
          </TABLE>
          <BR>

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     <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
          <TR VALIGN=TOP>
          <TD ALIGN=RIGHT WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
          <TD ALIGN=LEFT WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;

           Was found by a court of competent jurisdiction in a civil action or by the SEC
          or the Commodity Futures Trading Commission (&#147;CFTC&#148;) to have violated
          any federal or state securities law or Federal commodities law, and the judgment
          in such civil action or finding by the SEC or CFTC has not been subsequently
          reversed, suspended, or vacated. </FONT></TD>
          </TR>
          </TABLE>




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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

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<A NAME=A033></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Code
of Ethics</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors has adopted a Code of Ethics that applies to the
Company&#146;s Chief Executive Officer, financial officers and executive officers,
including its President and Chief Financial Officer. A copy of this Code of Ethics can be
found at the Company&#146;s internet website at www.Tengasco.com. The Company intends to
disclose any amendments to its Code of Ethics, and any waiver from a provision of the Code
of Ethics granted to the Company&#146;s Chief Executive Officer, President, Chief
Financial Officer, or persons performing similar functions, on the Company&#146;s Internet
website within five business days following such amendment or waiver. </FONT></P>

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<A NAME=A034></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholder
Communications with the Board of Directors</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders
may communicate with the Board of Directors of the Company by writing to: Cary V.
Sorensen, Secretary, Tengasco, Inc., 603 Main Avenue, Knoxville, TN 37902 or by e-mail:
to: <U>CSorensen@tengasco.com</U> Subject: Communication to Board of Directors. All
letters and e-mails will be answered, if possible, and will be distributed to board
members as appropriate. Notwithstanding the foregoing, the Company has the authority to
discard or disregard any communication which is unduly hostile, threatening, illegal or
otherwise inappropriate or to take any other appropriate actions with respect to such
communications. </FONT></P>








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<A NAME=A035></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXECUTIVE COMPENSATION </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 following table sets forth a summary of all compensation awarded to, earned or paid to,
the Company&#146;s Chief Executive Officer during fiscal years ended December 31, 2003, December 31, 2002 and December 31, 2001. None of the Company&#146;s other executive
officers earned compensation in excess of $100,000 per annum for services rendered to the Company in any capacity during those periods. </FONT></P>





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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 18; page: 18" -->



<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Default" -->
<A NAME=A036></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Summary Compensation
Table </FONT></H1>

<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR align=center VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH>
     <TH></TH>
     <TH>-----------Long Term Awards---&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br>-------Awards-------Payouts</TH></TR>
<TR VALIGN="TOP">
     <TD align=center><b>Annual Compensation</b>   </TD>

</TR>
</TABLE>




<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="1" WIDTH="760">
<TR VALIGN=Bottom>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Name and<BR>Principal Position                 </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Year                                           </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Salary ($)                                     </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Bonus ($)                                      </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Other<BR>Annual<BR>Compensation($)             </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Restricted<BR>Stock<BR>Awards($)               </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Securities<BR>Underlying<BR>Options<BR>/SARs(#)</FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">Payouts                                        </FONT></TH>
     <TH><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="1">All Other<BR>Compensation                      </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>Richard T. Williams,<br>Chief Executive Officer</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>2003</FONT></TD>
     <TD WIDTH="11%" ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$80,000&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$-0-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$&nbsp;&nbsp;&nbsp;-0-&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>60,000</FONT></TD>
     <TD WIDTH="6%" ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD>
     <TD WIDTH="3%" ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>Malcolm E. Ratliff,<br>Chief Executive Officer<sup>16</sup></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>2002</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$80,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$-0-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$1,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE="2">&nbsp;52,500<SUP>17</SUP> </FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>2001</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$80,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$-0-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>$1,000&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN="center"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>52,500</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Arial, Helvetica, Sans-Serif" SIZE=2>-0-</FONT></TD></TR>
<TR>
     <TD ALIGN="LEFT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD></TR>
</TABLE><br>











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<A NAME=A037></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OPTION GRANTS IN LAST
FISCAL YEAR </FONT></H1>



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<A NAME=A038></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Individualized Grants  </FONT></H1>





<TABLE WIDTH="100%" BORDER="1" CELLPADDING="0" CELLSPACING="0">

<TR VALIGN="TOP" BGCOLOR="#808080">
     <Th>Name  </Th>
     <Th> Number of<br>Securities <br> Underlying <br> Options/SARS<br>Granted (#)</Th>
     <Th>Percent of Total<br>Options/SARs<br>Granted to<br>Employees in <br>Fiscal 2003 </Th>
     <Th> Exercise <br>or Base<br>Price<br>($/Sh) </Th>
     <Th>Expiration<br>Date </Th></TR>
<TR VALIGN="TOP">
     <TD>Richard T. Williams     </TD>

     <TD align=center>60,000 </TD>
     <TD align=center>13.8% </TD>
     <TD align=center>$0.50  </TD>
     <TD align=center>05/06/06</TD></TR>
</TABLE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of the Company&#146;s other executive officers earned compensation in excess of $100,000
per annum for services rendered to the Company in any capacity during the fiscal year ended December 31, 2003. </FONT></P>


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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP>16</SUP> Malcolm E. Ratliff served as the Company&#146;s Chief Executive Officer throughout 2002.
Richard T. Williams, the Company&#146;s current Chief Executive Officer replaced Mr.Ratliff on February 3, 2003. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sub>17</sub> Number of shares underlying options has been retroactively adjusted for a 5% stock
dividend declared by the Company as of September 4, 2001. </FONT></P>














<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 19; page: 19" -->






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<A NAME=A039></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aggregate Option Exercises For Fiscal 2003 and Year End Option Values</b></FONT></P>


<TABLE WIDTH="100%" BORDER="1" CELLPADDING="0" CELLSPACING="0">

<TR VALIGN="TOP" BGCOLOR="#808080">
     <Th>Name  </Th>
     <Th> Shares Acquired<br>on Exercise</Th>
     <Th>Value ($)<br>Realized<sup>19</sup> </Th>
     <Th>Number of Securties<br>Underlying Unexcerised<br>Options/SARS at<br>December 31, 2003<br><br>Exercisable/Unexercisable </Th>

     <Th>Value <sub>18</sub> of Unexercised<br>In-the-Money<br>Options/SARs at<br>December 31, 2003<br><br>Exercisable/Unexercisable </Th></TR>
<TR VALIGN="TOP">
     <TD>Richard T. Williams     </TD>
     <TD align=Center>10000 </TD>
     <TD align=Center>$7,000 </TD>
     <TD align=Center>50,000/-0-  </TD>
     <TD align=Center>$12,500/-0-</TD></TR>
</TABLE><br>







<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of the Company&#146;s other executive officers in Fiscal 2003 earned compensation in excess of $100,000 per annum for
services rendered to the Company in any capacity. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company adopted an employee health insurance plan in August 2001. The Company does not
presently have a pension or similar plan for its directors, executive officers or employees. In April 2004, the Company obtained directors and officers liability insurance
to fund the Company&#146;s indemnity obligations to persons serving as directors and officers. </FONT></P>

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<A NAME=A043></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repricing Of Options In Fiscal 2003</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;The Company did not adjust or amend the exercise price of any options previously granted to any of its Directors or Executive Officers during Fiscal 2003. </FONT></P>


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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>


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<TABLE  WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR  VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<SUP>18</SUP>
Unexercised options are in-the-money if the fair market value of the underlying securities exceeds the exercise price of the option. The fair market value of the common stock was
$0.75 per share on December 31, 2003, as reported by The American Stock Exchange. The exercise price of the unexercised option granted to Richard T. Williams, the Chief
Executive Officer of the Company, in 2003 was $0.50. Prior to his becoming Chief Executive Officer of the Company. Dr. Williams on August 5, 2002 was granted an option to purchase
13,125 shares of the Company&#146;s common stock at a price of $2.69 per shares. That option expires on August 4, 2005. Since the exercise price of shares underlying that
option had a negative value as of December 31, 2003 they are not included in this chart.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<SUP>19</SUP>
Value realized in dollars is based upon the difference between the fair market value of the underlying securities on the date of exercise, and the exercise price of the option.
On June 18, 2003, Dr. Williams exercised his option to the extent of purchasing 10,000 shares of the Company&#146;s common stock at $0.50 per share. The closing price of the
Company&#146;s common stock on June 18, 2003 as reported on the American Stock Exchange was $1.20 per share.</FONT></TD>
</TR>
</TABLE>
<BR>




<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>






<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<A NAME=A044></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation of Directors</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors has resolved to compensate members of the Board of Directors for
attendance at meetings at the rate of $250 per day, together with direct out-of-pocket expenses incurred in attendance at the meetings, including travel. The Directors, however,
have waived such fees due to them as of this date for prior meetings. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Members of the Board of Directors may also be requested to perform consulting or other
professional services for the Company from time to time. The Board of Directors has reserved to itself the right to review all directors&#146; claims for compensation on an
ad hoc basis. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors who are on the Company&#146;s Audit, Compensation and Stock Option Committees (as will be
the members of the Nominating Committee to be formed in 2004) are independent and therefore, do not receive any consulting, advisory or compensatory fees from the Company.
However, such Board members may receive fees from the Company for their services on those committees. The Company intends to implement a plan for the payment of those committee
members for their services on an annual basis. </FONT></P>

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<A NAME=A045></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employment Contracts</b></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 Company has entered into an employment contract with its Chief Executive Officer, Richard
T. Williams, for a period of two years through December 31, 2004 at an annual salary of $80,000. There are presently no other employment contracts relating to any member of management. However,
depending upon the Company&#146;s operations and requirements, the Company may offer long
term contracts to directors, executive officers or key employees in the future. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A047></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTAIN TRANSACTIONS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<A NAME=A048></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transactions
with Management and Others</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;Except
as set forth hereafter, there have been no material transactions, series of similar
transactions or currently proposed transactions during 2003, to which the Company or any
of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000
and in which any director or executive officer or any security holder who is known to the
Company to own of record or beneficially more than 5% of the Company&#146;s common stock,
or any member of the immediate family of any of the foregoing persons, had a material
interest. </FONT></P>





<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 20; page: 20" -->






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors has not adopted any general policy with respect to these
transactions, many of which were effected on behalf of the Company by senior management
prior to consideration of the transaction by the Board of Directors in light of senior
management&#146;s perceived urgency of the funding requirements, the availability of
alternative sources and the terms of such transactions, which senior management viewed as
at least as favorable to the Company as could have been obtained through arms-length
negotiations with unaffiliated third parties. In each of the loans to the Company by
Dolphin Offshore Partners, L.P. (&#147;Dolphin), which owns more than ten percent of the
Company&#146;s outstanding common stock and whose controlling person, Peter E. Salas, is a
director of the Company and up for re-election, Mr. Salas negotiated on behalf of Dolphin
with senior management of the Company as to the terms thereof and did not participate in
any Board action with respect thereto. </FONT></P>

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<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, who at the time owned more than ten percent of the
Company&#146;s outstanding common stock and was a director of the Company and is now up
for re-election, 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. The market price of
the Company&#146;s common stock as measured by the closing price on the American Stock
Exchange on January 7, 2003, the date of the transaction, was $1.20 per share. Management
believes that this sale was made on terms at least as favorable to the Company as could
have been obtained through arms-length negotiations with unaffiliated third parties. </FONT></P>

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<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 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 was 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 due on January 4, 2004.
The obligations under these loans were secured by an undivided 10% interest in the
Company&#146;s Tennessee and Kansas pipelines. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May 20, 2003, Dolphin loaned the Company the sum of $750,000 and Jeffrey R. Bailey, the
President and a Director of the Company, loaned the Company $84,000, which aggregate
amount of $834,000 was used to pay the principal and interest due to Bank One for June
2003 and for working capital. These loans were evidenced by separate promissory notes
bearing interest at the rate of 12% per annum, with payments of interest only payable
quarterly and the principal balance due on January 4, 2004. The obligations under the
loans were secured by an undivided 30% and 3.36% interest, respectively, in the
Company&#146;s Tennessee and Kansas pipelines. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August&nbsp;6, 2003, Dolphin loaned the Company the sum of $150,000, which was</font></p>







<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 21; page: 21" -->












<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>used for
working capital. This loan was evidenced by a separate promissory note bearing interest at
the rate of 12% per annum, with payments of interest only payable quarterly and the
principal balance due on January&nbsp;4, 2004. The obligations under the loan were secured
by an undivided 6% interest in the Company&#146;s Tennessee and Kansas pipelines. </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;From
December 2002 through December 9, 2003, Dolphin had acquired a total of an 85% undivided
interest in the Company&#146;s Tennessee and Kansas pipelines as collateral for the series
of seven loans it had made to the Company. In the first five of these transactions, Peter
E. Salas, a Director and the controlling person of Dolphin, negotiated
the terms of the loans directly with management, which terms were approved by management
in view of the Company&#146;s immediate needs, financial condition and prospective
alternatives and under circumstances in which Dolphin was not generally engaged in the
business of lending money. These loans were made on terms that management believes were at
least as favorable to the Company as it could have obtained through arms-length
negotiations with unaffiliated third parties. The Company&#146;s Board approved the sixth
and seventh loans on December 3 and 9, 2003, in the amounts of $225,000 and $250,000,
respectively, with no participation by Mr. Salas in the meeting or the vote, which was
unanimous by the seven other Directors present at the meeting. In addition, the Company
had entered into a continuing security agreement, which was approved by the Board with no
participation by Mr.&nbsp;Salas in the meeting or vote, which was unanimous by the seven
other Directors present at the meeting, providing the terms of Dolphin&#146;s security
interest collateralizing all of its loans. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 24, 2003, Dolphin loaned the Company the sum of $1,000,000 which was used for
working capital and to pay all interest and principal in full of the 1998 convertible loan
to the Company refereed to as the Lutheran note then being held by several persons. This
loan is evidenced by a separate promissory note bearing interest at the rate of 12% per
annum, with payments of interest only payable quarterly and the principal balance payable
on April&nbsp;4, 2004. The obligations under the loan are secured by an undivided interest in the
Company&#146;s Tennessee and Kansas pipelines and the security agreement referred to
above. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February 2, 2004, Dolphin loaned the Company the sum of $225,000 which was used for making
payment of principal and interest to Bank One for February, 2004. This loan was evidenced
by a separate promissory note bearing interest at the rate of 12% per annum, with payments
of interest only payable quarterly and the principal balance payable on April&nbsp;4,
2004. The obligations under the loan were secured by an undivided interest in the
Company&#146;s Tennessee and Kansas pipelines and the security agreement referred to
above. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the series of loans made by Dolphin to the Company were repaid by the Company from
proceeds it received in March 2004 from the Rights Offering made by the Company. See, the
discussion below of the Rights Offering. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
April&nbsp;1 through June 30, 2003, the Company issued 10,363 shares of its common stock
to holders of the Company&#146;s Series A 8% Cumulative Convertible Preferred Stock in
lieu of cash quarterly interest payments due to those holders, with such shares valued at
the market price thereof. Also during that period, certain members of the Company&#146;s
Board of Directors exercised options granted to them pursuant to the Tengasco, Inc. Stock
Incentive Plan and purchased the following number of shares of the Company&#146;s common
stock at the exercise price of $0.50 per share. Richard&nbsp;T. Williams &#150; 10,000
shares, Bill&nbsp;L. Harbert &#150; 24,000 shares and John&nbsp;A. Clendening &#150;
24,000 shares. </FONT></P>

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<A NAME=A049></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Rights Offering</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 17, 2003, the Company filed a Registration Statement on Form S-1 with the SEC for
a rights offering of the Company&#146;s common stock (the &#147;Rights Offering&#148;). On
December 29, 2003; February 11, 2004; and, February 13, 2004, the Company filed amendments
to the Registration Statement. On February 13, 2004, the SEC deemed effective the
Registration Statement on Form S-1 as amended. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Rights Offering was a distribution to the holders of the Company&#146;s common stock
outstanding at the record date, February 27, 2004, at no charge, of nontransferable
subscription rights at the rate of one right to purchase three shares of the
Company&#146;s common stock for each share of common stock owned at the subscription price
of $0.75 in the aggregate, or $0.25 per each share purchased. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
record date for the Rights Offering was set as of February&nbsp;27, 2004. The offering
expired at 5:00 p.m., New York City time, on March&nbsp;18, 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
subscription right in addition to the right to purchase three shares of common stock
carried with it an over-subscription privilege. The over-subscription privilege provided
stockholders that exercise all of their basic subscription privileges with the opportunity to purchase those shares
that were not purchased by other stockholders through the exercise of their basic
subscription privileges at the same subscription price per share. In no event could any
subscriber purchase shares of the Company&#146;s common stock in the offering that, when
aggregated with all of the shares of the Company&#146;s common stock otherwise owned by
the subscriber and his, her or its affiliates, would immediately following the closing
represent more than 50% of the Company&#146;s issued and outstanding shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
net proceeds of the Rights Offering were initially used to pay non-bank indebtedness in
the aggregate amount of up to approximately $6 million (including to satisfy all of the
Company&#146;s outstanding loans to Dolphin in the principal amount of $3,850,000 plus
accrued interest) the balance of the net proceeds were used to repay bank indebtedness and
for working capital purposes, including the drilling of additional wells. </FONT></P>




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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 23; page: 23" -->






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the time the Rights Offering closed on March 18, 2004 all 36.3 million shares offered had
been subscribed for and, as a result the Company raised approximately $9.1 million. The
total number of shares subscribed for actually exceeded the 36.3 million shares available
for issuance under the offering. Consequently, all shares subscribed for under the basic
privilege were issued and the number of shares issued under the over- subscription
privilege was proportionately reduced to equal the number of remaining shares. The
allocation and issuance of the oversubscribed shares was made by Mellon Human Resources
&amp; Investor Solutions, the Company&#146;s subscription agent who also returned payments
for those oversubscribed shares that were not available. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Rights Offering, 7,029,604 rights were exercised pursuant to the basic subscription
privilege, resulting in the purchase of 21,088,812 shares at $0.25 per share for gross
proceeds to the Company of $5,272,203. A total of 15,211,188 shares were purchased
pursuant to the oversubscription privilege, resulting in additional gross proceeds to the
Company of $3,802,797. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the number of shares of common stock purchased in connection
with the Rights Offering by the Company&#146;s directors, officers and owners of more than
ten percent of the Company&#146;s outstanding common stock. </FONT></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Name</FONT></TH>
     <TH align=left><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Position</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Purchased</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=44% ALIGN=LEFT>Stephen W. Akos</TD>
     <TD WIDTH=44% ALIGN=LEFT>Director</TD>
     <TD WIDTH=12% ALIGN=RIGHT>48,868&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Jeffrey R. Bailey</TD>
     <TD ALIGN=LEFT>Director; President</TD>
     <TD ALIGN=RIGHT>66,287&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Robert L. Devereux</TD>
     <TD ALIGN=LEFT>Director<sup>20</sup></TD>
     <TD ALIGN=RIGHT>412,45720</TD></TR>


<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Richard T. Williams</TD>
     <TD ALIGN=left>Director&nbsp;; Chief Executive Officer</TD>
     <TD ALIGN=RIGHT>190,000</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Dolphin Offshore Partners,</TD>
     <TD ALIGN=LEFT></TD>
<TD ALIGN=RIGHT>14,248,732<sup>22</sup></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>L.P.&nbsp;&nbsp;&nbsp;<sup>21</sup></TD>
     <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT></TD></TR></TABLE><br>








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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>



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

<TD>&nbsp;</TD>
<TD WIDTH=100%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>

<SUP>20</SUP>&nbsp;Consists of 352,012 shares purchased directly with his spouse and 60,445 shares purchased by a limited liability company. The shares purchased by the limited liability company have been adjusted to reflect
                                                                                        Mr. Devereux's beneficial ownership interest in the shares purchased by the limited liability company. </FONT></TD>

</TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<SUP>21</SUP>
Peter E. Salas, a director of the Company who is up for re-election, is the controlling person of Dolphin Offshore Partners, L.P. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>&nbsp;</TD>
<TD WIDTH=100%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&nbsp;<sup>22</SUP>
Consists of 14,104,732 shares purchased directly by Dolphin Offshore Partners, L.P. and
144,000 shares purchased by Peter E. Salas.</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>



<!-- MARKER PAGE="sheet: 23; page: 23" -->

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<A NAME=A050></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indebtedness
of Management</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
officer, director or security holder known to the Company to own of record or beneficially
more than 5% of the Company&#146;s common stock or any member of the immediate family of
any of the foregoing persons is indebted to the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 3 Left-TNR" FSL="Project" -->
<A NAME=A051></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
of the Issuer</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company does not have a parent. </FONT></P>

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<A NAME=A052></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PERFORMANCE GRAPH </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;The
graph below compares the cumulative total stockholder return on the Company&#146;s common
stock with the cumulative total stockholder return of (1) the American Stock Exchange
Index and (2) the Standard Industrial Code Index for the Crude Petroleum and Natural Gas
Industry based on 187 different companies, assuming an investment in each of $100 on
December 21, 1999, the date on which the Company&#146;s Common Stock began trading on the
American Stock Exchange. </FONT></P>




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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>

 </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>12/21/99</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>12/31/99</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>3/31/00</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>6/30/00</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>9/30/00</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>12/31/00</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>3/31/01</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>6/30/01</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>9/30/01</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=17% ALIGN=LEFT>TENGASCO INCORP</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>100.00</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>89.47</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>73.16</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>76.84</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>74.22</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>105.26</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>96.42</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>113.43</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>80.50</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>SIC CODE INDEX</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>100.00</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>100.00</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>105.59</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>119.93</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>120.59</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>125.71</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>119.75</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>122.56</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>110.78</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>AMEX MARKET IND</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>100.00</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>100.00</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>111.37</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>103.29</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>105.87</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>95.75</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>93.35</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>100.03</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>78.98</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE><BR><BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=2><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>12/31/01</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>3/31/02</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>6/30/02</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>9/30/02</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>12/31/02 </FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>3/31/03 </FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>6/30/03 </FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>9/30/03</FONT></TH>
     <TH COLSPAN=2><FONT SIZE=1>12/31/03 </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=17% ALIGN=LEFT>TENGASCO INCORP</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>73.24</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>52.10</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>24.77</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>25.65</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>9.73</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>8.85</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>8.85</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>7.43</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>6.6</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>SIC CODE INDEX</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>116.02</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>130.15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>132.45</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>116.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>125.40</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>121.58</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>148.57</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>154.32</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>200.20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>AMEX MARKET IND</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>91.46</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>92.67</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>92.15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>85.79</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>87.81</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>88.49</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>102.66</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>106.03</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>119.52</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>






<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>BOARD RECOMMENDATION AND
VOTE REQUIRED</b> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
Proposal No. 1 regarding the election of directors, votes may be cast in favor of all
nominees, may be withheld with regard to all nominees or may be withheld only with regard
to nominees specified by the stockholder. Directors will be elected by a plurality of the
votes of the shares of the Company&#146;s common stock present in person or represented by
proxy, and entitled to vote on the election of directors at a meeting at which a quorum is
present. Abstentions are tabulated in determining the votes present at a meeting.
Consequently, an abstention has the same effect as a vote against a director-nominee, as
each abstention would be one less vote in favor of a director nominee. The Board of
Directors recommends that stockholders vote &#147;FOR&#148; the nominees set forth above.
Unless marked to the contrary, proxies received will be voted FOR the nominees set forth
above. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER PAGE="sheet: 25; page: 25" -->















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<A NAME=A053></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROPOSAL NO. 2 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A054></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>APPROVAL OF AMENDMENT
TO COMPANY&#146;S CHARTER <BR>TO INCREASE THE NUMBER OF SHARES<br>OF AUTHORIZED COMMON
STOCK  </FONT></H1>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A056></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Charter presently authorizes the issuance of 50,000,000 shares of common
stock. As of June 28, 2004, the Company had 48,677,828 shares of common stock outstanding.
On that date, there were also 342,028 shares of common stock subject to outstanding
options and warrants and 1,134,629 shares subject to conversion of outstanding preferred
stock. As a result, the aggregate number of shares issued and reserved for future issuance
currently approaches, and may exceed, the maximum number of shares the Company is
authorized to issue under its Charter. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has adopted a resolution unanimously approving and recommending to the
Company&#146;s stockholders for their approval an amendment to the Company&#146;s Charter
to provide for an increase of the number of shares of common stock that the Company is
authorized to issue from 50,000,000 to 100,000,000. The text of the proposed amendment to
the Company&#146;s Charter is attached as Appendix B to this proxy statement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the proposal to amend the Charter is approved by the stockholders of the Company, the
additional shares of common stock authorized would be part of the existing class of common
stock and, if and when issued, would have the same rights and privileges as the shares of
common stock currently issued and outstanding. </FONT></P>

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<A NAME=A057></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DESCRIPTION OF COMMON
STOCK </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s common stock is a typical and customary form of common stock and is
publicly traded on the American Stock Exchange under the symbol &#147;TGC.&#148; The
holders of common stock are entitled to one vote per share on all matters to be voted upon
by stockholders. The holders of common stock are not entitled to cumulate their votes in
the election of directors. All shares of common stock rank equally as to voting and all
other matters. Stockholders of the Company have no pre-emptive right to acquire additional
shares of common stock which means that current stockholders do not have a right to
purchase any new issue of shares of common stock in order to maintain their proportionate
ownership interests in the Company. The common stock is not subject to redemption and
carries no subscription or conversion rights. Subject to the prior rights of</font></p>





<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>28 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 26; page: 26" -->











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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
holders of
preferred stock, if any, the holders of the Company&#146;s common stock are entitled to
receive such dividends as the Board of Directors may from time to time declare out of legally available funds for
the payment of dividends and, in the event of liquidation, to share equally in corporate
assets after the satisfaction of all liabilities. </FONT></P>

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<A NAME=A059></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PURPOSE OF THE AMENDMENT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
proposed increase in the Company&#146;s authorized common stock has been recommended by
the Board of Directors to assure that an adequate supply of authorized, unissued shares is
available for general corporate needs and to provide the Board of Directors with the
necessary flexibility to issue shares of common stock for proper corporate purposes and to
respond quickly to business opportunities requiring the issuance of shares which may be
identified in the future without the expense and delay incident to obtaining stockholder
approval of an amendment to the Company&#146;s Charter at the time of such action. The
additional authorized shares of common stock may be used for such purposes as raising
equity capital, financing of an acquisition or business combination, declaring stock
splits or dividends, reserving additional shares for issuance under employee, executive
and director benefit plans, paying indebtedness and satisfying outstanding convertible
securities, such as preferred stock, by issuing such shares in exchange for such
securities. The Company has no current plans, arrangements or understandings regarding the
issuance of any of the additional shares of common stock for which authorization is sought
and there are no negotiations pending with respect to the issuance of such shares for any
purpose. </FONT></P>

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<A NAME=A060></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EFFECT OF THE AMENDMENT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the proposal to increase the authorized number of shares of common stock is approved by
the stockholders, some or all of the additional authorized shares may be issued at such
time and on such terms and conditions as the Board of Directors may determine without
further approval by the stockholders, except in situations where stockholder approval is
required under provisions of state law or the rules of any securities exchange on which
the Company&#146;s shares of common stock are then listed for trading. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
issuance of some or all of the additional authorized common stock would, among other
things, have a dilutive effect on the earnings per share and on the equity and voting
power of existing holders of the Company&#146;s common stock and may adversely affect the
market price of the Company&#146;s common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
authorized but unissued shares of common stock could be used by the Board of Directors to
discourage, delay or make more difficult a change in the control of the</font></P>



<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 27; page: 27" -->





<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Company. For
example, such shares could be privately placed with purchasers who might align themselves
with the Board of Directors in opposing a hostile takeover bid. The issuance of additional
shares could serve to dilute the stock ownership of persons seeking to obtain control and
thereby increase the cost of acquiring a given percentage of the outstanding stock. Although this
proposal to increase the authorized number of shares of common stock has been prompted by
business and financial considerations and not by the threat of any hostile takeover
attempt (nor is the Board currently aware of any such attempts directed at the Company),
stockholders should be aware that approval of this proposal could facilitate future
efforts by the Company to deter or prevent such changes in control of the Company,
including transactions in which the stockholders might otherwise receive a premium for
their shares over then current market prices. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
issuance of the additional shares of common stock might also be disadvantageous to current
stockholders in that any additional issuances would potentially reduce per share
dividends, if any. Stockholders should consider, however, that the possible impact upon
dividends is likely to be minimal in view of the fact that the Company has never paid
dividends, has never adopted any policy with respect to the payment of dividends and does
not intend to pay cash dividends in the foreseeable future. </FONT></P>

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<A NAME=A061></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FILING OF THE AMENDMENT </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;If
this proposal is approved by the Company&#146;s stockholders, the Board of Directors
expects to file a Certificate of Amendment to the Company&#146;s Charter increasing the
number of authorized shares of common stock with the Secretary of State of Tennessee as
soon as practicable after the date of the Annual Meeting. The remainder of the
Company&#146;s Charter will not change. Such Certificate of Amendment would be effective
on the date of filing. </FONT></P>

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<A NAME=A062></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VOTE REQUIRED </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
affirmative vote of the holders of a majority of the shares present and voting at the
meeting in person or by proxy will be required to approve the amendment to the
Company&#146;s Charter to increase the authorized common stock of the Company to
100,000,000 shares.<B> </B>Unless otherwise directed by the stockholder giving the proxy,
the proxy will be voted for the approval of the amendment. Shares voted as abstaining will
count as votes cast. Accordingly, an abstention from voting by a stockholder present in
person or by proxy at the meeting has the same legal effect as a vote &#147;against&#148;
Proposal No. 2 because it represents a share present or represented at the meeting and
entitled to vote, thereby increasing the number of affirmative votes required to approve
this proposal. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30 </FONT></P>
<P STYLE="page-break-after:always">
</P>

<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 28; page: 28" -->





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<A NAME=A063></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RECOMMENDATION OF THE
BOARD OF DIRECTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors unanimously recommends that you vote &#147;For&#148; the proposal to
approve the amendment to the Company&#146;s Charter to increase the number of shares of
authorized common stock. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER PAGE="sheet: 28; page: 28" -->
















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<A NAME=A064></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROPOSAL NO. 3 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A065></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RATIFICATION OF
SELECTION OF BDO <BR>SEIDMAN, LLP AS INDEPENDENT AUDITORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has selected the firm of BDO Seidman, LLP, independent certified public
accountants, to audit the accounts for the Company for fiscal year ending December 31,
2004 (&#147;Fiscal 2004&#148;). The firm of BDO Seidman, LLP has audited the
Company&#146;s financial statements for the past seven (7) fiscal years. The Company is
advised that neither BDO Seidman, LLP nor any of its partners has any material direct or
indirect relationship with the Company. The Board of Directors considers BDO Seidman, LLP
to be well qualified for the function of serving as the Company&#146;s auditors. Tennessee
law does not require the approval of the selection of auditors by the Company&#146;s
stockholders, but in view of the importance of the financial statements to stockholders,
the Board of Directors deems it desirable that they pass upon its selection of auditors.
In the event the stockholders disapprove of the selection, the Board of Directors will
consider the selection of other auditors. </FONT></P>

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<A NAME=A066></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AUDIT AND NON-AUDIT FEES </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;The
following table presents the fees for professional audit services rendered by BDO Seidman,
LLP for the audit of the Company&#146;s annual consolidated financial statements for the
fiscal years ended December 31, 2003 and December 31, 2002, and fees for other services
rendered by BDO Seidman, LLP during those periods: </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<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></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=44% ALIGN=LEFT><b>Fee Category</b></TD>
     <TD WIDTH=7% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=20% ALIGN=RIGHT><b>Fiscal 2003</b> </TD>
        <TD WIDTH=7% ALIGN=LEFT></TD>
     <TD WIDTH=20% ALIGN=RIGHT><b>Fiscal&nbsp;2002</b></TD>
        <TD WIDTH=2% ALIGN=LEFT><b></b></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Audit Fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$201,810</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$160,530</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Audit-Related Fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Tax Fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>All Other Fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$7,250</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$28,950</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Total Fees</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$209,060</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$189,480</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;Audit
fees include fees related to the services rendered in connection with the annual audit of
the Company&#146;s consolidated financial statements, the quarterly reviews of the
Company&#146;s quarterly reports on Form 10-Q and the reviews of and other services
related to registration statements and other offering memoranda. </FONT></P>



<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>32 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER PAGE="sheet: 29; page: 29" -->


























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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit-related
fees are for assurance and related services by the principal accountants that are
reasonably related to the performance of the audit or review of the Company&#146;s
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;Tax
Fees include (i) tax compliance, (ii) tax advice, (iii) tax planning and (iv) tax
reporting. </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 Fees includes fees for all other services provided by the principal accountants not
covered in the other categories such as litigation support, attendance at the Company's annual meeting and services provided in connection
with the Company's proxy statement.</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
fees in 2003 were higher than in 2002 primarily due to the inclusion of fees for services
performed by BDO Seidman, LLP in connection with the Company&#146;s filling of a
registration statement on Form S-1 with the SEC for the Rights Offering. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the services for 2002 and 2003 were performed by the full-time, permanent employees of
BDO Seidman, LLP </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
of the 2003 services described above were approved by the Audit Committee pursuant to the
SEC rule that requires audit committee pre-approval of audit and non-audit services
provided by the Company&#146;s independent auditors to the extent that rule was applicable
during fiscal year 2003. The Audit Committee has considered whether the provisions of such
services, including non-audit services, by BDO Seidman, LLP is compatible with maintaining
BDO Seidman, LLP&#146;s independence and has concluded that it is. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>BOARD RECOMMENDATION AND
VOTE REQUIRED </b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors recommends that you vote in favor of the above proposal in view of the
quality of the services provided by BDO Seidman, LLP, its outstanding reputation as a
leading audit firm and its familiarity with the Company&#146;s financial and other affairs
due to its previous service as auditors for the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
representative of BDO Seidman, LLP is expected to be present at the Annual Meeting with
the opportunity to make a statement if he desires to do so, and is expected to be
available to respond to appropriate questions. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratification
will require the affirmative vote of a majority of the shares present and voting at the
meeting in person or by proxy. In the event ratification is not provided, the Board of
Directors will review its future selection of the Company&#146;s independent auditors. </FONT></P>



<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>33 </FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER PAGE="sheet: 30; page: 30" -->













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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise directed by the stockholder giving the proxy, the proxy will be voted for the
ratification of the selection by the Board of Directors of BDO Seidman, LLP as the
Company&#146;s independent certified public accountants for Fiscal 2004. Shares voted as abstaining will count as votes
cast. Accordingly, an abstention from voting by a stockholder present in person or by
proxy at the meeting has the same legal effect as a vote &#147;against&#148; Proposal No.
3 because it represents a share present or represented at the meeting and entitled to
vote, thereby increasing the number of affirmative votes required to approve this
proposal. </FONT></P><br><br>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A067></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>STOCKHOLDERS&#146;
PROPOSALS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proposals
of stockholders intended to be presented at the 2005 annual meeting must be received in
writing, by the President of the Company at its offices by April 14, 2005 in order to be
considered for inclusion in the Company&#146;s proxy statement relating to that meeting. </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;SEC
rules and regulations provide that if the date of the Company&#146;s 2005 Annual Meeting
is advanced or delayed more than 30 days from the date of the 2004 Annual Meeting,
stockholder proposals intended to be included in the proxy materials for the 2005 Annual
Meeting must be received by the Company within a reasonable time before the Company begins
to print and mail the proxy materials for the 2005 Annual Meeting. Upon determination by
the Company that the date of the 2005 Annual Meeting will be advanced or delayed by more
than 30 days from the date of the 2004 Annual Meeting, the Company will disclose such
change in the earliest possible Quarterly Report on Form 10-Q. </FONT></P>


<TABLE 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 Order of the Board of Directors</FONT></TD>
</TR>
<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><br><br><br>Cary V. Sorensen,<i> Secretary</i></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>34</FONT></P>
<P STYLE="page-break-after:always">
</P>
<HR SIZE=5 COLOR=GRAY NOSHADE>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A068></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A069></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS PROXY IS
SOLICITED ON BEHALFOF <BR>THE BOARD OF DIRECTORS </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
undersigned hereby appoints Richard T. Williams and Cary V. Sorensen as proxies (the
&#147;Proxies&#148;), each with power of substitution and resubstitution, to vote all
shares of Common Stock, $.001 par value per share, of Tengasco, Inc. (the
&#147;Company&#148;) held of record by the undersigned on June 28, 2004 at the Annual
Meeting of stockholders to be held at the Club LeConte, First Tennessee Plaza, 800 South
Gay Street, Knoxville, Tennessee, on Thursday, August 12, 2004, at 10:00 A.M. local time,
or at any adjournments thereof, as directed below, and in their discretion on all other
matters coming before the meeting or any adjournments thereof. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<A NAME=A070></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Please mark boxes / / in
blue or black ink. </FONT></H1>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          Election of Directors: Clarke H. Bailey, John A. Clendening, Bill L. Harbert,
          Neal F. Harding, Carlos P. Salas, Peter E. Salas and Richard T. Williams. </FONT></P>

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<A NAME=A071></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Mark
only one of the two boxes for this item)</b></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/
</B> VOTE WITHHELD as to all nominees named above. </FONT></P>

<BR>

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     <HR ALIGN=left WIDTH=75% SIZE=1 NOSHADE>

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<A NAME=A072></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(OR) </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/
</B> VOTE WITHHELD as to all nominees named above. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          Proposal to approve an amendment to the Company&#146;s Charter which will
          increase the number of authorized shares of common stock from 50,000,000 to
          100,000,000: </FONT></P>

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     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;/ </TD>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AGAINST&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;/</TD>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ABSTAIN&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;/</TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.&nbsp;&nbsp;&nbsp;&nbsp;
          Proposal to ratify appointment of BDO Seidman, LLP as the Company&#146;s
          independent certified public accountants: </FONT></P>





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     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;/ </TD>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AGAINST&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;/</TD>
     <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ABSTAIN&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&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>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before the meeting. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>When properly executed,
this Proxy will be voted as directed. If no direction is made, this Proxy will be voted&#147;FOR&#148; Proposals 1, 2 and 3.  </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>Please
mark, date, sign and return this Proxy promptly in the enclosed envelope.</B> </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;<B>Please sign
exactly as name appears hereon. When shares are held by joint tenants, both should sign.
When signing as attorney or executor, administrator, trustee or guardian, please give your
full title as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by authorized
person.</B> </FONT></P>











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     <TD width=25%> <FONT FACE="Times New Roman, Times, Serif" SIZE=2> Dated: _______________________ ,2004<br><br>X ____________________________<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signature<br><br>X _____________________________<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Print Name(s)<br><br>X ______________________________<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signature, if held jointly</FONT></TD>
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<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH>
     <TH align=right>Appendix&nbsp; A</TH></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<A NAME=A002></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. AUDIT
COMMITTEE CHARTER </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AS AMENDED JUNE 18, 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee shall be appointed by the Board of Directors of Tengasco, Inc. (the
&#147;Company&#148;) to assist the Board in fulfilling its oversight responsibilities
relating to the Company&#146;s (1) financial statements and auditing, accounting and
related reporting processes and (2) systems of internal controls regarding finance,
accounting, legal compliance and ethics established by management and the Board. </FONT></P>

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<A NAME=A003></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPOSITION </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
members of the Audit Committee shall be elected by the Board at the meeting of the Board
immediately following the Company&#146;s annual stockholder meeting and shall hold office
until their successors are duly elected and qualified. The Audit Committee shall consist
of at least three members of the Board, each of whom shall meet all the independence and
experience requirements of applicable laws, regulations, and stock market rules. Each
member of the Audit Committee shall be able to read and understand fundamental financial
statements, including the Company&#146;s balance sheet, income statement, and cash flow
statement, or must be able to do so within a reasonable time after his or her appointment
to the Audit Committee. At least one member of the Audit Committee shall be a financial
expert as defined by the Securities and Exchange Commission and such person shall serve as
the Chairperson of the Audit Committee. </FONT></P>

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<A NAME=A004></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>MEETINGS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is anticipated that the Audit Committee will meet at least four times a year. However, the
Committee shall meet as many additional times as it deems necessary. A majority of the
Committee shall constitute a quorum. All determinations of the Audit Committee shall be
made by a majority of its members present, either in person or by telephone, at a meeting
duly called and held or where only two members are present by unanimous vote. A decision
or determination of the Audit Committee reduced to writing and signed by all members of
the Committee shall be fully as effective as if it had been at a meeting duly called and
held. </FONT></P>

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<A NAME=A005></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RESPONSIBILITIES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Project" -->
<A NAME=A006></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee shall:</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Project" -->
<A NAME=A007></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Documents/Reports
Review</u></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Review the annual audited financial statements with management and the</font></p>




<P STYLE="page-break-after:always">
</P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> independent
auditors, including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could significantly affect the
Company&#146;s financial statements, and recommend that the audited financial statements
be included in the Company&#146;s Annual Report on Form 10-K. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Review with management and the independent auditors the Company&#146;s quarterly 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;&#151;
Review with management and the independent auditors the significant financial reporting
issues and judgments made in connection with the preparation of the Company&#146;s
financial statements and discuss any other matters communicated to the Committee by the
independent auditors. </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;&#151;
Prepare the report of the Audit Committee required by the rules of the Securities and
Exchange Commission to be included in the Company&#146;s annual proxy statement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Project" -->
<A NAME=A008></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Accounting
and Financial Controls Framework</U></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Review major changes to the Company&#146;s auditing and accounting principles and
practices as suggested by the independent auditors. </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;&#151;
Review with the independent auditors any management letter provided by the independent
auditors and the Company&#146;s responses to that letter. Such review should include: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Any difficulties encountered in the course of the audit work, including any restrictions
on the scope of activities or access to required information. </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;&#151;
Any changes required in the planned scope of the audit. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151; The
financial reporting department responsibilities and staffing. </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;&#151;
Review with management (i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company&#146;s ability to record,
process, summarize and report financial data and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company&#146;s internal controls. </FONT></P>

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<A NAME=A009></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Oversight
of Independent Auditors</U></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Exercise direct responsibility for the appointment, compensation, retention, and oversight
of the work of any registered public accounting firm engaged, including resolution of
disagreements between management and the auditor regarding financial reporting, for the
purpose of preparing or issuing an audit report or performing other audit, review, ore
attest services for the Company, and assure that each such firm report directly to the
Committee. </FONT></P>


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</P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
         Approve the fees to be paid to the independent auditors.</FONT></P>














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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Assure receipt from the outside auditors of a formal written statement delineating all
relationships between the auditor and the Company consistent with Independence Standards
Board Standard No. 1, and actively engage in a dialogue with the auditors with respect to
any disclosed relationships or services that may impact the objectivity and independence
of the auditors and for taking, or recommending that the full Board take appropriate
action to oversee the independence of the outside auditors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;
Evaluate together with the Board the performance of the independent auditors and, if so
determined by the Audit Committee, recommend that the Board replace the independent
auditors. </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;&#151;
Meet with the independent auditors prior to the audit to review the planning and staffing
of the audit. </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;&#151;
Discuss with the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 relating to the conduct of the audit. </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;&#151;
Establish hiring policies for employees or former employees of the independent auditors. </FONT></P>

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<A NAME=A010></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL AUTHORITY AND
RESPONSIBILITIES  </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee shall have the authority to retain special legal, accounting or other
consultants to advise the Committee. The Audit Committee may request any officer or
employee of the Company or the Company&#146;s outside counsel or independent auditors to
attend a meeting of the Committee or to meet with any members of, or consultants to, the
Committee. The Company shall provide appropriate funding, as determined by the Audit
Committee in its capacity as a committee of the Board of Directors, for payment of
compensation to any registered public accounting firm engaged for the purpose of preparing
or issuing an audit report or performing other audit, review, or attest services for the
Company; for compensation to any legal, accounting or other consultants retained or
employed by the Committee; and for payment of ordinary administrative expenses of the
Audit Committee that are necessary or appropriate in carrying out its duties. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Audit Committee shall establish
procedures for the receipt, retention, and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing matters, and the
confidential anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee shall review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board. </FONT></P>
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<TYPE>EX-99
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<TABLE width=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
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     <TH></TH>
     <TH></TH>
     <TH align=right>Appendix&nbsp; B</TH></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
</TABLE>



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<A NAME=A001></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLES OF AMENDMENT
BY THE SHAREHOLDERS<br>TO THE CHARTER OF
TENGASCO, INC. </FONT></H1>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the provisions of Section
48-20-103 of the Tennessee Business Corporation Act, the undersigned Corporation executes
the following Certificate of Amendment to its Charter. </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;
          The name of the Corporation is Tengasco, Inc. (the &#147;Corporation&#148;). The
          Corporation is a for profit corporation. </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;
          The following resolution, establishing an increase in the number of common
          shares which the Corporation is authorized to issue, was recommended by the
          Board of Directors to the Shareholders of the Corporation and thereafter duly
          adopted by the Shareholders at a meeting of the Shareholders held on August 12,
          2004: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS,
</B>the Charter of the Corporation presently authorizes the issuance of 50,000,000 shares
of Common Stock, $.001 par value per share; and </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 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>WHEREAS,
</B>in order to accommodate business purposes deemed proper by the Board of Directors and
recommended to the Shareholders, the Shareholders do hereby provide for an amendment to
the Corporation&#146;s Charter to increase in the number of common shares, which the
Corporation is authorized to issue to 100,000,000, authorized common shares; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW,
THEREFORE, </B>be it <B>RESOLVED</B>, that the initial sentence of Paragraph 2 of the
Charter of the Corporation is hereby amended to read as follows: The aggregate number of
shares which the Corporation shall have authority to issue is one hundred twenty-five
million (125,000,000) shares consisting of one hundred million (100,000,000) shares
designated as Common Stock, at par value of $.001 per share, and twenty-five million
shares, designated as Preferred Stock, at a par value of $.0001 per share. All remaining
terms and provisions of Paragraph 2 of the Charter of the Corporation as previously
amended effective June 25, 1998 shall remain in full force and effect. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This amendment will not affect the
designation and number of shares of each class or series of preferred stock set forth in
the Charter or the relative rights, preferences and limitations of each such class or
series of preferred stock. The foregoing resolution was adopted by the Shareholders as of
August 12, 2004, at the regular annual meeting of the Shareholders at which a quorum was
present throughout. </FONT></P>

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<A NAME=A003></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC. </FONT></P>












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     <TD width=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BY: ___________________<br>Jeffrey R. Bailey<br>President<br><br><br>BY:___________________<br>Cary V. Sorensen<br>Secretary </font></TD></TR>
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