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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001001614-05-000031.txt : 20060919
<SEC-HEADER>0001001614-05-000031.hdr.sgml : 20060919
<ACCEPTANCE-DATETIME>20050718151615
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001001614-05-000031
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20050718

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:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		10215 TECHNOLOGY DRIVE
		STREET 2:		SUITE 301
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37932
		BUSINESS PHONE:		865-675-1554

	MAIL ADDRESS:	
		STREET 1:		10215 TECHNOLOGY DRIVE
		STREET 2:		SUITE 301
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37932
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<A NAME=A001></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tengasco, Inc.<br>10215 Technology Park,
Suite 301 <br>Knoxville, TN 37932-4307 <br>865.675.1554 <br>865.675.1621 (facsimile)</FONT></P>



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<A NAME=A006></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>July 18, 2005 </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mr. H. Roger Schwall </FONT></P>

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<A NAME=A007></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Assistant Director,
Division of Corporation Finance <BR>U.S. Securities and Exchange Commission<BR>100 F
Street, N.E.<br>Washington, D. C. 20549 </FONT></P>

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

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<A NAME=A008></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VIA EDGAR FILING </FONT></P>





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<A NAME=A009></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Re:      Tengasco, Inc. </FONT></P>


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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
10-K for Fiscal Year Ended December 31, 2004, Filed March 31, 2005<br> Form 10-Q for Fiscal
Quarter Ended March 31, 2005, Filed May 11, 2005 File No. 1-15555 </FONT></TD>
</TR>
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<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Mr. Schwall: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
our informal telephone discussions with Mr. Gary Newberry and Mr. James Murphy of your
offices in connection with the five numbered items contained in your letter to Mark Ruth,
CFO of Tengasco, Inc. dated July 13, 2005 we respond as follows to each of the five
numbered items in the letter. It is our present intention, following the receipt of any
additional comments you may have to these responses, to amend our Form 10-K in the manners
indicated below in order to enhance the overall disclosure made in our original filing. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For your convenience, we include your
comments together with our response below: </FONT></P>

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<A NAME=A010></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your comment No. 1: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Financial Statements- Net loss
after the cumulative effect of changes in accounting principles should be positioned
before deducting dividends on preferred stock necessary to arrive at net loss attributable
to common stockholders</U>. [Page F-6 of Form 10-K] </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our response: We believe this is
correct as filed. Due to SFAS 150, we are required as of 2004 to report dividends on
preferred stock as an interest expense. We were not required or permitted to do so in 2003
or 2002. So in order to make a uniform comparison of the results in this three year
period, these are reported in the 10-K as presently filed. Although not technically
incorrect, we believe it would be more confusing to the reader to make the change
suggested and that in fact would eliminate the ability of the reader to make direct
comparisons of net loss from year to year. In addition, the suggested change would affect
only the year 2003, and has no effect on any calculation of net loss to common
shareholders in any year. </FONT></P>

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<A NAME=A011></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your comment No. 2: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>We note that you follow the full
cost method for your oil and gas operations. Please disclose the information required
under Regulation S-X, Rule 4-10(c)(7), applicable to registrants following the full cost
method. [Page 12 of Form 10-K].</U> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our response: We have disclosed all
required information, for the reason that we have no exclusions from the full cost pool to
be disclosed pursuant to paragraph numbered (ii) of this section. However, in that we will
be amending the Form 10-K in response to your Comment No. 3 discussed below, we will
include an express statement as follows to enhance our disclosure: </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>The
Company has no undeveloped unproved properties and consequently no such properties have
been excluded from the full cost pool.</B> </FONT></P>

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<A NAME=A012></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your Comment Number 3: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>You indicate that you are
dependent on a small number of customers for the sale of gas from the Swan Creek Field and
have a concentration of credit risk with several customers. Please disclose revenues
attributable to each single customer contributing 10 percent or more of your total
revenues to comply with paragraph 39 of SFAS 131.</U> </FONT></P>

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<A NAME=A013></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Page F-15 of Form 10-K] </FONT></P>

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<A NAME=A014></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our response to Comment
Number 3: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We will include the following at page
F-15 of the Form 10-K. </FONT></P>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>In
2002, the Company received 46.8 percent of its revenues from Customer A; 32.3 percent of
its </B> <B>revenues from Customer B; and 13.9 percent of its revenues from Customer C.</B> </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>In
2003, the Company received 45.9 percent of its revenues from Customer A; 28.1 percent of
its revenues </B> <B>from Customer B; and 15.7 percent of its revenues from Customer C.</B> </FONT></TD>
</TR>
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<BR>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>In
2004, the Company received 59.3 percent of its revenues from Customer A; 18.2 percent of
its revenues </B> <B>from Customer B; and 14.4 percent of its revenues from Customer C.</B> </FONT></TD>
</TR>
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<BR>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>In
each of the years 2002 through 2004, the identity of the customers indicated above as
either A, B, or </B> <B>C was the same from year to year, although the percentage of
revenues varied slightly from year to year </B> <B>for that customer.</B> </FONT></TD>
</TR>
</TABLE>
<BR>

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<A NAME=A015></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your Comment No. 4: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>You state that the experienced
decline in actual production levels from existing wells in the Swan Creek Field was
expected and does not diminish either the shut-in pressure or the Company&#146;s actual
reserves in the field. Please reconcile this statement to us, as to past expectations and
actual reserves, with the 41% negative gas reserve revision taken in 2004 and forecasts in
both production levels and reserves from past reserve reports</U>. </FONT></P>

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<A NAME=A016></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Page 3, Form 10-K, Swan
Creek Production and Development] </FONT></P>

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<A NAME=A017></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our response to Comment
No. 4: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We believe that the negative gas
reserve revision and results of drilling of two wells in 2004 was adequately disclosed and
reported in the Form 10-K, but to enhance the overall disclosure we agree to amend the
Form 10-K at page 3 by amending the language of the current paragraph beginning &#147;The
experienced decline&#133;&#148; and adding an additional paragraph, so that the current
paragraph beginning &#147;The experienced decline&#133;&#148; and the new following
paragraph read as follows: </FONT></P>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>The
experienced decline in actual production levels from existing wells in the Swan Creek
Field was </B> <B>expected and does not diminish either the shut-in pressure or the
Company&#146;s proved producing reserves in </B> <B>the Swan Creek Field. The declines,
however, suggest the production rates from some of the Company&#146;s </B> <B>wells will
continue to be slower, which may result in such wells lasting longer than originally </B>
<B>expected. Although there can be no assurance, the Company expects these natural rates
of decline will be </B> <B>less than the decline experienced to date, and that ongoing
production from existing wells will tend to </B> <B>stabilize near current production
levels. The Company anticipates that the natural decline of </B> <B>production from
existing wells is now predictable in the Swan Creek Field, and that proven producing </B>
<B>reserves can be extracted primarily through existing wells; however, the total volume
of proved reserves </B> <B>in the Swan Creek field was reduced to&nbsp;6.7 BCF in 2004, a
reduction to 41% of the proved reserves of </B> <B>16.3 BCF reported in 2003 as discussed
below. &nbsp;</B> </FONT></TD>
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<BR>

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<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>In
2003 management had obtained state regulatory approval for drilling of infield wells in
the Swan </B> <B>Creek field at increased density of wells. Management expected that an
increased density of wells within </B> <B>the existing Swan Creek field would result in
additional reserves and reported those reserves as proven </B> <B>in accordance with
reservoir engineering standards. In 2004 the Company drilled and tested two new </B>
<B>infield developmental wells in the Swan Creek field as discussed above. Contrary to the
expectations </B> <B>for additional infield developmental wells, drilling and testing
results of the first two wells </B> <B>indicated that the current production wells would
be capable of and would likely produce all the </B> <B>remaining reserves, and that only
limited additional gas reserves could be added with additional infield </B>
<B>developmental drilling. Accordingly, the proven reserves associated with the increased
number of </B> <B>infield developmental wells in 2003 were not included in the proven
reserves reported by the Company in </B> <B>2004, resulting in a volume change from 16.3
BCF in 2003 to 6.7 BCF in 2004 of total proven gas reserves </B> <B>in Swan Creek field.
See Note 18 to the Consolidated Financial Statements. This change was almost </B>
<B>entirely related to undeveloped locations that management now believes do not have a
likelihood of being </B> <B>drilled in the future, and was not related in any manner to
the natural decline in production </B> <B>experienced in 2004 from existing wells in the
Swan Creek field as discussed above.</B> </FONT></TD>
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<A NAME=A018></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Your comment No. 5: </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.&nbsp;&nbsp;&nbsp;&nbsp;
          <U>We do not understand how, based on your past decline rate, you will be able
          to recover the gas reserves that you report as proved developed producing
          reserves. Please clarify this for us.</U> [Form 10-K, page F-32] </FONT></P>

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<A NAME=A019></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our response to comment
No. 5: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have provided supplementally to
Mr. James Murphy a decline curve chart for the entire Swan Creek field demonstrating based
on actual production history of the field that the field will produce the proved reserves
reported. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tengasco, Inc. acknowledges that it
is responsible for the adequacy and accuracy of the disclosure in the filing, that SEC
staff comments or changes to disclosure in response to staff comments do not foreclose the
Commission from taking any action with respect to the filing; and it may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under
the federal securities laws of the United States. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We will await further comment from
you with regard to these matters, particularly your comment No. 1, before preparing and
filing the amended pages of the Form 10-K as indicated in response to items 2, 3, and 4
above to enhance the overall disclosure already provided therein. </FONT></P>


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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Very truly yours,<br><br>Tengasco, Inc.<br>BY: <u>s/ Jeffrey R. Bailey</u><br>JEFFREY R. BAILEY, President</FONT></TD>
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