-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 P79/ncZuZGx7i+sdIibohgKhw0fnAsjI4WL2KN9q5E82fwIglwyy4MT1+xlMVHKu
 RqtLUny9YmMKYhXc+fhoiA==

<SEC-DOCUMENT>0001001614-06-000008.txt : 20060324
<SEC-HEADER>0001001614-06-000008.hdr.sgml : 20060324
<ACCEPTANCE-DATETIME>20060324120333
ACCESSION NUMBER:		0001001614-06-000008
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20060322
FILED AS OF DATE:		20060324
DATE AS OF CHANGE:		20060324
EFFECTIVENESS DATE:		20060324

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:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15555
		FILM NUMBER:		06708123

	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
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>finalproxy.htm
<DESCRIPTION>NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>




<div style='width:600;'>



<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2><b>SCHEDULE 14A INFORMATION</b></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>PROXY STATEMENT PURSUANT TO SECTION 14(a) </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>OF THE SECURITIES EXCHANGE ACT OF 1934</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Filed by the Registrant /X/</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Filed by a Party other than the Registrant / /</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2><b>Check the Appropriate Box:</b></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/  /Preliminary Proxy Statement</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/  /Confidential for Use of Commission Only</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/x /Definitive Proxy Statement</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/  /Definitive Additional Materials</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/  /Soliciting Materials Pursuant to &sect;240.14a-11(c) or &sect;240.14a-12</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=4><b>TENGASCO, INC.</b> __________________________________________________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=1>(Name of Registrant as Specified in its Charter)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="619" style='border-collapse:collapse'>
    <tr >
        <td width="16" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="603" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>_____________________________________________________________________________________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=1>(Name of person(s) Filing Proxy Statement if other than Registrant) </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2><b>Payment of Filing Fee (Check the appropriate box)</b></font></p>


<table border="0" cellspacing=0 cellpadding=0 width="109" style='border-collapse:collapse'>
    <tr >
        <td width="109" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>/x / No Fee Required</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/  / $125 per Exchange Act Rules-O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/  / Fee computed on table below per Exchange Act Rules14A-6(i)(4) and O-11.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="431" style='border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="383" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>1) Title of each class of securities to which each transaction applies:</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="625" style='border-collapse:collapse'>
    <tr >
        <td width="16" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>________________________________________________________________________________________</font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="357" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2) Aggregate number of securities to which transaction applies:</font></p> </td>
        <td  width="220">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="16" ></td>

        <td width="32" ></td>

        <td width="357" ></td>

        <td width="220" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="630" style='border-collapse:collapse'>
    <tr >
        <td width="16" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="615" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>_________________________________________________________________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.54in;text-align:left;'><font size=2>3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is calculated and state how it was determined)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="625" style='border-collapse:collapse'>
    <tr >
        <td width="16" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="609" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>________________________________________________________________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="357" style='border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="309" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>4) Proposed maximum aggregate value of transaction.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="625" style='border-collapse:collapse'>
    <tr >
        <td width="16" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="609" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>________________________________________________________________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="159" style='border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="111" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>5) Total fee paid.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="632" style='border-collapse:collapse'>
    <tr >
        <td width="16" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="616" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>_________________________________________________________________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/ / Fee paid previously by written preliminary materials.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>/ / check box if any part of the fee is offset as provided by Exhange Act Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="229" style='border-collapse:collapse'>
    <tr >
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>1) Amount Previously Paid  </font></p> </td>
        <td  width="92">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>2) Form Schedule or Registration Statement No.:  </font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>3) Filing Party:  </font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="80" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>4) Date Filed:  </font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="80" ></td>

        <td width="5" ></td>

        <td width="52" ></td>

        <td width="92" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


</div>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

















<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A001></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC.<br>10215 TECHNOLOGY DRIVE
N.W.<br>KNOXVILLE, TENNESSEE
37932 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A002></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A003></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A004></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> April 24, 2006</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A005></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A006></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A007></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TO THE STOCKHOLDERS: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
is hereby given that the 2006 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 Homewood Suites by Hilton, 10935 Turkey Drive, Knoxville, Tennessee 37922
10:00 A.M., local time, on Monday, April 24, 2006 for the following purposes: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <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, Jeffrey R. Bailey, John A. Clendening, Neal F.
          Harding, Carlos P. Salas and Peter E. Salas to the Board of Directors to hold
          office until their successors shall have been elected and qualify; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          To ratify the appointment by the Audit Committee of the Board of Directors of
          Rodefer Moss &amp; Co, PLLC 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="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&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>

<!-- 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
Board of Directors has fixed the close of business on March 1, 2006 as the record date for
the determination of the stockholders entitled to receive notice 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 10215 Technology Drive N.W., Suite 301, Knoxville, Tennessee 37932, for ten
(10) days prior to April 24, 2006. </FONT></P>




<!-- MARKER FORMAT-SHEET="Head Center Italic-TNR" FSL="Workstation" -->
<A NAME=A008></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By Order of the Board of Directors <br><br>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jeffrey R. Bailey,
<I>Chief Executive Officer </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<A NAME=A009></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: March 22, 2006 </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>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>

<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>



<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A010></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TENGASCO, INC.<br>PROXY STATEMENT </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A011></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A012></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 10215 Technology Drive, N.W., Suite 301, Knoxville, Tennessee 37932, in
connection with the solicitation of proxies to be used at the annual meeting of
stockholders of the Company to be held on April 24, 2006 and at any adjournments thereof
(the &#147;Annual Meeting&#148;). This proxy statement will be mailed to stockholders
beginning approximately March 22, 2006. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
may vote in person at the Annual Meeting or you may vote by proxy. We recommend that you
vote by proxy even if you plan to attend the Annual Meeting. If your share ownership is
recorded directly, you will receive a proxy card. Voting instructions are included on the
proxy card. If your share ownership is beneficial (that is, your shares are held in the
name of a bank, broker or other nominee referred to as in &#147;street name&#148;), your
broker will issue you a voting instruction form that you use to instruct them how to vote
your shares. Your broker must follow your voting instructions. Although most brokers and
nominees offer mail, telephone and internet voting, availability and specific procedures
will depend on their voting arrangements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a proxy 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. Unless instructions to the contrary are indicated, proxies will be
voted FOR the election of the directors named therein, and FOR the ratification of the
selection by the Audit Committee of the Board of Directors of Rodefer Moss &amp; Co, PLLC,
as the independent certified public accountants of the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
copy of the Company&#146;s annual report on Form 10-K of the Company for the fiscal year
ended December 31, 2005 (&#147;Fiscal 2005&#148;), which contains financial statements
audited by the Company&#146;s independent certified public accountants, accompanies this
proxy statement. </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
cost of preparing, assembling and mailing this notice of meeting, proxy statement, the
enclosed annual report on Form 10-K 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 or e-mail. 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>


<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A013></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VOTING SECURITIES AND </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A014></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PRINCIPAL HOLDERS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 March 1, 2006 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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of the Record Date, 58,605,698 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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 and 2 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>

<!-- 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 sets forth the share holdings of those persons who own more than 5% of the
Company&#146;s common stock as of March 1, 2006 with these computations being based upon
58,604,678 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 granted or
held by such shareholder as of March 1, 2006. </FONT></P>

<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A015></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Five Percent
Stockholders<SUP>(1)</SUP> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Default" -->
<A NAME=A016></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 </FONT></H1>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH align=left COLSPAN=2>Name and Address<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH align=left COLSPAN=2>Title<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>Number of Shares <br>Beneficially Owned<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>Percent of Class<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=43% ALIGN=LEFT>Dolphin Offshore</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=17% ALIGN=LEFT>Stockholder</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT>21,057,492</TD>
        <TD WIDTH=9% ALIGN=LEFT><SUP>(2)</SUP></TD>
     <TD WIDTH=6% ALIGN=RIGHT>35</TD>
        <TD WIDTH=2% ALIGN=LEFT>.9%</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>SC Fundamental Value</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Stockholder</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>6,494,100</TD>
        <TD ALIGN=LEFT><SUP>(3)</SUP></TD>
     <TD ALIGN=RIGHT>11</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>







<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A018></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROPOSAL NO. 1: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A019></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ELECTION OF DIRECTORS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A020></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 Bylaws provides that the number of directors
of the Company shall be a minimum of three and a maximum of ten. 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 six persons during Fiscal 2005 and six nominees for the Board are
put forth before the stockholders for the Annual Meeting. All of the nominees are
presently directors of the Company and Mr. Jeffrey R. Bailey, one of the director-nominees
is also presently the Chief Executive Officer of the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A021></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOARD OF DIRECTORS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 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 twelve
meetings in Fiscal 2005. All directors who are up for re-election 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 2005. Although it has no formal policy requiring
attendance, the Company encourages all of its directors to attend the annual meeting of
stockholders. Two of the Company&#146;s directors 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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 six director-nominees are independent directors in
accordance with the definition of that term under the Rules of the American Stock
Exchange. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>


<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>




<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A022></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Identification
of Director-Nominees</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the names of all current director-nominees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Workstation" -->
<A NAME=A023></A>
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A024></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Default" -->
<A NAME=A025></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>                  </FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
<TR VALIGN=Bottom>
     <TH align= left COLSPAN=2>Name<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH align=left COLSPAN=2>Positions Held<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>Date of Initial<br> Election or Designation<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=36% ALIGN=LEFT>Clarke H. Bailey</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=31% ALIGN=LEFT>Director</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=23% ALIGN=LEFT>8/12/04</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>1865 Palmer Avenue</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Larchmont, NY 10538</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Jeffrey R. Bailey</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>2/28/03-8/11/04;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>2306 West Gallaher Ferry</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Chief Executive</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>10/21/04</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Knoxville, TN 37932</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Officer</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>John A. Clendening</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>2/28/03</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>1031 Saint Johns Drive</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Maryville, TN 37801</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Neal F. Harding</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>8/12/04</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>2509 Plantside Drive</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Louisville, KY 40299</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Carlos P. Salas</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>8/12/04</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>Peter E. Salas</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>10/8/02</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>129 East 17th Street</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Chairman of the Board</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>10/21/04</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10003</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>



<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A026></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Background
of Directors</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clarke
H. Bailey is 51 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</FONT></P>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>






 <!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. He was elected to the Board of Directors on
August 12, 2004. Mr. Bailey serves as the Chairman of the Company&#146;s Audit Committee
and as the financial expert of that Committee. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jeffrey
R. Bailey is 48 years old. He graduated in 1980 from New Mexico Institute of Mining and
Technology with a B.S. degree in Geological Engineering. Upon graduation he joined
Gearhart Industries as a field engineer working in Texas, New Mexico, Kansas, Oklahoma and
Arkansas. Gearhart Industries later merged with Halliburton Company. In 1993 after 13
years working in various field operations and management roles primarily focused on
reservoir evaluation, log analysis and log data acquisition he assumed a global role with
Halliburton as a petrophysics instructor in Fort Worth, Texas. His duties were to teach
Halliburton personnel and customers around the world log analysis and competition
technology and to review analytical reservoir problems. In this role Mr. Bailey had the
opportunity to review reservoirs in Europe, Latin America, Asia Pacific and the Middle
East developing a special expertise in carbonate reservoirs. In 1997 he became technical
manager for Halliburton in Mexico focusing on finding engineering solutions to the
production challenges of large carbonate reservoirs in Mexico. He joined the Company as
its Chief Geological Engineer on March 1, 2002. He was elected as President of the Company
on July 17, 2002 and is presently the Company&#146;s Chief Executive Officer. He was
elected as a Director on February 28, 2003 and served as a Director until August 11, 2004.
He was again elected to the Company&#146;s Board of Directors on October 21, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Dr.&nbsp;John A. Clendening is 74 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 1992. Dr. Clendening has served as President and
          other offices of the American Association of Stratigraphic Palynologists and the
          Society of Organic Petrologists. From 1992-1998 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 as a Director of the Company
          on February 28, 2003. </FONT></P>







<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7 </FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neal
F. Harding is 64 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 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. He was again elected as a Director of the Company on August 12, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Carlos
P. Salas is 34 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. He was elected to the
Company&#146;s Board of Directors on August 12, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Peter
E. Salas is 51 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="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A027></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Committees</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 audit, nomination and governance, compensation/stock
option, and frontier exploration committees. </FONT></P>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>






<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A028></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Compensation/Stock
Option Committee </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
Fiscal 2004, the Company&#146;s Board merged its Compensation and Stock Option Committees
into one Committee. The members of the Compensation/Stock Option Committee in Fiscal 2005
were director-nominees John A. Clendening, Carlos P. Salas and Neal F. Harding with Mr.
Clendening acting as Chairman. The Compensation/Stock Option Committee&#146;s other
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/Stock Option 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. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation/Stock Option Committee is also charged with administering the Tengasco, Inc.
Stock Incentive Plan (the &#147;Stock Incentive Plan&#148;) which was adopted by the Board
of Directors on October 25, 2000. The Compensation/Stock Option Committee has complete
discretionary authority with respect to the awarding of options and Stock Appreciation
Rights (&#147;SARs&#148;), under the 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 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 Stock Incentive Plan; and
to make all other determinations necessary or advisable for administering the Plan. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Center Italic-TNR" FSL="Workstation" -->
<A NAME=A029></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>REPORT OF THE
COMPENSATION COMMITTEEON <BR>EXECUTIVE COMPENSATION </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A030></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Introduction</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation/Stock Option Committee of the Board of Directors is composed solely of
non-employee directors who satisfy the current independence standards established by the
American Stock Exchange. Pursuant to the Rules of the American Stock Exchange, this
Committee determines or recommends 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</FONT></P>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>




<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> officers. The Chief Executive Officer may not be present during the voting or
deliberations with respect to his compensation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following report is being furnished with respect to certain compensation paid to the
Company&#146;s executive officers during the fiscal year ended December 31, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A031></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation
Philosophy</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s compensation program is intended to attract, retain, motivate and reward
highly qualified executives who are expected to manage both the short-term and long-term
success of the Company and thereby increase shareholder value. The level of compensation
that is paid to executive officers is based on both the performance of the Company and the
individual officer. The Company&#146;s performance is judged primarily upon the operating
results and profitability for the immediately preceding fiscal year. Individual
performance is measured based on an evaluation of the executive officer&#146;s particular
responsibilities, his performance in the prior year, and his general management skills. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A032></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation
Program</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s compensation program for executive officers consists of cash compensation
and, if the situation warrants, equity based compensation. The principal elements of this
program are the following: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Salary</I>. The base salary component of an executive officer&#146;s compensation is
          intended to reward the executive for normal levels of performance. When
          reviewing base salaries, the Committee will consider the following factors: (1)
          individual performance, (2) the performance of the Company and the extent to
          which the executive contributed to that performance, (3) the executive&#146;s
          level of responsibility and prior experience; and (4) the executive&#146;s value
          to the Company both presently and in the future. The Committee also considers
          the recommendations of the Chief Executive Officer except in the case of his own
          compensation. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock
Options</I>. In order to align the financial interests of executive officers with those of
the shareholders, the Committee grants stock options to its executives on a periodic
basis. Options are granted with an exercise price equal to or greater than the market
value of the Company&#146;s&#146;s shares on the date of grant. Since the financial reward
provided by stock options will be dependent on appreciation in the market value of the
Company&#146;s shares, stock options effectively reward executives only for performance
that results in improved market performance of our common stock, which directly benefits
all shareholders. Generally, the number of shares included in each stock option grant is
determined based on an evaluation of the executive&#146;s importance to the future
performance of the Company, as well as his past performance. Options are granted on terms
that provide that they will become exercisable (or &#147;vest&#148;) in annual or other
periodic installments (such as, for example, 25% per year over four years), so that if an
executive&#146;s employment is terminated, whether by the Company or by the executive,
prior to the</FONT></P>

<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> full vesting of the options, the unvested portion terminates automatically,
thereby creating an incentive for the executive to remain in the Company&#146;s employ for
at least the vesting period. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
Fiscal 2005 the Compensation/Stock Option Committee met six (6) times. In Fiscal 2005 it
granted options to officers and employees of the Company to purchase an aggregate of
2,500,000 shares of the Company&#146;s common stock, including an option to purchase
1,250,000 shares to Jeffrey R. Bailey, the Company&#146;s Chief Executive Officer and
options to purchase 400,000 shares each to Mark A. Ruth, the Company&#146;s Chief
Financial Officer and Cary V. Sorensen, the Company&#146;s Vice-President, Secretary and
General Counsel. Each of the options granted to these officers Option vests over a period
of fours years with 20% vested upon authorization and additional 20% on each anniversary
date of authorization and the exercise price of the options was greater than the market
price of the Company&#146;s per share price on the day the options were granted. </FONT></P>

<!-- 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;It
also reviewed and made recommendation to the full Board of Directors regarding salaries
and benefits of the Company&#146;s executive officers. In determining the salary of the
Company&#146;s Chief Executive Officer during the fiscal year ended December 31, 2005, the
Committee considered his prior employment history and experience in the oil and gas
industry, his superior knowledge of that industry, his past performance with the Company,
his management abilities and projected performance during the fiscal year. The Committee
also considered the Company&#146;s performance and financial position in making its
determination. The Committee set Mr. Bailey&#146;s salary at an annual rate of $130,000. </FONT></P>

  <!-- MARKER FORMAT-SHEET="Head Center Italic-TNR" FSL="Workstation" -->
<A NAME=A033></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Member of the Compensation/Stock Option Committee<br></font></p>



<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="TOP">
     <TD><br>John A. Clendenning<br>Carlos P. Salas<br>Neal F. Harding</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD></TR>
</TABLE>




<!-- MARKER FORMAT-SHEET="Head Center Italic-TNR" FSL="Workstation" -->

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Compensation/Stock
Option Committee InterlockingAnd <BR>Insider Participation </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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/Stock Option 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/Stock Option Committee is an officer or an employee of the
Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A034></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Audit Committee </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
Fiscal 2005, director-nominees Clarke H. Bailey, John A. Clendening and Neal F. Harding
were the members of the Audit Committee. Mr. Bailey was the Chairman of the Committee and
the Board of Directors determined that Mr. Bailey is an &#147;audit committee financial
expert&#148; as defined by applicable Securities and Exchange Commission (&#147;SEC&#148;)</FONT></P>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>regulations. 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 SEC and the
American Stock Exchange. The Audit Committee adopted an Audit Committee Charter during
fiscal 2001. In 2004, the Board adopted an amended Audit Committee Charter, a copy of
which was included in the Company&#146;s 2004 Proxy Statement and is available on the
Company&#146;s internet website, www.tengasco.com. 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 2005 with the Company&#146;s auditors, including
to discuss the audit of the Company&#146;s year end financial statements. It is intended
that if elected as directors, Messrs. Bailey, Clendening and Harding will continue to
serve as members of the Audit Committee and Clarke H. Bailey will continue to be
designated as the financial expert of the committee in 2006. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Center Italic-TNR" FSL="Workstation" -->
<A NAME=A035></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 2 Left-TNR" FSL="Workstation" -->
<A NAME=A036></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has:</I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               Reviewed and discussed the Company&#146;s unaudited financial statements for the
               first three quarters of Fiscal 2005 and the Company&#146;s audited financial
               statements for the year ended December 31, 2005 with the management of the
               Company and the Company&#146;s independent auditors. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               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>

<!-- 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;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 2005 be included in the Quarterly Reports on Form 10-Q for those quarters and
that the</FONT></P>






<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>








<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR"  -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 audited financial statements for the year ended December 31, 2005 be included in
the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2005.</font></p>



<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Members of the Audit Committee</font></P>


<TABLE align=center BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="TOP">
     <TD><br><br>Clarke H. Bailey<br>Neal F. Harding<br>John A. Clendenning</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD></TR>
</TABLE>







<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A037></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nomination and
Governance Committee </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nomination and Governance Committee was formed in Fiscal 2004. In Fiscal 2005, the members
of the Committee were director-nominees Carlos P. Salas, Clarke H. Bailey and Neal F.
Harding with Mr. Salas acting as Chairman. The Company believes that each member of the
Committee was independent as that term is defined under the rules of the American Stock
Exchange. The Committee met one time in Fiscal 2005. The Committee, among other duties,
determines the slate of director candidates to be presented for election at the
Company&#146;s annual meeting of shareholders. Although the Company does not presently
have a nominating committee charter, on November 18, 2004, the Company&#146;s Board of
Directors adopted procedures for annual director nominations by the Nomination and
Governance Committee. Those procedures provide that the qualifications that should be met
by any person recommended as a nominee for a position on the Company&#146;s Board of
Directors should include one or more of the following: a background or experience in oil
and gas exploration, production, transportation, geology, 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 a right to receive compensation
for such service. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has no separate policy with regard to the consideration of any director candidates
recommended by security holders. However, the Nomination Committee will consider director
candidates recommended by security holders. Any person recommended by a security holder to
serve on the Board of Directors is considered upon the same terms as candidates
recommended by any other person. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among
the nominating procedures adopted are the following: (1) Any shareholder, officer, or
director may recommend for nomination any person for the slate of candidates for
membership on the Company&#146;s Board of Directors to be presented to the shareholders at
the Company&#146;s annual meeting of shareholders. Such recommendations must be furnished
in writing addressed to the Company&#146;s Board of Directors at the Company&#146;s
principal offices. All such nominations will be furnished to the Nomination Committee
which may conduct interviews, investigations or make other determinations as to the
qualifications of such recommended persons. (2) Any then-current members of the Board of
Directors desiring to stand for re-election may be placed on the slate of directors for
re-election without further inquiry as to their qualifications. (3) The Nomination
Committee will meet to determine the slate of candidates for</FONT></P>








<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

















<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> the Board in such a manner
and at such a time so as not to delay either the mailing of the proxy statement to the
Company&#146;s shareholders or the annual meeting of shareholders. At such meeting, each
recommended person including directors standing for re-election shall be subject to
affirmative vote of half or more of the members of the Nomination Committee for inclusion
on the slate of nominees. (4) The adopted procedures apply only to the determination of
the slate of directors to be presented for election at the annual meeting of the
shareholders. Any vacancies on the Board of Directors following the annual meeting of
shareholders may be filled in the manner currently applicable under the Company&#146;s
Charter, Bylaws, and applicable state law. (5) The procedures adopted may be amended from
time to time by the Board of Directors or by the Nomination Committee, in order to comply
with any applicable provision or interpretation of any rule, statute, or stock exchange
rule of the exchange on which the Company&#146;s stock may be listed. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
nomination procedures adopted are posted on the Company&#146;s internet website at
www.tengasco.com. In the event of any such amendment to the procedures, the Company
intends to disclose the amendments on the Company&#146;s internet website within five
business days following such amendment. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nomination Committee determined the slate of candidates for the Board of Directors
presented for election at this year&#146;s Annual Meeting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
other function of this Committee is to oversee the Company&#146;s compliance with the
corporate governance requirements of the SEC and the American Stock Exchange. The Chairman
of the Committee, Carlos P. Salas, is an attorney with experience in the area of
securities law. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Default" -->
<A NAME=A038></A>
<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other Committees </FONT></H1>

         The Company's  Board also has a frontier  exploration  committee.  The members of this Committee in Fiscal
2005 were Jeffrey R. Bailey,  John A.  Clendening  and Carlos P. Salas.  The Committee met five (5) times in Fiscal
2005 to discuss new areas of potential development for the Company.


<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A039></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Section
16(a) Beneficial Ownership Reporting Compliance</u></b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
16(a) of the Securities Exchange Act of 1934 requires the Company&#146;s executive
officers, directors and persons who beneficially own more than 10% of the Company&#146;s
Common Stock to file initial reports of ownership and reports of changes in ownership with
the SEC no later that the second business day after the date on which the transaction
occurred unless certain exceptions apply. To the Company&#146;s knowledge, based on the
review of copies of such reports filed with the SEC and other information furnished to the
Company, all Section 16(a) filing</FONT></P>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>


















<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 requirements applicable to the Company&#146;s officers,
directors and greater than 10% beneficial owners were complied with during Fiscal 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A040></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Family
and Other Relationships</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 Carlos P. Salas, a Director of the Company, is the second cousin
of Peter E. Salas, also a director of the Company. 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
20,839,492 shares of the Company&#146;s common stock. Peter E. Salas is the controlling
person of Dolphin Offshore Partners, L.P. Carlos P. Salas has no direct or indirect
ownership interest in Dolphin Offshore Partners, L.P. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 Clarke H. Bailey, a Director of the Company and
Jeffrey R. Bailey, the President and a Director of the Company. 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 percentage investment in
those companies. There are no family relationships between any of the other Directors or
executive officers of the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A041></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Involvement
in Certain Legal Proceedings</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the knowledge of management, no director, executive officer or affiliate of the Company or
owner of record or beneficially of more than 5% of the Company&#146;s common stock is a
party adverse to the Company or has a material interest adverse to the Company in any
proceeding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               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>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>













<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               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>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Lvl 4-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
               <TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               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>
               <BR>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A042></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Stockholder
Communications with the Board of Directors</u></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;Stockholders
may communicate with the Board of Directors of the Company by writing to: Cary V.
Sorensen, Secretary, Tengasco, Inc., 10215 Technology Drive, N.W., Suite 301, Knoxville,
TN 37932 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>


<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>










<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A043></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECURITY OWNERSHIP OF
DIRECTORS AND OFFICERS </FONT></H1>







<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH align=left COLSPAN=3>Name and Address<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH align=left COLSPAN=3>Title<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Number of Shares Beneficially Owned<sup>(4)</sup><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Percent of Class<sup>(5)</sup><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=38% ALIGN=LEFT>Clarke H. Bailey</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=22% ALIGN=LEFT>Director</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=10% ALIGN=RIGHT>110,000</TD>
        <TD WIDTH=8% ALIGN=LEFT><sup>(6)</sup></TD>
     <TD WIDTH=13% ALIGN=LEFT>Less than 1%</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>1865 Palmer Avenue</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Larchmont, NY 10538</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Jeffrey R. Bailey</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>386,287</TD>
        <TD ALIGN=LEFT><sup>(7)</sup></TD>
     <TD ALIGN=LEFT>Less than 1%</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>2306 West Gallaher Ferry</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>President</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Knoxville, TN 37932</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>John A. Clendening</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>240,000</TD>
        <TD ALIGN=LEFT><sup>(8)</sup></TD>
     <TD ALIGN=LEFT>Less than 1%</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>1031 Saint Johns Drive</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Maryville, TN 37801</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Neal F. Harding</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>685,180</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>1.2</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>2509 Plantside Drive</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Louisville, KY 40299</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Carlos P. Salas</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>10,000</TD>
        <TD ALIGN=LEFT><sup>(9)</sup></TD>
     <TD ALIGN=LEFT>Less than 1%</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>129 East 17th Street</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10003</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Peter E. Salas</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Director</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>21,057,492</TD>
        <TD ALIGN=LEFT><sup>(10)</sup></TD>
     <TD ALIGN=LEFT>35.9</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>129 East 17th Street</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>New York, NY 10003</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Robert M. Carter</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>President</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>7,696</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Less than 1%</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>441 Glen Abbey Blvd</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Tengasco</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Knoxville, TN 37922</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Pipeline Corporation</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Mark A. Ruth</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Chief</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>140,100</TD>
        <TD ALIGN=LEFT><sup>(11)</sup></TD>
     <TD ALIGN=LEFT>Less than 1%</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>9400 Hickory Knoll Lane</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Financial</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Knoxville, TN 37931</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Officer</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>Cary V. Sorensen</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Vice-President;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>120,000</TD>
        <TD ALIGN=LEFT><sup>(12)</sup></TD>
     <TD ALIGN=LEFT>Less than 1%</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>5517 Crestwood Drive</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>General Counsel;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Knoxville, TN 37919</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>Secretary</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><br>All Officers, Directors</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>22,756,755</TD>
        <TD ALIGN=LEFT><sup>(13)</sup></TD>
     <TD ALIGN=LEFT>38.4</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>and Director-Nominees as a group</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>





<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>











<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A045></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes
in Control</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A046></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="Workstation" -->
<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, 2005,
December 31, 2004 and December 31, 2003. 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>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->
<A NAME=A047></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Summary Compensation
Table </FONT></H1>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=9>&#151; &#151; Long Term Awards&#151; &#151; <HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     </TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3></TH>


     <TH COLSPAN=9>AnnualCompensation<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3></TH>

     <TH COLSPAN=9>Awards<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH align=left COLSPAN=3>Name and<BR>
Principal Position<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Year<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Salary<BR>
($)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Bonus ($)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Other Annual Compensation<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>  Restricted Stock Awards ($)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE>    </TH>
     <TH COLSPAN=3>Securities Underlying ($) Options/ SARs(#)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Payouts<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>All Other Compensation<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=33% ALIGN=LEFT>Jeffrey R. Bailey,</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=LEFT>2005</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=9% ALIGN=RIGHT> 130,000</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=LEFT>$-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=4% ALIGN=LEFT>$-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=3% ALIGN=LEFT>-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=9% ALIGN=RIGHT>1,250,000</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=3% ALIGN=LEFT>-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=3% ALIGN=LEFT>-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Chief Executive</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Officer</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>

     <TD COLSPAN=26 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Richard T. Williams,</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>2004</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 80,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>$-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>$-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>13,125</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Chief Executive</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>2003</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 80,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>$-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>$-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>73,125</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=LEFT>-0-</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Officer(14)</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>






<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>












<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Option Grants For Fiscal 2005 </FONT></H1>









<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1>Individual Grants</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT SIZE=1>Potential Realizable Value At Assumed Annual Rates of Stock Price Appreciation For Option Term(15)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     </TR>
<TR VALIGN=Bottom>
     <TH align=left COLSPAN=3><FONT SIZE=1>Name</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Number of Securities Underlying Options/SARs Granted (#)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Percent of Total Options/SARs Granted to Employees in Fiscal 2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Exercise or Base Price ($/Sh)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Expirat-ion<BR>
Date</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>5%($)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>10% ($)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=22% ALIGN=LEFT>Jeffrey R</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=8% ALIGN=RIGHT>1,250,000</TD>
        <TD WIDTH=7% ALIGN=LEFT>(16)</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=8% ALIGN=RIGHT>50</TD>
        <TD WIDTH=4% ALIGN=LEFT>%</TD>
     <TD WIDTH=5% ALIGN=RIGHT>$</TD><TD WIDTH=1% ALIGN=RIGHT> 0</TD>
        <TD WIDTH=2% ALIGN=LEFT>.27</TD>
     <TD WIDTH=12% ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4/20/10</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=8% ALIGN=RIGHT> 87,500</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=8% ALIGN=RIGHT> 200,000</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Bailey</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
         <b>None of the Company's other executive officers earned compensation in excess of $100,000 per annum for
services rendered to the Company in any capacity in Fiscal 2005.</b></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Workstation" -->

<H1 ALIGN=left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Aggregate Option Exercises For Fiscal 2005
and Year End Option Values
 </FONT></H1>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1>Number of Securities Underlying Unexercised Options/SARs at December 31, 2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Value(17) of Unexercised In-the-Money Options/SARs at December 31, 2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1>Name</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Shares Acquired<BR>
on Exercise</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Value ($)Realized</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Exercisable/Unexercisable</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Exercisable/<BR>
Unexercisable</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=25% ALIGN=LEFT>Jeffrey R. Bailey</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=16% ALIGN=LEFT>-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>$</TD><TD WIDTH=1% ALIGN=RIGHT> 0</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=23% ALIGN=LEFT>1,250,000/-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=24% ALIGN=LEFT>$162,500/-0-</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>







<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>










<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A051></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Compensation of Directors </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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/Stock Option and Nomination and
Governance Committees 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. A plan (the
&#147;Plan&#148;) to issue cash and/or shares of stock to independent directors for
service on the various committees of the Board of Directors was authorized by the
Company&#146;s Board on May 19, 2005 and approved by shareholders at last year&#146;s
Annual Meeting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Plan, the Board of Directors, in its discretion, from time to time may grant
compensation to any or all independent directors serving on the Company&#146;s Board of
Directors as the Board may deem appropriate in the form of cash or Company stock, provided
that the value of such compensation does not exceed the limits of compensation for
determination of the independence of directors under rules and regulations of the SEC or
the American Stock Exchange (&#147;AMEX&#148;) or such other exchange upon which shares of
the Company may be listed. The Board may, but is not required, to consider the
recommendations of the Compensation/Stock Option Committee with regard to any such cash or
equity compensation to be awarded. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the Plan,on July 19, 2005, the Company issued 100,000 shares of its common stock each
to two of its directors, John A. Clendening and Clarke H. Bailey, and 50,000 shares to
another director, Neal F. Harding, for their services as members of the Audit Committee. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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. Management has considered adopting a 401(k) plan and full liability insurance
for directors and executive officers. However, there are no immediate plans to do so at
this time. </FONT></P>


<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>20</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>
















<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A052></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Employment Contracts </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are presently no 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="Workstation" -->
<A NAME=A053></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTAIN TRANSACTIONS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A054></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transactions
with Management and Others</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 2005, 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="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 4, 2005, the Company sold its gas wells, associated gathering system, underlying
leases and rights of way located on its Kansas Properties for $2.4 million. All of the net
proceeds from the sale were used to pay down a note the Company had issued to Dolphin
Offshore Partners, L.P. (&#147;Dolphin&#148;) dated May 18, 2004 from its original
principal amount of $2,500,000 to $150,000. This note evidenced a $2.5 million loan from
Dolphin to the Company the proceeds of which had been used primarily to funds the
Company&#146;s settlement of its litigation with its primary lender, Bank One, N.A.
Dolphin is the Company&#146;s largest shareholder. Peter E. Salas, who is the Chairman of
the Board of Directors of the Company, is the sole shareholder and controlling person of
Dolphin Management, Inc., the general partner of Dolphin. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May 19, 2005, the Company issued a note to Dolphin in the principal amount of $700,000
bearing interest at the rate of 12% per annum and payable on August 20, 2005 (the
&#147;$700,000 Note&#148;). The $700,000 Note replaced the balance due of $150,000 on the
Company&#146;s earlier note to Dolphin as described above and a $550,000 note to Dolphin
evidencing a loan in that principal amount made by Dolphin to the Company on December 31,
2004. The proceeds of that $550,000 loan were used in part to fund the Company&#146;s
exchange of a cash payment for a portion of the Company&#146;s outstanding Series A 8%
Cumulative Convertible Preferred Stock. Thereafter, the due date of the $700,000 Note was
extended on the same terms as the existing Note to December 31, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August 22, 2005, Dolphin loaned the Company the sum of $1,814,000 to fund the
Company&#146;s exchange of cash payments for the surrender of a portion of its Series B 8%
and Series C 6% Cumulative Convertible Preferred Stock. The loan was evidenced by a
promissory note to Dolphin on the same date and in the same principal amount of the loan
bearing interest at the rate of 12% per annum and due and payable on December 31, 2005
(the &#147;$1,814,000 Note&#148;). </FONT></P>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>








<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both
the $700,000 Note and the $1,814,000 Note were secured by all of the Company&#146;s
assets. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 5, 2005, Hoactzin Partners, L.P. (&#147;Hoactzin&#148;) subscribed for a 94.3%
working interest in a twelve well drilling program to be undertaken by the Company on its
Kansas Properties. In exchange for its interest in that drilling program, Hoactzin
surrendered to the Company the $700,000 Note and the $1,814,000 Note which had been
assigned to it by Dolphin. Under the terms of the twelve well drilling program, once
Hoactzin receives total proceeds from its working interest in the program in the amount of
$3,016,800 Hoactzin will pay the Company a management fee equal to 85% of the net revenues
attributable to its working interest in the Program for the remaining life of the twelve
wells. In addition, the Company has an option expiring March 31, 2006 to repurchase from
Hoactzin the obligation to drill the final six wells of the twelve well program by paying
to Hoactzin an amount equal to one half of the principal amount of the notes exchanged by
Hoactzin, plus interest on that amount at 6% per annum until the date of repurchase, and
granting to Hoactzin a 1/16 overriding royalty in both the six wells existing at the time
of repurchase and the next six wells in the Program drilled by the Company.  Hoactzin has agreed to extend the expiration date of the repurchase option from March 31, 2006 to an indefinite
future date being not later than the beginning of drilling of what would be the seventh well in the program if
the repurchase option has not been exercised.
 Peter E.
Salas, the Chairman of the Board of Directors of the Company, is the controlling person of
both Hoactzin and, as stated, he is also the sole shareholder and controlling person of
Dolphin Management, Inc., the general partner of Dolphin. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 limited availability
of alternative sources, and the belief that the terms of such transactions were at least
as favorable to the Company as could have been obtained through arms-length negotiations
with unaffiliated third parties. In each of the Company&#146;s transactions with Dolphin,
Peter E. 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>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
an offer made to all holders of the Company&#146;s B and C Shares, on September 12, 2005,
Dolphin exchanged all of its Series B Shares having an aggregate value of $1,148,760 for
4,595,040 shares of the Company&#146;s common stock. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April 21, 2005, options were granted under the Tengasco, Inc. Stock Incentive Plan for a
term of five years to the following officers of the Company to purchase shares of the
Company&#146;s common stock in the following amounts at a price of $0.27 per share which
was above the closing price of $0.23 of the Company&#146;s stock as listed on the AMEX on
that day: 1,2500,000 shares to Jeffrey Baily, the Company&#146;s Chief Executive Officer,
400,000 shares each to Mark A. Ruth, the Company&#146;s Chief Financial Officer, and Cary
V. Sorensen, Vice-President, Secretary and General Counsel to the Company. Each of these
options is for a term of five years and vests over a period of fours years with 20% vested
upon authorization and additional 20% on each anniversary date of authorization over the
next four years. </FONT></P>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>


















<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July 19, 2005, the Company issued 100,000 shares of its common stock each to two of its
directors, John A. Clendening and Clarke H. Bailey, and 50,000 shares to another director,
Neal F. Harding, for their services as members of the Audit Committee. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A055></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indebtedness
of Management</b></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 2 Left-TNR"  -->
<A NAME=A056></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parent
of the Issuer</I></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has no parent.</FONT></P>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A057></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PERFORMANCE GRAPH </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 208 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>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A058></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPARISON OF
CUMULATIVE TOTAL RETURN OF ONE OR MORE </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Default" -->
<A NAME=A059></A>
<H1 ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMPANIES, PEER GROUPS,
INDUSTRY INDEXES AND/OR BROAD MARKETS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Page Rule Single" FSL="Default" -->
     <HR ALIGN=LEFT WIDTH=100% SIZE=1 NOSHADE>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<A NAME=A060></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 </FONT></H1>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>


     <TH COLSPAN=15><FONT SIZE=1>FISCAL YEAR ENDING</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN=LEFT COLSPAN=3><FONT SIZE=1>COMPANY/INDEX/MARKET</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>12/29/2000</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>12/31/2001</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>12/31/2002</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>12/31/2003</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>12/31/2004</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>12/30/2005</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=46% ALIGN=LEFT>Tengasco Incorporated</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=1% ALIGN=RIGHT>100</TD>
        <TD WIDTH=2% ALIGN=LEFT>.00</TD>
     <TD WIDTH=5% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=1% ALIGN=RIGHT>69</TD>
        <TD WIDTH=2% ALIGN=LEFT>.58</TD>
     <TD WIDTH=5% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=1% ALIGN=RIGHT>9</TD>
        <TD WIDTH=2% ALIGN=LEFT>.24</TD>
     <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=1% ALIGN=RIGHT>6</TD>
        <TD WIDTH=2% ALIGN=LEFT>.30</TD>
     <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=1% ALIGN=RIGHT>2</TD>
        <TD WIDTH=2% ALIGN=LEFT>.18</TD>
     <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=1% ALIGN=RIGHT>3</TD>
        <TD WIDTH=1% ALIGN=LEFT>.36</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Crude Petroleum &amp; Natural Gas</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>100</TD>
        <TD ALIGN=LEFT>.00</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>91</TD>
        <TD ALIGN=LEFT>.76</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>97</TD>
        <TD ALIGN=LEFT>.82</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>157</TD>
        <TD ALIGN=LEFT>.10</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>199</TD>
        <TD ALIGN=LEFT>.58</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>286</TD>
        <TD ALIGN=LEFT>.73</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>AMEX Market Index</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>100</TD>
        <TD ALIGN=LEFT>.00</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>95</TD>
        <TD ALIGN=LEFT>.39</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>91</TD>
        <TD ALIGN=LEFT>.58</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>124</TD>
        <TD ALIGN=LEFT>.66</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>142</TD>
        <TD ALIGN=LEFT>.75</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>157</TD>
        <TD ALIGN=LEFT>.43</TD></TR>

</TABLE>






<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>


















<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A061></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOARD RECOMMENDATION AND
VOTE REQUIRED </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;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. If a broker
indicates on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter (i.e., a &#147;broker non-vote&#148;), those shares will
not be considered as present and entitled to vote with respect to that matter. 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>


<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A062></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="Workstation" -->
<A NAME=A063></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RATIFICATION OF
SELECTION OF RODEFER MOSS &amp; CO,PLLC AS INDEPENDENT AUDITORS  </FONT></H1>


<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May 31, 2005, the Company engaged Rodefer Moss &amp; Co, PLLC (&#147;Rodefer Moss&#148;)
of Knoxville, Tennessee to serve as its independent registered public accounting firm and
dismissed BDO Seidman LLP (&#147;BDO Seidman&#148;). The change in independent registered
public accounting firms was approved by the Audit Committee of the Company&#146;s Board of
Directors and thereafter ratified by the Company&#146;s stockholders at last year&#146;s
Annual Meeting. BDO Seidman audited the Company&#146;s financial statements for the year
ended December 31, 2004 and for several prior years. Rodefer Moss audited the
Company&#146;s financial statements for the year ended December 31, 2005. The Board&#146;s
Audit Committee has again recommended and the Board of Directors has approved the
engagement of Rodefer Moss as independent certified public accountants, to audit the
accounts for the Company for Fiscal 2006. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is advised that neither Rodefer Moss nor any of its partners has any material
direct or indirect relationship with the Company. The Audit Committee considers Rodefer
Moss 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>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A065></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Previous
Independent Auditors</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          BDO Seidman&#146;s audit report on the financial statements for the year ended
          December 31, 2004 was qualified for an uncertainty as to the Company&#146;s
          ability to continue as a going concern. BDO Seidman&#146;s audit report for that
          period contained no adverse opinion or disclaimer of opinion and was not
          qualified or modified as to audit scope or accounting principles. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          During the fiscal year ended December 31, 2004 and the subsequent interim period
          through May 31, 2005, there were no disagreements with BDO Seidman on any matter
          of accounting principle or practice, financial statement disclosure, or auditing
          scope or procedure which, if not resolved to BDO Seidman&#146;s satisfaction,
          would have caused it to make reference to the subject matter of the disagreement
          in connection with its reports. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          None of the reportable events set forth in Item 304(a)(1)(v) of Regulation S-K
          occurred within the year ended December 31, 2004 or within the period from
          January 1, 2005 through May 31, 2005 except, that on November 12, 2004, BDO
          Seidman advised management and the Audit Committee that it believed a material
          weakness existed in the Company&#146;s internal controls over financial
          reporting. The Company disclosed this material weakness in the Company&#146;s
          Quarterly Report on Form 10-Q for the quarter ending September 30, 2004 and in
          its</FONT></P>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>





<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Annual Report on Form 10-K for the year ended December 31, 2004. The Company
          reported that its disclosure controls and procedures were not effective to
          ensure that material information was recorded, processed, summarized and
          reported by management of the Company on a timely basis in order to comply with
          the Company&#146;s disclosure obligations under the Securities Exchange Act of
          1934, and the rules and regulations thereunder as to one particular matter. That
          matter involved an error in the calculation of the estimated fair value of the
          Company&#146;s mandatory preferred stock for presentation in accordance with
          Statement of Financial Accounting Standard No. 150 &#147;Accounting for Certain
          Financial Instruments with Characteristics of both Liabilities and Equity.&#148;
          Management noted that the matter (i) related principally to the implementation
          of complex and new calculations under a newly implemented accounting standard,
          and (ii) that the error described did not result from the failure of the
          Company&#146;s disclosure controls and procedures to make known to the
          appropriate officials and auditors the facts concerning the Company&#146;s
          convertible preferred stock. Management after consulting with BDO Seidman
          determined that this could be remedied by continuing education and professional
          development of accounting staff on new accounting pronouncements and this would
          be sufficient to prevent any similar reoccurrence. The Company has and is
          continuing to provide necessary and appropriate educational and professional
          development and such efforts have remediated the material weakness described
          herein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Audit Committee of the Board of Directors participated in and approved the
          decision to change accountants. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The Company provided BDO with a copy of the foregoing statements and requested
          that BDO Seidman furnish it with a letter addressed to the Securities and
          Exchange Commission (&#147;SEC&#148;) stating whether or not it agreed with such
          statements. BDO Seidman has provided the Company with a copy of the letter it
          sent to the SEC stating that it had reviewed and agreed with the Company&#146;s
          statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A066></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;New
Independent Accountants</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to its engagement of Rodefer Moss as its new independent auditors, the Company did not
consult with Rodefer Moss regarding (i) the application of accounting principles to a
specified transaction, either completed or proposed; (ii) the type of audit opinion that
might be rendered by Roderfer Moss on the Company&#146;s financial statements; or (iii)
any other matter that was the subject of a disagreement between the Company and its former
auditors as described in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as
that term is defined in Item 304(a)(1)(v). </FONT></P>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

























<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A067></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 the
Company&#146;s prior independent accountants, BDO Seidman and the Company&#146;s current
independent accountants, Rodefer Moss, for the audit of the Company&#146;s annual
consolidated financial statements for the fiscal years ended December 31, 2005 and
December 31, 2004, and fees for other services rendered by BDO Seidman and Rodefer Moss
during those periods: </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=760>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=74% ALIGN=LEFT>Fee Category</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=8% ALIGN=RIGHT>Fiscal 2005</TD>
        <TD WIDTH=3% ALIGN=LEFT></TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp; &nbsp;Fiscal 2004</TD><TD WIDTH=8% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT></TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br>Audit Fees</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 123,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 155,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br>Audit-Related Fees</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br>Tax Fees</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 0</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br>All Other Fees</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 1,500</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 12,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>

<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br>Total Fees</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 125,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT> 167,000</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>

</TABLE>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
fees in 2004 were fees of BDO Seidman, the Company&#146;s independent accountants during
that period. All fees in 2005 with the exception of $18,000 under the category Audit Fees
provided by the Company&#146;s new accountants, Rodefer Moss, were fees charged by the
Company&#146;s former accountants, BDO Seidman, relating primarily to their audit of the
Company&#146;s financial statement for the year ended December 31, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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="Workstation" -->
<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="Workstation" -->
<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, etc. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the services for 2004 and 2005 were performed by the full-time, permanent employees of
either BDO Seidman or Rodefer Moss. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the 2005 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 2005. The Audit Committee considered whether the provisions of such
services, including non-audit services, by BDO Seidman and Rodefer Moss were compatible
with maintaining their independence and concluded they were. </FONT></P>





<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>
















<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<A NAME=A068></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOARD RECOMMENDATION AND
VOTE REQUIRED </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 to ratify the
appointment of Rodefer Moss &amp; Co, PLLC as independent auditors of the Company for
Fiscal 2006. A representative of Rodefer Moss &amp; Co, PLLC 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 Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 Audit
Committee and the Board of Directors will review the future selection of the
Company&#146;s independent auditors. </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;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 Rodefer Moss &amp; Co, PLLC as
the Company&#146;s independent certified public accountants for Fiscal 2006. Shares voted
as abstaining will count as votes cast. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular matter
(i.e., a &#147;broker non-vote&#148;), those shares will not be considered as present and
entitled to vote with respect to that matter. 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>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>28</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>










<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A069></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>STOCKHOLDERS&#146;
PROPOSALS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<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 2007 annual meeting must be received in
writing, by the President of the Company at its offices by November 22, 2006 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 2007 Annual Meeting
is advanced or delayed more than 30 days from the date of the 2006 Annual Meeting,
stockholder proposals intended to be included in the proxy materials for the 2007 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 2007 Annual Meeting. Upon determination by
the Company that the date of the 2007 Annual Meeting will be advanced or delayed by more
than 30 days from the date of the 2006 Annual Meeting, the Company will disclose such
change in the earliest possible Quarterly Report on Form 10-Q.<br><br>By Order of the Board of Directors</font></p>



<TABLE align=center BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="TOP">
     <TD>Cary V. Sorensen, </TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD>Secretary</TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD></TR>
</TABLE>




<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>





<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A070></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="Workstation" -->
<A NAME=A071></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THIS PROXY IS
SOLICITED ON BEHALF </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<A NAME=A072></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OF THE BOARD OF
DIRECTORS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned hereby appoints Jeffrey R. Bailey 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 March 1, 2006 at the Annual
Meeting of stockholders to be held at the Homewood Suites by Hilton, 10935 Turkey Drive,
Knoxville, Tennessee, on Monday, April 24, 2006, 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="Workstation" -->
<A NAME=A073></A>
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Please mark boxes / / in
blue or black ink. </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;
          Election of Directors: Clarke H. Bailey, Jeffrey R. Bailey, John A. Clendening,
          Neal F. Harding, Carlos P. Salas and Peter E. Salas. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left-TNR" FSL="Workstation" -->
<A NAME=A074></A>
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Mark
only one of the two boxes for this item)</I></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>/
/</B> VOTE FOR all nominees named above except those who may be named on these two lines: </FONT></P>

<!-- MARKER FORMAT-SHEET="Three Quarters Rule" FSL="Default" -->
     <HR ALIGN=CENTER WIDTH=75% SIZE=1 NOSHADE>

<!-- MARKER FORMAT-SHEET="Three Quarters Rule" FSL="Default" -->
     <HR ALIGN=CENTER WIDTH=75% SIZE=1 NOSHADE>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<A NAME=A075></A>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(OR) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>/
/</B> VOTE WITHHELD as to all nominees named above. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Flush Lv 0- TNR" FSL="Default" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;
          Proposal to ratify appointment of Rodefer Moss &amp; Co, PLLC as the
          Company&#146;s independent certified public accountants for Fiscal 2006: </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;
FOR      /   /    AGAINST  /   /   ABSTAIN  /   /  </FONT></P>






<!-- MARKER FORMAT-SHEET="Para (List) Hang LV 1-TNR" FSL="Workstation" -->
          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3. </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               In their discretion, the Proxies are authorized to vote upon such other business
               as may properly come before the meeting. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 and 2. </FONT></P>



<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>











<!-- 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
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>
















<TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH></TH>
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN="TOP">
     <TD>Dated: _______________________ , 2006
</TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD><br>X ____________________________<br>Signature</TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD><br>X _____________________________<br>Print Name(s)</TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD><br>X ____________________________<br> Signature, if held jointly
</TD>
     <TD></TD>
     <TD></TD></TR>
<TR VALIGN="TOP">
     <TD></TD>
     <TD></TD>
     <TD></TD></TR>
</TABLE>








<P ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31</FONT></P>
<!-- MARKER PAGE="sheet: 1; page: 1" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>












<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(1)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Unless otherwise stated, all shares of Common Stock are directly held with sole
          voting and dispositive power. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(2)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of 20,839,492 shares held directly by Dolphin Offshore Partners, L.P.
          (&#147;Dolphin&#148;) and, 218,000 shares held directly by Peter E. Salas who is
          the Chairman of the Company&#146;s Board of Directors and is the sole
          shareholder and controlling person of Dolphin Management, Inc, the general
          partner of Dolphin. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(3)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Ownership of shares reported on Schedule 13F filed with the SEC by member of a
          group consisting of SC Fundamental Value Fund, L.P., SC Fundamental LLC, SC
          Fundamental Value BVI, Ltd., SC Fundamental BVI, Inc., SC BVI Partners, PMC-BVI,
          Inc., Peter M. Collery, Neil H. Koffler and John T. Bird. This group initially
          reported its ownership on a Schedule 13G filed with the SEC. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(4)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Unless otherwise stated, all shares of common stock are directly held with sole
          voting and dispositive power. The shares set forth in the table are as of March
          1, 2006. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(5)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of 1934
          based upon 58,605,698 shares of common stock being outstanding as of the record
          date, March 1, 2006. Shares not outstanding that are subject to options or
          warrants exercisable by the holder thereof within 60 days of March 1, 2006 are
          deemed outstanding for the purposes of calculating the number and percentage
          owned by such stockholder, but not deemed outstanding for the purpose of
          calculating the percentage of any other person. Unless otherwise noted, all
          shares listed as beneficially owned by a stockholder are actually outstanding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(6)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of 100,000 shares held directly and a vested, fully exercisable option
          to purchase 10,000 shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(7)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of 76,287 shares held directly and vested, fully exercisable options to
          purchase 310,000 shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(8)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of 230,000 shares held directly and a vested, fully exercisable option
          to purchase 10,000 shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(9)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of a vested, fully exercisable option to purchase 10,000 shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(10)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of 218,000 shares held directly and 20,839,492 shares held directly by
          Dolphin Offshore Partners, L.P. (&#147;Dolphin&#148;). Peter E. Salas the
          Chairman of the Company&#146;s Board of Directors is the sole shareholder and
          controlling person of Dolphin Management, Inc which is the general partner of
          Dolphin. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(11)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of 100 shares held directly and vested, fully exercisable options to
          purchase 140,000 shares. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(12)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of shares underlying vested, fully exercisable options. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(13)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Consists of shares held directly and indirectly by management, 20,839,492 shares
          held by Dolphin and 600,000 shares underlying vested, fully exercisable options,
          . </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(14)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Richard T. Williams replaced Malcolm E. Ratliff as the Company&#146;s Chief
          Executive Officer on February 3, 2003 and continued in that position until he
          resigned as of December 31, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(15)</SUP>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          The potential realizable value is reported net of the option exercise price, but
          before income taxes associated with exercise. These amounts represent assumed
          annual compounded rates of appreciation of 5% and 10% only from the date of
          grant to the end of the option. Actual gains, if any, on stock option exercises
          are dependent on future performance of the Company&#146;s common stock, as
          applicable, overall stock market conditions, and the optionee&#146;s continued
          employment through the vesting period. The amounts reflected in this table may
          not necessarily be achieved. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(16)</SUP>
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Option vests over a period of fours years with 20% vested upon authorization
          and additional 20% on each anniversary date of authorization over the next four
          years. </FONT></p>


<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;<SUP>(17)</SUP>
          &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 $0.40 per share on December 30, 2005, the last trading day
          of Fiscal 2005, as reported by the American Stock Exchange. Mr. Bailey was
          granted an option to purchase 1,250,000 shares of the Company&#146;s common
          stock at a price of $0.27 per share. That option vests over a period of four
          years with 20% vested on authorization and an additional 20% vesting on the
          anniversary date of authorization over the next four years. The option expires
          on April 20, 2010. </FONT></P>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
