Tengasco Inc. reported a second quarter loss of $858,197, or 9 cents per diluted share, versus a loss of $336,034, or 4 cents per diluted share for the second quarter in 2001. Among other things, the company attributed the loss to a “substantial decline” in natural gas and oil prices. Revenues declined 30% for the quarter and 23% for the first six months of the year.

In addition to declining commodity prices, Tengasco said that the on-going repairs to address fluid problems in some of its wells in the Swan Creek field and an interruption of sales to BAE Ordnance Systems while it connected additional gas burning facilities to its operations, were also responsible for its decline in revenues.

“Although our second-quarter results do not reflect it, Tengasco exhibited significant operational improvements during the second quarter,” said Jeffrey R. Bailey, Tengasco’s president. “We are successfully addressing the operational issues that were preventing our Swan Creek Field from reaching its full potential, and now believe that these initiatives will be the catalyst for future growth.”

The company said the earnings decline in the periods were also due to increased depreciation and depletion charges, non-recurring charges under the company’s hedging agreement with Bank One and significant increased accounting and legal fees caused by the company’s litigation with Bank One. The company announced that as of June 30 it will no longer hedge its oil and gas production.

“We continue to believe that our oil and gas producing properties and our intrastate pipeline assets are undervalued,” said M.E. Ratliff, CEO of Tengasco. “We also expect production to increase during the balance of the year and gas and oil prices to stabilize at higher levels. Accordingly, I am optimistic that the company’s operations will be profitable by the end of the year.”

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