KNOXVILLE, Tenn., March 31, 2011 /PRNewswire/ -- Tengasco, Inc.
(NYSE Amex: TGC) announced today that it has filed with the
Securities and Exchange Commission its Annual Report on Form 10-K
for the year ended December 31, 2010.
The Company reported total proven reserves at December 31, 2010 of 2.5 million barrels, valued
at $48.3 million on a discounted
future net cash flow basis, up from 2.3 million barrels valued at
$28.2 million at the end of 2009.
With production of 240,000 barrels during 2010, this reserve
increase demonstrates a production replacement gain of 186%.
The Company realized revenues of $13.2
million in 2010 compared to $9.7
million in 2009. Revenues increased $3.3 million from 2009 due to an increase in oil
prices in Kansas as prices
averaged $72.14 in 2010 compared to
$54.48 in 2009 and increased
$0.1 million due to volume increases
in Kansas oil sales. In
addition, revenues from the methane project increased $0.1 million in 2010 over 2009 levels.
The Company reported a net loss to holders of common stock of
$(1.7) million or $(0.03) per share in 2010 compared to a net loss
to holders of common stock of $(2.0)
million or $(0.03) per share
in 2009.
The net loss for 2010 included the impact of a non-cash
unrealized gain on the Company's derivative contracts and a
non-cash impairment of the Company's pipeline assets. The net
loss for 2009 included the impact of a non-cash unrealized loss on
the Company's derivative contracts. If these non-cash items
are excluded from the Company's net income (loss), the Company
would report an adjusted net income to holders of common stock of
$0.9 million or $0.02 per share in 2010 compared to an adjusted
net loss to holders of common stock of $(1.2) million or $(0.02) per share in 2009 (a non-GAAP measure).
Below is a reconciliation of these non-GAAP financial
measures used in this release, to comparable GAAP financial
measures (in thousands):
|
|
|
Years ended December
31,
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
Net income (loss)
(GAAP)
|
$ (1,745)
|
|
$ (2,018)
|
|
|
|
|
|
|
Unrealized
(gain) loss on derivatives
|
(626)
|
|
1,313
|
|
Impairment
of pipeline assets
|
4,957
|
|
-
|
|
Tax
effect
|
(1,664)
|
|
(505)
|
|
|
|
|
|
|
Adjusted net income (loss)
(non-GAAP)
|
$
922
|
|
$ (1,210)
|
|
|
|
|
|
|
|
During 2010, the Company recorded a $0.5
million gain on derivatives. The gain was composed of
a $0.6 million unrealized gain
partially offset by $0.1 million of
settlement payments made to Macquarie, the counterparty under the
Company's hedge agreement. In 2009, the Company had recorded
a $(1.3) million unrealized loss on
derivatives.
During 2010, the Company recorded a $5
million ($3 million net of tax
effect) non-cash writedown of its 65-mile pipeline system asset in
Tennessee. This writedown
resulted from the Company's assessment that cash flows generated
from the pipeline were insufficient to recover the pipeline's net
book value. During the fourth quarter of 2010 the Company
received expressions of interest to purchase from potential
purchasers of the pipeline asset which were significantly below the
asset's net book value. These offers indicated that the carrying
amount of the pipeline may not be recoverable.
The Company recorded a deferred tax benefit of $1.1 million in 2010.
Jeffrey R. Bailey, Chief
Executive Officer, said "The Company's revenues from operations
increased in 2010 to $13.2 million,
an increase of 36% above 2009 revenues of $9.7 million. Our production volumes of oil
in Kansas also began to increase
as a result of increased drilling activity which has allowed us to
begin to catch up from the period of low drilling activity in 2009
and early 2010 due to low commodity prices. Despite these positive
results in revenues and production, we have reported a loss of
$0.03 per share for 2010 as a result
of our non-cash writedown of our Tennessee pipeline system. This system
was built to deliver gas volumes from Swan Creek, but with the
natural decline of Swan Creek volumes and low gas prices, the
pipeline capacity has been underutilized because the line is not
interconnected to other fields. The pipeline was being
carried on our books at its depreciated cost of $12 million, and we have written it down to
$7 million. The difference of
$5 million is counted against
earnings per share even though it is a non-cash item. Along
this same line, we reported a non-cash unrealized gain on the hedge
agreement of $.6 million, and a
deferred tax benefit of $1.1 million
which partially offset the effect on earnings from the pipeline
writedown."
Mr. Bailey continued: "As we move into 2011 we have begun
drilling in Kansas again with our
12th well of the year finishing this week. We look forward to
increasing revenues through the drill bit. We continue to
drill using our own cash flow from operations, without any drilling
partners that would dilute the Company's interest in the wells, and
our senior lender has increased our borrowing base from
$14 million to $20 million. We
believe this is a vote of confidence in our chosen course to grow
the company through predominantly focusing on increasing production
in Kansas during these times of
high commodity prices for oil."
The statements contained in this release that are not purely
historical are forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements
include statements regarding "expectations," "anticipations,"
"intentions," "beliefs," or "strategies" regarding the future.
Forward-looking statements also include statements regarding
revenue, margins, expenses, and earnings analysis for 2010 and
thereafter; oil and gas prices; reserve calculation and valuation;
exploration activities; development expenditures; costs of
regulatory compliance; environmental matters; technological
developments; future products or product development; the Company's
products and distribution development strategies; potential
acquisitions or strategic alliances; and liquidity and anticipated
cash needs and availability. The Company's actual results
could differ materially from the forward-looking statements.
SOURCE Tengasco, Inc.