KNOXVILLE, Tenn., Feb. 22, 2012 /PRNewswire/ -- Tengasco, Inc.
(NYSE Amex: TGC) announced results of its drilling operations for
the year ended December 31,
2011. The Company announced that as a result of its drilling
26 wells in 2011, with 16 completed as producers and 10 dry holes,
and polymer activities primarily in Kansas, the Company at December 31, 2011 had increased the Company's
proved oil reserves to 2.6 million barrels of oil net to the
Company's interest. The Company also announced that during
2011 it had achieved a record gross production volume of
246,000 gross barrels of oil. This resulted in the Company's ratio
of reserve replacement in 2011 being 137% of the oil the Company
actually produced in 2011.
The Company will report financial results for 2011 by filing its
Form 10-K for the year ended December
31, 2011. The Company intends to file its Form
10-K for 2011 and to simultaneously issue an earnings press
release, on or before March 30,
2012.
In early 2012, the Company purchased an inventory of casing,
tubing, and pump jacks for $1.7
million to be used in the first 20 wells of a program to
drill 36 or more wells as quickly as practical in 2012. The wells
will be drilled primarily from the Company's cash flow and some use
of the borrowing base, and will not involve any third party
drilling partners. The Company has contracted for a drilling
rig to be used exclusively drilling for the Company throughout the
year, with an option to add additional rigs. Plans primarily
include oil well drilling in Kansas, but also include several wells in
Tennessee. Since the start of
2012, the Company has drilled and completed in Kansas as producers the first three wells and
begun the fourth well in this program. The Company
anticipates it can secure a second rig soon to increase the pace of
our 2012 capital plan.
The Company announced that on January 25,
2012, the Company's wholly-owned subsidiary, Manufactured
Methane Corporation ("MMC"), commenced sales of electricity
generated at the Carter Valley site of its methane extraction
facilities. The electricity generated is sold under contract
between MMC, Holston Electric Cooperative, Inc., the local
distributor, and Tennessee Valley Authority through TVA's
Generation Partners program. This will offset MMC's
electrical costs and provide a second revenue stream from the
methane facilities. Methane gas sales will continue simultaneously
with electric generation. The electric generation also
reduces oxygen input to the methane plant, which along with
improvements to the collection system in the field have together
resulted in consistently high levels in-service time since January
25. Although a portion of the gas used for generation of
electricity will not be available for methane extraction, the use
of the gas for electricity is equivalent to sale of the methane for
almost $15 per MMBtu, more than
double the price currently received for methane sales and six times
the current natural gas spot market price.
Jeffrey R. Bailey, CEO said: "We
have set an all-time annual company production record during the
year 2011, eclipsing our 2008 total of about 238,000 barrels of
gross production with about 246,000 barrels in 2011. This is
notable since we did not set any daily, weekly, monthly, or
quarterly production record in 2011; all those records were reached
during 2008. Our oil production has resulted in a reserve
replacement percentage of 137% as we are growing the reserves
additions faster than production declines simply from generic
drilling. Our drilling has been paid for mostly from cash
flow due to currently higher oil prices and we have increased the
reserves without the benefit of additions by acquisition. It
is very encouraging that the Company can add reserve growth of more
than 100% and now follow up with an ambitious 2012 drilling budget.
Since we did no drilling in 2009, and were limited by cash
availability during the first half of 2010, these record 2011
drilling results represent a comeback of which we are very
proud. We plan to supplement this success with a more
aggressive drilling program in 2012, beginning with a 36 well
program primarily on our existing properties in Kansas to be drilled as quickly as conditions
permit, with price-driven capital caution. All of these wells
will be Company owned wells, with no drilling partners. This
should result in maximizing the value of the Company particularly
in view of the currently high commodity prices for oil which
continue to support high values of producing assets, to the benefit
of our shareholders. And I believe these favorable operational
results will be reflected in our financial results that we will be
reporting in our annual report on Form 10-K."
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
2011 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.