Tengasco Announces Third Quarter 2010 Financial Results
KNOXVILLE, Tenn., Nov. 12, 2010 /PRNewswire-FirstCall/ -- Tengasco, Inc. (NYSE Amex: TGC) announced today its financial results for the quarter ended September 30, 2010. The Company also filed today with the SEC its report on Form 10-Q for the quarter ended September 30, 2010.
The Company recognized $3.3 million in revenues during the third quarter of 2010 compared to $2.6 million in the third quarter of 2009, a 27% increase over the prior period. The increase in third quarter 2010 revenues was due to a $7.68 or 13% increase in the average oil price and a 6 thousand barrel or 16% increase in oil sales volume. Kansas oil prices in the third quarter of 2010 averaged $68.64 per barrel compared to $60.96 per barrel in the third quarter of 2009. The Company recorded a $(0.1) million non-cash unrealized loss on derivatives related to its oil hedging agreement for the third quarter of 2010. The Company realized net income attributable to common shareholders of $0.2 million or $0.00 per share of common stock during the third quarter of 2010, compared to a net loss in the third quarter of 2009 of $(0.4) million or $(0.01) per share of common stock. In the third quarter of 2010, the Company had income from operations of $0.5 million compared to income from operations of $0.3 million in the third quarter of 2009.
The Company recognized $9.4 million in revenues during the first nine months of 2010 compared to $6.8 million in the first nine months of 2009, a 38% increase over the prior period. The increase in revenues was primarily due to a $20.48 or 41% increase in the average oil prices in 2010. Oil prices in the first nine months of 2010 averaged $70.22 per barrel compared to $49.74 per barrel in the first nine months of 2009. The Company realized net income attributable to common shareholders of $1.2 million or $0.02 per share of common stock during the first nine months of 2010 compared to a net loss in the first nine months of 2009 to common shareholders of $(0.9) million or $(0.02) per share of common stock. During the first nine months of 2010, the Company had income from operations of $1.5 million compared to income from operations of $0.1 million during the first nine months of 2009.
Jeffrey R. Bailey, CEO, said "We are pleased that our net oil sales increased from 35,000 barrels in the first quarter 2010 to 46,000 barrels in the third quarter 2010, a 31% increase. We accomplished this increase in production through additional drilling and polymer treatments in Kansas that we have been able to perform with additional cash flow this year following the drastic fall in prices that began in late 2008 and continued through mid-2009."Mr. Bailey continued: "Through the first nine months of 2010 we drilled 6 wells, with 4 more scheduled to be drilled between now and the end of the year. Four of the six wells drilled were producers, with the Albers B #2 leading the way by producing more than 16,000 gross barrels of oil in a little over 5 months. We have also done 12 polymer jobs mostly in the Riffe field properties that we purchased in July 2008. All together those polymers have added a cumulative 18,000 additional barrels to our nine-month total. We have one more polymer to bring on in November 2010 before winter suspends our polymer treatments. Our production total for October 2010 was over 22,000 barrels, the highest monthly total this year and the highest since January 2009, a period of 21 months. With oil prices projected to remain in the mid to upper seventies and maybe even the eighties, we anticipate a more active drilling schedule in 2011. We continue to keep a cushion of available borrowing under our credit facility, in case a suitable acquisition target becomes available. However, we may also consider using borrowings to maintain or accelerate drilling in 2011." Mr. Bailey concluded: "The Company's Methane Project in Tennessee had no revenue in the third quarter of 2010, after providing about $170,000 in revenues during the second quarter and demonstrating a long period of continuous daily production. The project was offline the entire third quarter primarily as a result of ongoing major repairs by the landfill owner to its gas collection system. During this down time, we have performed repairs and scheduled maintenance on our own equipment that should assist in increasing production volumes on restart when the landfill owner completes the gas collection system repairs which we currently anticipate should occur by early 2011." "We have had increased operating income in the third quarter having seen oil prices holding in the $70 range even in times of reduced demand for oil through 2010 so far. In fact prices have exceeded $81.50 for October 2010 which is the upper end of the collar in our hedging agreement. As a result, we will be making a payment of $4,500 under the hedge for the month of October 2010. Our growth in production this year means that the fixed number of barrels hedged has become only about half of our increased actual production, so we will have the full upside price benefit on the unhedged half of our produced barrels." Forward-looking statements made in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties which may cause actual results to differ from anticipated results, including risks associated with the timing and development of the Company's reserves and projects as well as risks of downturns in economic conditions generally, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. SOURCE Tengasco, Inc.
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