With that, I'll introduce Jeff Bailey, our CEO and he will proceed with the call.Jeff Bailey Thank you for joining our second quarter conference call. Just wanted to go over again, if you want to follow along, if you are listening in and you want to follow along with the presentation. The PDF version of that presentation is on our website at tengasco.com. For that first page that you come to you can click on that and move in to that slide show and you can follow along and we will keep you up to date with the pages that we are on. So I think overall you saw from the press release, we had a pretty good quarter and so we will talk in detail about some of the events, we will talk about our drilling that we have, we will talk about our recent polymer jobs and we will talk about those issues and we will go forward. But first I want to walk you through the financials and I am going to let my Mike Rugen do that, so Mike go ahead. Mike Rugen Thanks Jeff. For those following along on the PDF presentation I am going to start on slide three and I will try to keep you posted on which slide that I am going through. Slide three is the overview of the quarterly financials. As you could see that net income increased a $110,000 or 11% from $977,000 or $0.02 a share in the second quarter of 2011 to a 1,087,000 or $0.02 a share in the second quarter of 2012. This was made up of several different factors and I will go basically line by line and discuss the changes between the quarters. Starting with revenue. Revenue increased $445,000 or 9% from $4.785 million in the second quarter of 2011 to $5.23 million in the second quarter of 2012. Of that $445,000 increase, $900,000 was actually related to a 9400 barrel increase in sales volumes in our Kansas production. Sales volumes went from 47,900 barrels in 2011 to 53,300 barrels in 2012.
That resulted primarily from the drilling in polymer programs that we have been conducting not only this year, but the second half of last year. $138,000 of the increase was related to increase in our MMC revenues. We had $62000 in revenues in the second quarter of 2011. It actually was $200,000 in the second quarter of 2012.A $114,000 of that $138,000 increase actually related to electricity sales. If you remember we started selling electricity out there in January of 2012. These increases were partially offset by a $9.56 per barrel decrease in the oil price. We average $95.46 in the second quarter of 2011. We only averaged $85.90 in the second quarter of 2012. Production cost and taxes increased in $328,000or 20% from the $1.678 million in 2011 to $2 million in 2012. $150,000 of this increase really related to the change in the crude oil inventory, $100,o00 of the increase related to increase in landfill expenses and finally the remainder related to miscellaneous increases in expenses in our fuel cost in Kansas. DD&A expense increased $238,000 or 36% from $666,000 in 2011 to $904,000 in 2012. The increase was primarily related to higher oil and gas depletion costs. Approximately half of the increase was due to increase in volumes that we discussed previously. The other half of the increase related to higher DD&A rates we experienced in that quarter. General and administrative expenses decreased to $119,000 or 17% from $719,000 in 2011 to $600,000 in 2012. That decrease was primarily related to timing. Interest expense increased $42,000 or 26% from $164,000 in 2011 to $206,000 in 2012, primarily related to increased bank borrowings which was used to supplement cash flows in funding our drilling and polymer programs. Read the rest of this transcript for free on seekingalpha.com