# PROMISSORY NOTE

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|$550,000                              | 
|Knoxville, TennesseeDecember 30, 2004 | 

FOR
VALUE RECEIVED, the undersigned, TENGASCO, INC., a Tennessee corporation and TENGASCO
PIPELINE CORPORATION, a Tennessee corporation (the Maker whether one or
more), jointly and severally promise to pay to the order of Dolphin Offshore Partners, LP,
whose address is care of Dolphin Asset Management Corporation, 129 East 17th
St., New York, N.Y. its successors and/or assigns (said parties and any subsequent holders
hereinafter being collectively called the Holder at 129 East
17th St., New York, N.Y (or at such other place as the Holder hereof may
designate) the principal sum of FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000), (the
Principal), plus interest (the Interest) at the rate set forth
below on the Principal from time to time remaining unpaid.

Interest
on the outstanding Principal balance shall accrue at a rate of twelve percent (12%) per
annum based upon a 360-day year. Interest on the unpaid principal balance shall accrue
from date hereof and shall be payable forty-five days after the end of each calendar
quarter. The entire unpaid Principal and any accumulated unpaid Interest thereon shall be
due (the Due Date) on May 20, 2005.

This
Note is secured by a lien on following property wherever located and whether now/owned or
hereafter owned or acquired by Maker, whether or not affixed to realty, and all Proceeds
and Products thereof in any form, and all parts, accessories, attachments, special tools,
additions, replacements, substitutions and accessions thereto or therefor and in all
increases or profits received therefrom (Collateral): all of Makers interest, either
real or personal, tangible or intangible; in that certain undivided interest in pipeline
facilities owned by the Company and described in Exhibits A and B attached
hereto and incorporated herein by reference.

Maker
agrees that Maker will pay the principal and all accumulated and unpaid interest in full
within ten days of closing of any sale by the Maker of either of the pipelines described
on Exhibits A or B attached hereto to any third party.

This
Note is a Note referred to in the Continuing Security Agreement dated December 3, 2003
between Maker and Holder, and is entitled to the benefits and subject to the terms thereof
and may be prepaid in whole or in part and secured by the collateral as provided therein.

1.       
          Default. The happening of any of the following events shall constitute an
          event of default hereunder: failure of Maker to pay in full any Principal
          payment or Interest Payment due hereunder promptly when it becomes due; the
          occurrence of any one or more of the Events of Default specified in the Security
          Agreement or the Maker becoming bankrupt, insolvent or if any bankruptcy
          (voluntary or involuntary) or insolvency proceedings (as said terms
          insolvent and insolvency proceedings are defined in the
          Uniform Commercial Code of Tennessee) are instituted or made by or against
          Maker, or if application is made for the appointment for a receiver for the
          Maker or for any of the assets of any Maker, or as assignment is made for the
          benefit of the Makers creditors.

Upon
the happening of any event of default as defined herein, the Holder, at its option, may
declare the entire unpaid Principal balance of this Promissory Note without notice or
demand, together with accrued Interest, to be immediately due and payable without notice
or demand. In the event of default, the then unpaid principal balance hereof shall bear
interest from the time of such default at the maximum legal rate permissible.

In
addition to payment of Interest and Principal, if there is a default in this Note, the
Holder shall be entitled to recover from the Maker all the Holders costs of
collection, including the Holders attorneys fees (whether incurred in
connection with any judicial, bankruptcy, reorganization, administrative, appeals or other
proceedings and whether such fees or expenses arise before proceedings are commenced or
after entry of any judgment), and all other costs or expenses incurred in connection
therewith.

2.       
          Waiver. With respect to the payment hereof, the Maker waives all rights
          of exemption of property from levy or sale under execution or the process for
          the collection of debts under the Constitution or laws of the United States or
          of any state thereof, and demand, presentment, protest, notice of dishonor, suit
          against any party, and all other requirements necessary to charge or hold any
          Maker liable hereunder.

No
failure or delay on the part of the Holder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the Maker or the
Holder at law, in equity or otherwise. Any amendment, supplement or modification of or to
any provision of this Note, any waiver of any provision of this Note and any consent to
any departure by the Maker from the terms of any provision of this Note, shall be
effective (i) only if it is made or given in writing and signed by the Maker and the
Holder of this Note and (ii) only in the specific instance and for the specific purpose
for which made or given.

3.       
          Fees and Costs. The Maker agrees to pay all filing fees and taxes, and
          all costs of collection or securing or attempting to collect or secure the
          payment thereof, including attorneys fees, whether or not involving
          litigation and/or appellate proceedings.

4.       
          Remedies. The Holder shall not by any act, delay, omission or otherwise
          be deemed to have waived any of its rights or remedies, and no waiver of any
          kind shall be valid, unless in writing and signed by the Holder. All rights and
          remedies of the Holder shall be cumulative. Furthermore, the Holder shall be
          entitled to all the rights of a Holder in due course of a negotiable instrument.
          In the event of default, Holder shall have all remedies available to a secured
          party under the Uniform Commercial Code. Holder shall give Maker ten business
          days notice in writing of any public or private sale of the property securing
          this note. Holder shall incur no liability as a result of the sale of the
          property securing this note, other than for its own negligence, willful
          misconduct, or bad faith.

5.       
          Warranty of Title. The seller warrants that the Makers title to the
          property is free of any encumbrance.

6.       
          Governing Law. This Note shall be governed by and construed in accordance
          with the laws of the State of New York. Any provision of this Note that may be
          unenforceable or invalid under any law shall be ineffective to the extent of
          such unenforceability or invalidity without affecting the enforceability or
          validity of any other provision hereof.

7.       
          Notice. Any notice required to be given to any person shall be deemed
          sufficient if mailed, postage prepaid, to such persons address as set
          forth in this Note.

8.       
          Successors and Assigns. The provisions of this Note are binding on the
          assigns and successors of Maker and shall inure to the benefit of the Holder and
          its successors and assigns.

9.       
          Collection. If this Note is not paid upon demand or according to the
          tenor hereof and strictly as above provided, it may be placed in the hands of an
          attorney at law for collection. In such event, each party liable for payment
          thereof, as Maker, endorser, guarantor or otherwise, hereby agrees to pay the
          holder hereof, in addition to the sums above stated, a reasonable
          attorneys fee, whether or not suit be initiated, which fee shall include
          attorneys fees at the trial level and on appeal, together with all costs
          incurred. IN THE EVENT THAT LITIGATION IS INITIATED FOR THE COLLECTION OF THE
          OBLIGATION EVIDENCED BY THIS NOTE, THEN MAKER HEREBY WAIVES ANY RIGHT TO TRIAL
          BY JURY REGARDING THIS NOTE AND ANY AGREEMENT OR INSTRUMENT SECURING SAME, AND
          THE PREVAILING PARTY IN SUCH LITIGATION SHALL BE ENTITLED TO AN AWARD FOR COSTS
          AND REASONABLE ATTORNEYS FEES INCURRED IN THE LITIGATION, INCLUDING ALL
          TRIALS AND APPEALS RELATING THERETO.

The
Maker hereby irrevocably consents and submits to the exclusive jurisdiction of the United
States federal courts and the courts of the State of New York located in
New York, New York, in connection with any action or proceeding arising out of
or relating to this Note or any document or instrument delivered pursuant hereto.

For
purposes of any action that may be brought to enforce this Note, the Maker agrees that
this Note constitutes an instrument for the payment of money only within the meaning of
Section 3213 of the Civil Practice Law and Rules of the State of New York.

Notwithstanding
anything to the contrary, in no event, whether by reason of advancement of the proceeds
hereof, acceleration of maturity of the unpaid balance hereof, or otherwise, shall the
amount taken, reserved or paid, charged or agreed to be paid, for the use, forbearance or
detention of money advanced pursuant hereto or pursuant to any other document executed in
connection herewith, exceed the maximum rate allowed by New York law. If any one or more
of the provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any other provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.

The
Maker shall execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any governmental authority or any other
person) as may be reasonably required or appropriate to carry out or to perform the
provisions of this Note.TENGASCO, INC.

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|By:   S/ JEFFREY R. BAILEY, PresidentTENGASCO PIPELINE CORPORATION | 
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|By:  S/ CARY V. SORENSEN,   Vice President | 
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EXHIBIT A
to PROMISSORY NOTE Dated  December 30, 2004 between Tengasco, Inc. and Tengasco Pipeline
Corporation as Maker and Dolphin

# Offshore Partners, LP
as Holder.

Any
and all undivided interest in and to Tengasco Pipeline Corporations right, title,
and interest in, to the following property rights-of-way, leases (other than the right to
produce oil or gas under any lease granting pipeline installation and use rights) and/or
easements located in Hancock County, Hawkins County, and Sullivan County, Tennessee.

[PHASE
I]: That certain steel pipeline main, 6 inches and 8 inches in diameter, as it has been
installed, together with all associated permits, pipeline rights-of-way, and pipeline
installation rights under oil and gas leases (but excluding any rights to produce oil and
gas leases under any oil and gas lease granting such pipeline installation rights), from a
point at the Big Creek Missionary Baptist Church at the intersection of Upper Caney Valley
Road and Big Creek Road in Hancock County, Tennessee, extending generally eastward north
of the Clinch River, boring under the Clinch River and proceeding generally southward
along an existing Tennessee Valley Authority power line easement along and within
rights-of-way thereon, which are incorporated by reference for all purposes but without
limiting the generality of the foregoing description, proceeding further into Hawkins
County, Tennessee, to a point of intersection of the existing installed pipeline with the
distribution system of Hawkins County Gas Utility District, a total distance described in
this paragraph of approximately 26.0 miles; together with

[PHASE
II]: That certain steel pipeline main 8 inches and 12 inches in diameter as it has been
installed, together with a 4-inch supply line already constructed, with all associated
contracts, permits, agreements, and pipeline rights-of-way, extending from a point of
intersection of the existing installed Phase I pipeline described above with the
distribution system of Hawkins County Gas Utility District and proceeding from that point
generally eastward along rights-of-way along Highway 11-W, and proceeding further along
and within the right-of-way of Highway 11 -w in accordance with the permit granted by
Tennessee Department of Transportation to Tengasco Pipeline Corporation dated April 11,
2000, and proceeding generally eastwards to a point located on the grounds of Holston Army
Ammunition Plant in accordance with the Tenant Use Agreement between Royal Ordinance North
America, Inc. (now BAE Systems Ordnance Systems, Inc.) and Tengasco Pipeline Corporation
dated June 16, 2000, which agreement is incorporated by reference for all purposes,
proceeding to a point on the grounds of the Holston Army Ammunition Plant known as Mead
Station, proceeding from that point further both as a 4-inch supply line to Holston Area A
and ending at the Area A boilers and as a 12-inch main line generally southward, off the
grounds of Holston Army Ammunition Plant and across rights-of-way to and including
property owned by Eastman Chemical Company, and proceeding to the point of interconnection
with the existing natural gas system owned by Eastman Chemical Company in Kingsport,
Sullivan County, Tennessee, a total distance described in this paragraph of approximately
30.4 miles, together with compressors, valves, stations and metering equipment installed
to effect deliveries through the pipeline .

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EXHIBIT B
to PROMISSORY NOTE Dated December 30, 2004 between Tengasco, Inc. and Tengasco Pipeline
Corporation as Maker and Dolphin

# Offshore Partners, LP
as Holder.

Any
and all undivided interest in and to Tengasco Pipeline Corporations right, title,
and interest in, to the following property rights-of-way, leases (other than the right to
produce oil or gas under any lease granting pipeline installation and use rights) and/or
easements located in or near Hays, Kansas.

| | Seven
miles of ten-inch diameter steel pipeline; Seven and one-half miles of eight-inch diameter
steel pipeline; Sixty-nine miles of four-inch diameter steel pipeline; Two miles of
two-inch pipeline; Compressor station and equipment thereon including but not limited to 3
No. 342 CAT motors with a JG2 Aerial Compression Unit.
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