# U.S. Securities and
Exchange Commission Washington, D.C. 20549

# 

# Form 10-Q

# QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

# 

# For the Quarterly
period endedJune 30, 2004

# Commission File No.
0-20975

Tengasco, Inc.(Exact name of
registrant as specified in its charter)

|Tennessee                                                    | 87-0267438                       
|------------------------------------------------------------ | ---------------------------------
|State or other jurisdiction of incorporation or organization | (IRS Employer Identification No.)

603 Main Avenue, Suite
500, Knoxville, TN 37902(Address of principal
executive offices)



(865-523-1124)(Registrants
telephone number, including area code)

Check whether the issuer (1) filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
XNo__

State the number of shares
outstanding of each of the issuers classes of common equity, as of the latest
practicable date: 48,506,977 common shares at June 30, 2004.

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# TENGASCO, INC. AND
SUBSIDIARIES

TABLE OF CONTENTS

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2



# TENGASCO, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETSASSETS

|                                    | June 30, 2004(Unaudited) | December 31, 2003
|----------------------------------- | ------------------------ | -----------------
|Current Assets:                     |                          |                  
|Cash and cash equivalents           |                          |                  
|Investments                         |                          |                  
|Accounts receivable net             |                          |                  
|Participants receivable             |                          |                  
|Inventory                           |                          |                  
|                                    |                          |                  
|Current portion of loan fees, net   |                          |                  
|Other current assets                |                          |                  
|                                    |                          |                  
|                                    |                          |                  
|Total current assets                |                          |                  
|Oil and gas properties, net (on the |                          |                  
|basis of full cost accounting)      |                          |                  
|Completed pipeline facilities, net  |                          |                  
|Other property and equipment, net   |                          |                  
|                                    |                          |                  
|Other                               |                          |                  
|                                    |                          |                  
|                                    |                          |                  
|                                    |                          |                  
|                                    |                          |                  
|                                    |                          |                  
|                                    |                          |                  
|                                    |                          |                  

See accompanying notes
to condensed consolidated financial statements

3



---

# TENGASCO, INC. AND
SUBSIDIARIES

# CONDENSED CONSOLIDATED
BALANCE SHEETS

# LIABILITIES AND
STOCKHOLDERS EQUITY

|                                                | June 30, 2004(Unaudited) | December 31, 2003
|----------------------------------------------- | ------------------------ | -----------------
|Current Liabilities                             |                          |                  
|Current maturities of long-term debt            |                          |                  
|Accounts payable-trade                          |                          |                  
|Accrued interest payable                        |                          |                  
|Notes payable to related parties                |                          |                  
|Other accrued liabilities                       |                          |                  
|Current shares subject to mandatory redemption  |                          |                  
|Total current liabilities                       |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|Shares subject to mandatory redemption          |                          |                  
|Asset retirement obligations                    |                          |                  
|Long-term debt less current maturities          |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|Total liabilities                               |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|Stockholders Equity                             |                          |                  
|Common stock $.001 per value, 50,000,000 shares |                          |                  
|authorized                                      |                          |                  
|Additional paid-in-capital                      |                          |                  
|Accumulated deficit                             |                          |                  
|Accumulated other comprehensive loss            |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|Total stockholders equity                       |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  
|                                                |                          |                  

See accompanying notes
to condensed consolidated financial statements

4



---

# TENGASCO, INC. AND
SUBSIDIARIES

# CONSOLIDATED
STATEMENTS OF LOSS

# (Unaudited)

|                                                                                                         | For the Three Months
Ended June 30, | For the Six Months Ended
June 30,
|-------------------------------------------------------------------------------------------------------- | ----------------------------------- | ---------------------------------
|
|Revenues and other income                                                                                |                                     |                                  
|Oil and gas revenues                                                                                     |                                     | $   1,380,289                    
|Pipeline transportation  revenues                                                                        |                                     | 24,676                           
|Interest income                                                                                          |                                     | 1,695                            
|                                                                                                         |                                     |                                  
|Total revenues and other income                                                                          |                                     | 1,406,660                        
|Cost and other deductions                                                                                |                                    
|Production costs and taxes                                                                               |                                     | 667,851                          
|Depletion, depreciation and amortization                                                                 |                                     | 564,984                          
|Interest expense                                                                                         |                                     | 274,854                          
|General and administrative cost                                                                          |                                     | 282,266                          
|Public Relations                                                                                         |                                     | 1,750                            
|Professional fees                                                                                        |                                     | 233,403                          
|                                                                                                         |                                     |                                  
|Total cost and other deductions                                                                          |                                     | 2,025,108                        
|Gain from extinguishment of debt                                                                         |                                     | 336,820                          
|                                                                                                         |                                     |                                  
|Net loss                                                                                                 |                                     | (281,628                         
|                                                                                                         |                                     |                                  
|Dividends on preferred stock                                                                             |                                     | 0                                
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|Net loss attributable to common shareholdersbefore cumulative effect of a change in accounting principle |                                     | $    (281,628                    
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|Cumulative effect of a change in accounting principle                                                    |                                     | 0                                
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     | $    (281,628                    
|                                                                                                         |                                     |                                  
|Net loss attributable to common shareholders per share                                                   |                                    
|basic and diluted:                                                                                       |                                    
|Operations                                                                                               |                                     | $         (0.01                  
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|Cumulative effect of a change in accounting principle                                                    |                                     | 0                                
|                                                                                                         |                                     |                                  
|Total                                                                                                    |                                     | $         (0.01                  
|                                                                                                         |                                     |                                  
|                                                                                                         |                                     |                                  
|Weighted average shares outstanding                                                                      |                                     | 48,506,977                       
|                                                                                                         |                                     |                                  

See accompanying notes
to condensed consolidated financial statements

5



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# TENGASCO, INC. AND
SUBSIDIARIES

# CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY

# (Unaudited)

|                         | Common Stock |  |  |            | 
|------------------------ | ------------ |  |  | ---------- | 
|
|
|Balance at December 31,  |              |  |  |            | 
|2003 Net Loss            |              |  |  | 12,064,977 | 
|                         |              |  |  | --         | 
|Common Stock Issued for  |              | 
|exercised options        |              |  |  | 142,000    | 
|Common Stock Issued in   |              | 
|Rights Offering          |              |  |  | 36,300,000 | 
|                         |              |  |  |            | 
|                         |              |  |  |            | 
|Balance at June 30, 2004 |              |  |  | 48,506,977 | 
|(Unaudited)              |              | 

See accompanying notes
to condensed consolidated financial statements

6



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# TENGASCO, INC. AND
SUBSIDIARIESCONSOLIDATED
STATEMENTS OF CASH FLOWS

|                                                           | For the six
Months
Ended June 30, 2004 | For the six Months
Ended June 30, 2003
|---------------------------------------------------------- | -------------------------------------- | --------------------------------------
|
|Operating Activities                                       |                                        |                                       
|Net Loss                                                   |                                        |                                       
|Adjustments to reconcile net loss to net cash              |                                        |                                       
|Provided by (used in) operating activities:                |                                        |                                       
|Depletion, depreciation and amortization                   |                                        |                                       
|Accretion of Redeemable Liabilities                        |                                        |                                       
|Charitable donation, services paid in stock, stock options |                                        |                                       
|Gain on Sale of Equipment                                  |                                        |                                       
|Changes in assets and liabilities                          |                                        |                                       
|Accounts receivable                                        |                                        |                                       
|Investments                                                |                                        |                                       
|Participants receivable                                    |                                        |                                       
|Other Current Assets                                       |                                        |                                       
|Other Assets                                               |                                        |                                       
|Accounts payable                                           |                                        |                                       
|Accrued interest payable                                   |                                        |                                       
|Other accrued liabilities                                  |                                        |                                       
|Other                                                      |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Net cash provided by (used in) operating activities        |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Investing activities                                       |                                        |                                       
|Net additions to oil and gas properties                    |                                        |                                       
|Net additions to pipeline facilities                       |                                        |                                       
|Sale of other property  and equipment                      |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Net cash used in investing activities                      |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Financing activities                                       |                                        |                                       
|Proceeds from exercise of options                          |                                        |                                       
|Repayments of borrowings                                   |                                        |                                       
|Proceeds from borrowings                                   |                                        |                                       
|Proceeds from private placement of common stock            |                                        |                                       
|Loan fee amortization                                      |                                        |                                       
|Net proceeds from rights offering                          |                                        |                                       
|Dividends paid on redeemable liabilities                   |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Net cash provided by financing activities                  |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Net change in cash and cash equivalents                    |                                        |                                       
|                                                           |                                        |                                       
|Cash and cash equivalents, beginning of period             |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|Cash and cash equivalents, end of period                   |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       
|                                                           |                                        |                                       

See accompanying notes
to condensed consolidated financial statements.

7



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# Tengasco, Inc. And
Subsidiaries

# Condensed Notes to Consolidated
Financial Statements

# (Unaudited)

(1)       
                     Basis of
          Presentation

The
accompanying unaudited consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six months ended June 30, 2004
are not necessarily indicative of the results that may be expected for the year ended
December 31, 2004. Additionally, deferred income taxes and income tax expense is not
reflected in the Companys financial statements due to the fact that the Company has
had recurring losses and deferred tax assets arising from net operating gross
carry-forwards have been fully reserved. For further information, refer to the
Companys consolidated financial statements and footnotes thereto for the year ended
December 31, 2003 included in the Companys annual report on Form 10-K.

(2)       
                     Earnings Per Share

In
accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings
Per Share, basic and diluted loss per share are based on 48,506,977 and 11,944,583
weighted average shares outstanding for the quarter ended June 30, 2004 and June 30, 2003,
respectively, and 33,115,395 and 11,854,950 for the six months ended June 30, 2004 and
June 30, 2003 respectively.

For
the six-month periods ended June, 2004 and 2003, the Company had no vested, unexercised,
in the money options. As the Company was in a net loss position, any potential common
share equivalents would have been anti-dilutive.

The
Company adopted the disclosure provision of the Statement of Financial Accounting
Standards (SFAS or statement) No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, which amends SFAS No. 123. Accounting
for Stock-Based Compensation, SFAS No. 148 provides alternative methods of
transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation, which was originally provided under SFAS No. 123. The
Statement also improves the timeliness of disclosures by requiring the information be
included in interim, as well as annual, financial statements. The adoption of these
disclosure provisions did not have a material affect on the Companys June 30, 2004
consolidated results of operations, financial position, or cash flows.

SFAS
No. 123 encourages, but does not require, companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company has chosen to continue
to account for stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of the
Companys stock at the date of the grant over the amount an employee must pay to
acquire the stock. The option price of all the Companys stock options is equal to
the market value of the stock at the grant

8



---

date. As such, no compensation expense is
recorded in the accompanying consolidated financial statements.

Had
compensation cost been determined based upon the fair value at the grant date for awards
under the stock option plan consistent with the methodology prescribed under SFAS No. 123,
the Companys pro forma net loss and net loss per share would have differed from the
amounts reported as follows:

|                       | Year Ended | Six Months | Six Months |           
|---------------------- | ---------- | ---------- | ---------- | ----------
|
|Net loss attributable  |            |            | $          | (3,451,580
|to common shareholders |            |           
|as reported            |            |           
|Stock-based employee   |            |            | $          | (22,650   
|compensation expense   |            |           
|determined under fair  |            |           
|value basis            |            |           
|Pro forma net loss     |            |            | $          | (3,474,230
|attributable to common |            |           
|shareholders           |            |           
|Earning per share:     |            |           
|Basic and diluted,     |            |            | $          | (0.29     
|as reported            |            |           
|Basic  and diluted,    |            |            | $          | (0.29     
|pro forma              |            |           

(3)       
                     Liquidity

The Company continues to be in the early
stages of its oil and gas related operating history as it endeavors to expand its
operations. Accordingly, the Company has incurred continuous losses through these
operating stages and has an accumulated deficit of $32,889,432 and a working capital
deficit of $4,549,139 as of June 30, 2004. During 2002, the Company was informed by its
primary lender that the entire amount of its outstanding credit facility was immediately
due and payable, as provided for in the Credit Agreement. The Company disputed its
obligation to make this payment and has resolved the dispute as discussed in Note 10. The
Company believes that now that its dispute has been resolved and that it has obtained
additional funds through its Rights Offering discussed in Note 9, it will be able to
obtain long-term financing to allow the Company to continue drilling and to locate and
develop other properties. If such funding for additional drilling becomes available, the
Company plans to drill new wells in locations it has identified in Kansas on its existing
leases in response to drilling activity in the area, which it believes will establish new
areas of oil production. However, no assurances can be made that such financing will be
obtained or that any additional drilling will result in new producing reserves. The
inability of the Company to obtain additional long-term financing could impair the
Companys ability to meet its other obligations as they become due.

9



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(4)       
                     New Accounting
          Pronouncements

In
March 2004, The Emerging Issues Task Force (EITF) reached a consensus that
mineral rights, as defined in EITF Issue No. 04-02, Whether Mineral Rights are
Tangible or Intangible Asset, are tangible assets and that they should be removed as
examples of intangible assets in SFAS Nos. 141 and 142. The FASB has recently ratified
this consensus and directed the FASB staff to amend SFAS Nos. 141 and 142 through the
issuance of FASB Staff Positions FSP FAS 141-1 and FSP FAS 142-1. Historically the Company
has included the cost of such mineral rights as tangible assets, which is consistent with
the EITFs consensus. As such, EITF 04-02 will not affect Tengascos
consolidated condensed financial statements.

During
December 2003, the FASB issued Interpretation No. 46R, Consolidation of Variable
Interest Entities (FIN 46), which requires the consolidation of certain
entities that are determined to be variable interest entities (VIEs). An
entity is considered to be a VIE when either (i) the entity lacks sufficient equity to
carry on its principal operations, (ii) the equity owners of the entity cannot make
decisions about the entitys activities or (iii) the entitys equity neither
absorbs losses or benefits from gains. The Company owns no interests in variable interest
entities, and therefore this new interpretation has not affected the Companys
consolidated financial statements.

In
May 2003, the FASB issued Statement of Financial Accounting Standard No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (SFAS 150). SFAS 150 establishes standards for
how an issuer classifies and measures in its statement of financial position certain
financial instruments with characteristics of both liabilities and equity and it requires
that an issuer classify a financial instrument within its scope as a liability. SFAS 150
was effective for financial instruments entered into or modified after May 31, 2003 for
public companies. Restatement is not permitted. Adoption of this standard during 2003
resulted in a reclassification to a liability and restatement of the Companys assets
to restricted fair values of the Companys Series A, B and C preferred stock subject
to mandatory redemption. Accordingly, for the year ended December 31, 2003, the Company reclassified the preferrred stock to shares subject to mandatory redemption (liability) at estimated fair value, and
recognized a cumulative gain from a change in accounting principle of approximately
$365,675. This cumulative gain results from the difference between the carrying amount of
the preferred shares and the fair value of the shares after adoption. In the first and
second quarters of 2004, $224,722 and $216,254, respectively, were recognized as interest
expense related to those shares subject to mandatory redemption.

(5)       
                     Letter of Credit Agreement

On
November 8, 2001, the Company signed a credit facility with the Energy Finance Division of
Bank One, N.A. in Houston, Texas whereby Bank One extended to the Company a revolving line
of credit of up to $35 million. The initial borrowing base under the facility was $10
million. The interest rate was the Bank One base rate plus one-quarter percent.

On
November 9, 2001, funds from this credit line were used to (1) refinance existing
indebtedness on the Companys Kansas properties, (2) to repay the internal financing
provided by directors and shareholders on the Companys completed 65-mile Tennessee
intrastate pipeline system, (3) to repay a note payable to Spoonbill, Inc., (4) to repay a
purchase money note due to M.E. Ratliff, who at the time was the Companys Chief
Executive Officer and Chairman of the Board of Directors, for purchase by the Company of a
drilling rig and related equipment, (5) to repay in full the remaining principal of the
working capital loan due December 31, 2001 to Edward W.T. Gray III, who at that time was a
director of the Company. All of these obligations incurred interest at a rate
substantially greater than the rate being charged by Bank One under the credit facility.

10



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On
April 5, 2002, the Company received a notice from Bank One stating that it had
re-determined and reduced the borrowing base under the Credit Agreement by $6,000,000 to
$3,101,766. Bank One demanded that the Company pay the $6,000,000 within thirty days of
the notice. The Company filed a lawsuit in Federal Court to prevent Bank One from
exercising any rights under the Credit Agreement. The Company was paying $200,000 per
month toward the outstanding balance of the credit facility until the settlement. As of
May 1, 2004, the outstanding balance due to Bank One under the Credit Agreement was
$4,101,796. On May 13, 2004 the Company entered into an agreement, settling its lawsuit
with Bank One. See Note 10, Bank One Litigation Settlement.

(6)       
                     Notes Payable

From
December 2002 through December 9, 2003, Dolphin Offshore Partners, L.P.
(Dolphin) acquired a total of an 85% undivided interest in the Companys
Tennessee and Kansas pipelines as collateral for a series of seven loans. In the first
five of these transactions totaling $1,650,000, Peter E. Salas, a Director of the Company
and the general partner and controlling person of Dolphin, negotiated the terms of the
loans directly with management, which terms were approved by management in view of the
Companys immediate needs, financial condition and prospective alternatives and under
circumstances in which Dolphin was not generally engaged in the business of lending money.
These loans were made on terms that management believes were at least as favorable to the
Company as it could have obtained through arms-length negotiations with unaffiliated third
parties. The Companys Board approved the sixth and seventh loans on December 3 and
9, 2003, in the amounts of $225,000 and $250,000, respectively, with no participation by
Mr. Salas in the meeting or the vote, which was unanimous by the seven other Directors
present at the meeting. In addition, the Company entered into a continuing security
agreement, which was approved by the Board with no participation by Mr. Salas in the
meeting or vote, which was unanimous by the seven other Directors present at the meeting,
providing the terms of Dolphins security interest collateralizing all of its loans.

On
December 24, 2003, Dolphin loaned the Company the sum of $1,000,000 which was used for
working capital and to pay all interest and principal in full of the 1998 convertible loan
to the Company referred to as the Lutheran note then being held by several persons. This
loan was evidenced by a separate promissory note bearing interest at the rate of 12% per
annum, with payments of interest only payable quarterly and the principal balance payable
on April 4, 2004. The obligations under the loan were secured by an undivided
interest in the Companys Tennessee and Kansas pipelines and the security agreement
referred to above.

On
February 2, 2004, Dolphin loaned the Company the sum of $225,000 which was used for making
payment of principal and interest to Bank One for February, 2004. This loan was evidenced
by a separate promissory note bearing interest at the rate of 12% per annum, with payments
of interest only payable quarterly and the principal balance payable on April 4,
2004. The obligations under the loan were secured by an undivided interest in the
Companys Tennessee and Kansas pipelines and the security agreement referred to
above.

All
notes payable to Dolphin dated prior to May 18, 2004 were repaid on March 30, 2004 from
the proceeds received by the Company from its Rights Offering.

On
May 18, 2004, Dolphin loaned the Company $2,500,000 bearing interest at 12% per annum with
interest payable monthly beginning June 18, 2004 and principal payable on May 20, 2005,
which loan is secured by a first lien on the Companys Tennessee and Kansas producing
properties and the Tennessee pipeline. The proceeds of the loan were used to fund in part
the settlement of the Bank One litigation. See, Part II, Item 1, Legal Proceedings.

11



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(7)       
                     Litigation Settlements

On
May 10, 2004 the Court entered its final order approving the fairness of the settlement to
the class, dismissing the action pursuant to a Settlement Stipulation, and fully releasing
the claims of the class members in Paul Miller v. M. E. Ratliff and Tengasco, Inc.,No. 3:02-CV-644 in the United States District Court for the Eastern District of
Tennessee, Knoxville, Tennessee. This action sought certification of a class action to
recover on behalf of a class of all persons who purchased shares of the Companys
common stock between August 1, 2001 and April 23, 2002, unspecified damages allegedly
caused by violations of the federal securities laws. In January, 2004 all parties reached
a settlement subject to court approval. On April 29, 2004, a final hearing for approval of
the settlement was held. The Court entered its order approving the settlement on May 10,
2004. Class members may file their claims against the settlement fund through July 15,
2004. The fund will be disbursed in accordance with the claims filed. Under the
settlement, the Company paid into a settlement fund the amount of $37,500 to include all
costs of administration, contributed 150,000 shares of stock of Miller Petroleum, Inc.
owned by the Company and will issue 300,000 warrants to purchase a share of the
Companys common stock for a period of three years from date of issue at $1 per share
subject to adjustments. All expenses including attorneys fees are to be paid out of
these settlement funds.

(8)       
                     Cumulative Effect of a
Change in Accounting Principle

Effective
January 1, 2003, the Company implemented the requirements of Statement of Financial
Accounting Standards No. 143 (SFAS 143), Accounting for Asset Retirement
Obligations. Among other things, SFAS 143 requires entities to record a liability
and corresponding increase in long-lived assets. Over the passage of time, accretion of
the liability is recognized as an operation expense and the capitalized cost is depleted
over the estimated useful life of the related asset. Additionally, SFAS 143 requires that
upon initial application of these standards, the Company must recognize a cumulative
effect of a change in accounting principle corresponding to the accumulated accretion and
depletion expense that would have been recognized had this standard been applied at the
time the long-lived assets were acquired or constructed. The Companys asset
retirement obligations relate primarily to the plugging, dismantling and removal of wells
drilled to date.

Using
a credit-adjusted risk fee rate of 12%, an estimated useful life of wells ranging from
30-40 years, and estimated plugging and abandonment cost ranging from $5,000 per well to
$10,000 per well, the Company has recorded a non-cash charge related to the cumulative
effect of a change in accounting principle of $351,204 in its statement of operations
effective January 1, 2003. Oil and gas properties were increased by $260,191, which
represents the present value of all future obligations to retire the wells at January 1,
2003, net of accumulated depletion on this cost through that date. A corresponding
obligation totaling $611,395 was recorded as of January 1, 2003. Accretion expense for the
three months and six months ended June 30, 2003 was $18,342 and $36,684, respectively.
Accretion expense for the three and six months ended June 30, 2004 was also $18,342 and
$36,684, respectively.

(9)       
                     Rights
Offering

On
October 17, 2003, the Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission (SEC). On February 13, 2004, the SEC deemed
the Registration Statement on Form S-1 effective.

The
Rights Offering was a distribution to the holders of the Companys common stock
outstanding at the record date, February 27, 2004, at no charge, of nontransferable
subscription rights at the rate of one right to purchase three shares of the
Companys common stock for each share of common stock owned at the subscription price
of $0.75 in the aggregate, or $0.25 per each share purchased.

12



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Each
subscription right, in addition to the right to purchase three shares of common stock,
carried with it an over-subscription privilege. The over-subscription privilege provided
stockholders that exercise all of their basic subscription privileges with the opportunity
to purchase those shares that were not purchased by other stockholders through the
exercise of their basic subscription privileges, at the same subscription price per
share.  In no event could any subscriber purchase shares of the Companys common
stock in the offering that, when aggregated with all of the shares of the Companys
common stock otherwise owned by the subscriber and his, her or its affiliates, would
immediately following the closing represent more than 50% of the Companys issued and
outstanding shares.

As
provided in the Rights Offering, 7,029,604 rights were exercised pursuant to the basic
subscription privilege, resulting in the purchase of 21,088,812 shares at $0.25 per share
for gross proceeds to the Company of $5,272,203 resulting from the basic subscription
privilege. A total of 15,211,118 rights were exercised pursuant to the oversubscription
privilege, resulting in additional gross proceeds to the Company of $3,802,797. Of the
shares purchased pursuant to the Rights Offering 14,966,344 shares were purchased by
Directors, Officers and owners of 10% of the Companys outstanding common stock.

At
the time the Rights Offering closed on March 18, 2004 all 36.3 million shares offered had
been subscribed and, as a result, the Company raised approximately $9.1 million. The total
number of shares subscribed actually exceeded the 36.3 million shares available for
issuance under the offering. Consequently, all shares subscribed for under the basic
privilege were issued and the number of shares issued under the over-subscription
privilege was proportionately reduced to equal the number of remaining shares. The
allocation and issuance of the oversubscribed shares was made by Mellon Investor Services,
the Companys subscription agent who also returned payments for those over-subscribed
shares that were not available.

The
net proceeds of the Rights Offering have been used to pay non-bank indebtedness in the
aggregate amount of approximately $6 million (including up to $3,850,000 in principal
amount plus accrued interest owed by the Company to Dolphin) and to pay $1,157,000 as a
portion of the Companys settlement with Bank One. The balance of the net
proceeds will be used for working capital purposes, including the drilling of
additional wells. At December 31, 2003, the Company incurred costs in connection with the
Rights Offering of $223,003, which were reflected in the consolidated balance sheet in
other current assets. This asset was offset against gross proceeds in March 2004, when
such proceeds were received by the Company.

(10)       
                     Bank One Litigation
Settlement

As
of May 1, 2004, the principal amount owed by the Company under the credit facility with
Bank One signed on November 8, 2001 was $4,101,601. On Thursday, May 13, 2003, the Company
and the Bank One executed a written agreement resolving all claims against each other.
Pursuant to that agreement, the Company agreed to pay the sum of $3,657,000 to the Bank by
May 18, 2004, in full satisfaction of its obligations to the Bank and to immediately
release all claims against the Bank and to dismiss the litigation. In turn, Bank One
agreed to immediately release all its claims against the Company, dismiss the litigation
and to execute releases of its liens on all of the Companys properties securing the
credit facility upon receipt of the agreed payment. Bank One retained a right to seek
specific performance of the May 13, 2004 agreement if payment were not made by May 18,
2004 and to recover attorneys fees if such relief were sought. The Company and the
Bank each agreed to bear all of its own costs, expenses, and attorneys fees incurred
to date.

On
May 18, 2004, the Company paid Bank One, the agreed upon settlement in the amount of
$3,657,000. The funds were obtained from proceeds of a bridge loan from Dolphin Offshore
Partners,

13



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LP (Dolphin) (the managing partner of Dolphin is Peter E. Salas, a
member of the Board of Directors), in the principal amount of $2,500,000 bearing interest
at 12% per annum and payable interest only monthly beginning June 18, 2004 with the
principal amount due May 20, 2005. The loan is secured by a first lien on the
Companys Tennessee and Kansas producing properties and the Tennessee pipeline. The
balance of the settlement amount of $1,157,000 was paid from funds available to the
Company from the proceeds of the rights offering. Upon receipt of this payment, an agreed
order signed by the Company and the Bank dismissing all claims in litigation was filed
with the court on May 20, 2004 and entered by the court. No hearing or approval of the
settlement by the court is required. The Company recorded a gain from extinguishment of
debt in the amount of $336,820 in the second quarter of 2004, which was the difference
between the carrying amount of the loan less the settlement amount.

# ITEM 2        
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# Results
of Operations and Financial Condition

# Kansas

During
the first six months of 2004, the Company produced and sold 58,742 barrels of oil and
126,987 Mcf of natural gas from its Kansas Properties comprised of 149 producing oil wells
and 59 producing gas wells. The first six months production of 58,742 barrels of oil
compares to 65,458 barrels produced in the first six months of 2003. The first six months
production of 126,987 Mcf of gas compares to 129,995 Mcf produced in the first six months
of 2003. In summary, the six months production reflected expected continued production
levels from the Kansas Properties, which have been in production for many years. The
decrease in oil production reflects a normal decline curve for the Kansas properties. This
decline has not been offset by additional drilling and well work-overs due to the Bank One
litigation. The revenues from the Kansas properties were $1,958,859 in the first six
months of 2004 compared to $2,049,781 in 2003. This decrease was due to the lower
production levels in 2004.

# Tennessee

During
the first six months of 2004, the Company produced gas from 23 wells in the Swan Creek
field, which it sold in Kingsport, Tennessee to Eastman Chemical Company
(Eastman).

Natural
gas production from the Swan Creek field for the first six months of 2004 was an average
of 635 Mcf per day during that period as compared to 1,150 Mcf per day in the first six
months of 2003. The first three months production reflected expected natural decline in
production from the existing Swan Creek gas wells which were first brought into production
in mid-2001 upon completion of the Companys pipeline. This natural decline is normal
for any producing well, and this decline as experienced on existing wells in Swan Creek
was not unexpected.

# Comparison of the Six Months Ending June 30, 2004 and 2003

The
Company recognized $2,712,639 in oil and gas revenues from its Kansas Properties and the
Swan Creek Field during the first six months of 2004 compared to $3,360,763 in the first
six months of 2003. The decrease in revenues was due to a decrease in production from
Kansas and Swan Creek oil sales and from gas sales in Swan Creek. Kansas gas sales also
declined by approximately $110,000 due to an unusually high price received in March of
2003 of $8.64 per Mcf, as compared to $4.11 in 2004. The decrease in pipeline
transportation revenues from $92,723 in 2003 to $47,917 in 2004 is directly related to the
decrease in gas volumes in Swan Creek.

14



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The
Company realized a net loss attributable to common shareholders of $1,497,933 ($0.05) per
share of common stock, during the first six months of 2004 compared to a net loss in the
second quarter of 2003 to common shareholders of $1,606,331 ($0.14) per share of common
stock.

Production
costs and taxes in the first six months of 2004 of $1,539,432 decreased from $1,627,879 in
the first six months of 2003. The difference is due to management controlling costs at
every level.

Depreciation,
depletion, and amortization expense for the first six months of 2004 was $1,173,148
compared to $1,259,138 in the first six months of 2003.

During
the first six months the Company reduced it general and administrative costs by $239,869
from 2003. Management has made an effort to control costs in every aspect of its
operations, including a reduction in personnel from 2003 levels.

Professional
fees, in the first six months of 2004 were $531,278 compared to $420,944 in the same
period in 2003. These fees have remained at a high level, primarily due to costs incurred
for legal and accounting services as a result of the Bank One and Paul Miller lawsuits.

Interest
expense for the first six months of 2004 increased from the first six months of 2003 to
$779,239 from $294,098. The increase was due to the issuance of notes to Dolphin during
the first quarter of 2004. These notes were paid on March 20, 2004. In addition, dividends
on the Companys Preferred Stock in the amount of $268,388 and accretion of $172,588
were recognized as interest expense in the first six months of 2004 due to the
Companys adoption of SFAS 150, discussed in Note 4 of the Companys Condensed
Notes to Consolidated Financial Statements.

The
Company recorded a gain from extinguishment of debt in the amount of $336,820 in the
second quarter of 2004, which was the difference between the carrying amount of the Bank
One loan less the settlement amount. See Note 10 of the Condensed Notes to Consolidated Financial Statements, Bank One Litigation Settlement.

# Comparison of the Quarters Ending June 30, 2004 and 2003

The
Company recognized $1,380,289 in oil and gas revenues from its Kansas Properties and the
Swan Creek Field during the second quarter of 2004 compared to $1,436,848 in the second
quarter of 2003. The decrease in revenues was due to a decrease in production from Kansas
and Swan Creek oil sales and from gas sales in Swan Creek, although revenues from Kansas oil sales increased in the second quarter of 2004 from the second quarter in 2003 due to higher oil prices. The decrease in pipeline
transportation revenues of $20,543 is directly related to the decrease of gas volumes in
Swan Creek.

The
Company realized a net loss attributable to common shareholders of $281,628 ($0.01) per
share of common stock, during the second quarter of 2004 compared to a net loss in the
second quarter of 2003 to common shareholders of $812,786 ($0.07) per share of common
stock

Production
costs and taxes in the second quarter of 2004 of $667,851 decreased from $857,970 in the
second quarter of 2003. The difference is due to managements cost-controlling
efforts.

Depreciation,
depletion, and amortization expense for the second quarter of 2004 was $564,984 compared
to $628,196 in the second quarter of 2003. This is due to equipment that had become fully
depreciated in late 2003.

15



---

During
the second quarter due to the cost-cutting efforts of management the Company reduced its
general and administrative costs by $16,892 from 2003.

Professional
fees, in the second quarter of 2004 were $233,403 compared to $211,518 in the same period
in 2003. These fees have remained at a high level, primarily due to costs incurred for
legal and accounting services as a result of the Bank One and Paul Miller lawsuits.

Interest
expense for the second quarter of 2004 increased from the second quarter of 2003 to
$274,854 from $140,742. Dividends on the Companys Preferred Stock in the amount of
$134,194 and accretion of $82,060 were recognized as interest expense in the second
quarter of 2004 due to the Companys adoption of SFAS 150, discussed in Note 4 of the
Companys Condensed Notes to Consolidated Financial Statements.

The
Company recorded a gain from extinguishment of debt in the amount of $336,820 in the
second quarter of 2004, which was the difference between the carrying amount of the Bank
One loan less the settlement amount. See Note 10 of the Condensed Notes to Consolidated Financial Statements Bank One Litigation Settlement.

# Liquidity
and Capital Resources

On
November 8, 2001, the Company signed a credit facility agreement (the Credit
Agreement) with the Energy Finance Division of Bank One, N.A. in Houston Texas
(Bank One). The Company instituted litigation in May 2002 based on certain
actions taken by Bank One under the agreement.

The
harmful effects upon operations of the Company caused by the actions of Bank One and the
litigation with Bank One were dramatic. First, the action of Bank One had the effect of
totally cutting off any additional funds to the Company to support Company operations.
Further, the funds loaned to the Company by Bank One were to refinance the Companys
indebtedness and no funds were then available to pay this large repayment obligation to
Bank One, even if such action by the Bank had been proper, which the Company vigorously
and continually denied. The principal reason the Company had entered into the Bank One
credit agreement was to provide for additional funds to promote the growth of the Company.
Consequently, as a result of Bank Ones unwarranted actions no additional funds under
the credit facility agreement were available for additional drilling that the Company had
anticipated performing in 2002 and 2003.

Second,
the existence of the dispute with Bank One, compounded by the fact that Bank Ones
action caused the Company to disclose that there was an uncertainty over the
Companys ability to continue as a going concern, significantly discouraged other
institutional lenders from considering a variety of additional or replacement financing
options for drilling and other purposes that may have ordinarily been available to the
Company. Third, the dispute caused Bank One to fail to grant permission under the existing
loan agreements with the Company to permit the Company to formulate drilling programs
involving potential third party investors that may have permitted additional drilling to
occur. Finally, this dispute caused the Company to incur significant legal fees to protect
the Companys rights.

On
May 13, 2004, the Company resolved its dispute with Bank One. See, Part II, Item 1, Legal
Proceedings. The Company believes that now that its dispute has been resolved it will be
able to obtain long term financing to allow the Company to continue drilling and to locate
and develop other properties. However, no assurances can be made that such financing will
be obtained.

The
Company plans to drill wells in new locations it has identified in Kansas on its existing
leases in response to drilling activity in the area establishing new areas of oil
production. Although the

16



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Company successfully drilled the Dick No. 7 well in Kansas in
2001 and completed the well as an oil well, it was not able to drill any new wells in
Kansas in 2002 or 2003 due to lack of funds available for such drilling caused by the Bank
One situation. The Company is hopeful now that the Bank One matter has been resolved that
it will soon be able to resume drilling and well work-overs in Kansas to maximize
production from the Kansas Properties.

ITEM
3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Risk

The
Companys major market risk exposure is in the pricing applicable to its oil and gas
production. Realized pricing is primarily driven by the prevailing worldwide price for
crude oil and spot prices applicable to natural gas production. Historically, prices
received for oil and gas production have been volatile and unpredictable and price
volatility is expected to continue. Monthly oil price realizations ranged from a low of
$29.77 per barrel to a high of $38.08 per barrel during 2004. Gas price realizations
ranged from a monthly low of $4.11 per Mcf to a monthly high of $6.68 per Mcf during the
same period. The Company did not enter into any hedging agreements in 2003 or the first
six months of 2004, to limit exposure to oil and gas price fluctuations.

Interest Rate Risk

At
June 30, 2004, the Company had debt outstanding of approximately $2.5 million at a fixed
rate. The Company did not have any open derivative contracts relating to interest rates at
June 30, 2004.

Forward-Looking
Statements and Risk

Certain
statements in this report, including statements of the future plans, objectives, and
expected performance of the Company, are forward-looking statements that are dependent
upon certain events, risks and uncertainties that may be outside the Companys
control, and which could cause actual results to differ materially from those anticipated.
Some of these include, but are not limited to, the market prices of oil and gas, economic
and competitive conditions, inflation rates, legislative and regulatory changes, financial
market conditions, political and economic uncertainties of foreign governments, future
business decisions, and other uncertainties, all of which are difficult to predict.

There
are numerous uncertainties inherent in estimating quantities of oil and gas reserves and
in projecting future rates of production and the timing of development expenditures. The
total amount or timing of actual future production may vary significantly from reserves
and production estimates. The drilling of exploratory or developmental wells can involve
significant risks, including those related to timing, success rates and cost overruns.
Lease and rig availability, complex geology and other factors can also affect these risks.
Additionally, fluctuations in oil and gas prices, or a prolonged period of low prices, may
substantially adversely affect the Companys financial position, results of
operations and cash flows.

17



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# ITEM
4         CONTROLS AND PROCEDURES

# Controls and Procedures

The
Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed by the Company in reports that it files or submits
under the Securities Exchange Act, is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms and that such information is
accumulated and communicated to our management, including the Companys Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosures. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. As of the
end of the period covered by this report, and under the supervision and with the
participation of the management, including its Chief Executive Officer and Chief Financial
Officer, management evaluated the effectiveness of the design and operation of these
disclosure controls and procedures. Based on this evaluation and subject to the foregoing,
the Companys Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures were effective in reaching a reasonable
level of assurance of achieving managements desired controls and procedures
objectives.

There
have been no changes in the Companys internal controls over financial reporting that
occurred during the Companys most recent fiscal quarter that have materially
affected, or are reasonably likely to affect, the Companys internal control over
financial reporting.

As
part of a continuing effort to improve the Companys business processes management is
evaluating its internal controls and may update certain controls to accommodate any
modifications to its business processes or accounting procedures.

# Changes in Internal
Controls

During
the period covered by this quarterly report, there have not been any changes in the
Companys internal controls that have materially affected or are reasonably likely to
materially affect, the Companys internal controls over financial reporting.

# PART
II OTHER INFORMATION                
        ITEM 1      LEGAL PROCEEDINGS

To
the knowledge of management, no federal, state or local governmental agency is presently
contemplating any proceeding against the Company that would have a result materially
adverse to the Company. To the knowledge of management, no director, executive officer or
affiliate of the Company or owner of record or beneficially of more than 5% of the
Companys common stock is a party adverse to the Company or had a material interest
adverse to the Company in any proceeding.

1. Tengasco, Inc., Tengasco Land and Mineral
Corporation and Tengasco Pipeline Corporation v. Bank One, NA, Docket No. 2:02-CV-118
in the Eastern District of Tennessee, Northeastern Division at Greeneville.

18



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On
November 8, 2001, the Company signed a credit facility with Bank One, N.A. in Houston,
Texas whereby Bank One extended to the Company a revolving line of credit of up to $35
million. The initial borrowing base under the facility was $10 million.

On
April 5, 2002, the Company received a notice from Bank One stating that it had
re-determined and reduced the then-existing borrowing base under the Credit Agreement by
$6,000,000 to $3,101,777. Bank One demanded that the Company pay the $6,000,000 within
thirty days. On May 2, 2002, the Company filed suit in federal court to restrain Bank One
from taking any steps pursuant to its Credit Agreement to enforce its demand that the
Company reduce its loan obligation or else be deemed in default and for damages resulting
from the wrongful demand. The Company sought a jury trial and actual damages sustained by
it as a result of the wrongful demand, in the amount of $51,000,000 plus punitive damages
in the amount of $100 million.

On
July 1, 2002, Bank One filed its answer and counterclaim, alleging that its actions were
proper under the terms of the Credit Agreement, and in the counterclaim, seeking to
recover all amounts it alleges to be owed under the Credit Agreement, including principal,
accrued interest, expenses and attorneys fees in the approximate amount of $9
million. The Company continued to pay the sum of $200,000 per month of principal due under
the original terms of the Credit Agreement, plus interest.

As
of May 1, 2004, the principal amount owed by the Company under the credit facility, with
Bank One was $4,101,601. On May 13, 2003, the Company and Bank One executed a written
agreement resolving all claims against each other. Pursuant to that agreement, the Company
agreed to pay the sum of $3,657,000 to Bank One by May 18, 2004, in full satisfaction of
its obligations to Bank One and each of the parties agreed to the dismissal of the lawsuit
and to release their claims against each other. Bank One agreed to execute releases of its
liens on all of the Companys properties securing the credit facility upon receipt of
the agreed payment. The Company and the Bank agreed to bear all of their own costs,
expenses, and attorneys fees incurred to date. The settlement payment was made by
the Company on May 18, 2004. See Part II, Item 5, Other Information.

2. Paul Miller v.
M. E. Ratliff and Tengasco, Inc.,Docket Number 3:02-CV-644 in the United States
District Court for the Eastern District of Tennessee, Knoxville, Tennessee.

This
action was commenced in November 2002 and sought certification of a class action to
recover on behalf of a class of all persons who purchased shares of the Companys
common stock between August 1, 2001 and April 23, 2002, damages in an amount not specified
which were allegedly caused by violations of the federal securities laws, specifically
Rule 10b-5 issued under the Securities Exchange Act of 1934 as to the Company and Malcolm
E. Ratliff, the Companys former Chief Executive Officer and a Director, and Section
20(a) the Securities Exchange Act of 1934 as to Mr. Ratliff. The complaint alleges that
documents and statements made to the investing public by the Company and Mr. Ratliff
misrepresented material facts regarding the business and finances of the Company. As of
January 30, 2004, a written stipulation of settlement documenting the settlement terms was
signed by counsel for all parties. The stipulation of settlement was presented to the
Court on February 27, 2004 for a determination of initial fairness and initiation of other
procedures leading to a final hearing. At the hearing, the Court granted initial approval
of the settlement as proposed and established periods for determination of the class and
dates for a final settlement hearing approving disbursement of settlement funds to any
class members. Under the settlement, the Company has paid into a settlement fund the
amount of $37,500 to include all costs of administration, and has also contributed 150,000
shares of stock of Miller Petroleum, Inc. that is currently owned by the Company that had
been accepted in payment of an obligation owed to the Company by Miller Petroleum. The
Company also contributed to the settlement fund the Companys agreement to issue
300,000 warrants to purchase a share of the Companys common stock for a period of
three years from date of issue at $1 per share. The number or price of the warrants is to
be adjusted to account for the additional shares sold pursuant to the rights

19



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offering made
by the Company or other stated events. All expenses including attorneys fees as are
awarded by the court on final hearing are to be paid out of the settlement funds. The
parties stipulated the existence of a class for settlement purposes only. On April 29,
2004, a final hearing for approval of the settlement was held in federal court in
Knoxville, Tennessee. On May 10, 2004 the Court entered its final order approving the
fairness of the settlement to the class, dismissing the action pursuant to the Settlement
Stipulation, and fully releasing the claims of the class members. Pursuant to the
Settlement Stipulation and the Courts final order, class members may file their
claims against the settlement fund through July 15, 2004. The fund will be disbursed in
accordance with the claims filed. No further court approval is required or contemplated,
although the Court retains jurisdiction to enforce the settlement stipulation and the
Courts final order.

# ITEM
5     OTHER INFORMATION

On
May 18, 2004, Dolphin loaned the Company $2,500,000 bearing interest at 12% per annum with
interest payable monthly beginning June 18, 2004 and principal payable on May 20, 2005,
which loan is secured by a first lien on the companys Tennessee and Kansas producing
properties and the Tennessee pipeline. The proceeds of the loan were used to fund in part
the settlement of the Bank One litigation. See, Part II, Item 1, Legal Proceedings.

Tengasco
drilled two wells to the Knox formation in the Swan Creek field in May 2004. The first was
the Hazel Sutton #3, which encountered lower than expected gas volumes. The well was
plugged back to the Trenton formation. A completion in the Trenton has resulted in both
gas and oil production while testing. Oil production from the Trenton depends on oil being
driven into the well bore by the pressure of gas. Production of this well as a gas well,
or simultaneous production of both oil and gas, might inhibit future oil well development.
Consequently, the well is not currently being produced while management evaluates the
effect on future possible nearby oil wells.

The
second well, the Stephen Lawson #8, was also drilled to the Knox formation and has been
producing since its completion in late June. The well is producing at a rate of
approximately 45,000 cubic feet of gas per day from the Knox formation. The Stephen Lawson
#8 also had evidence of oil and gas in the shallower Trenton and Stones River formations
during drilling. No production is presently occurring from the Trenton and Stones River
formations, but based on the showings additional reserves may be logged in the
Companys future reserve reports in a behind pipe
category.

20



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ITEM 6 EXHIBITS AND
REPORTS ON FORM 8-K

(a)        The following
exhibits are filed with this report:10.47 Promissory Note dated May 18,
2004 from Tengasco, Inc. and Tengasco Pipeline Corporation as Maker to Dolphin Offshore
Partners, LP as Holder in the principal amount of $2,500,000 bearing interest at 12% per
annum, payable interest only monthly beginning June 18, 2004 with principal due May 20,
2005, pre-payable without penalty, and secured by the Companys Tennessee and Kansas
producing properties and the Tennessee pipeline.

31.1 Certification of Chief Executive
Officer, pursuant to Exchange Act Rule, Rule 13a-14a/15d-14a.

31.2 Certification of
Chief Financial Officer, pursuant Exchange Act Rule, Rule 13a-14a/15d-14a

32.1 Certifications of Chief
Executive Officer pursuant to 18 U.S.C section 1350 as adopted pursuant to section 906 of
the Sarbanes  Oxley Act of 2002.

32.2 Certifications of Chief
Financial Officer pursuant to 18 U.S.C section 1350 as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.

(b)     During
this quarter, the Company filed one Current Report on Form 8-K on
April 23, 2004 which included, under Item 5, an announcement that on April 23,
2004 the Company issued a press release announcing its resumption of drilling in the Swan
Creek Filed in Tennessee.

21



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# SIGNATURES

Pursuant to the requirements of the
Securities and Exchange Act of 1934, the Registrant duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.

Dated: August 20, 2004

TENGASCO, INC.

| |                                                                       
| | ----------------------------------------------------------------------
| | By:   s/ Richard T. WilliamsRichard T. WilliamsChief Executive Officer

| |                                                         
| | --------------------------------------------------------
| | By:   s/ Mark A. RuthMark A. RuthChief Financial Officer

22



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| | Exhibit 31.1
CERTIFICATION
| | --------------------------

| | I, Richard T. Williams, certify that:
| | -------------------------------------

| | 1.    
I have reviewed this Quarterly Report on Form 10-Q of Tengasco, Inc. for the quarter ended June 30, 2004.
| | ----------------------------------------------------------------------------------------------------------------

| | 2.    
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.    
Based on my knowledge, the financial statements, and other information included in this
report, fairly present in all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for, the periods presented in this
report;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.    
The Registrants other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
(13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)     

           Designed such disclosure controls and procedures, or caused such disclosure
          controls and procedures to be designed under our supervision, to ensure that
          material information relating to the registrant, including its consolidated
          subsidiaries, is made know to us by others within those entities, particularly
          during the period in which this report is being prepared:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)      

           Designed such internal control over financial reporting, or caused such
          internal control over financial reporting to be designed under our supervision,
          to provide reasonable assurance regarding the reliability of financial reporting
          and the preparation of financial statements for external purposes in accordance
          with generally accepted accounting principles;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)     

           Evaluated the effectiveness of the registrants disclosure controls and
          procedures and presented in this report our conclusions about the effectiveness
          of the disclosure controls and procedures, as of the end of the period covered
          by this report based on such evaluation, and;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)     

           Disclosed in this report any change in the registrants internal control
          over financial reporting that the occurred during the registrants most
          recent fiscal quarter (the registrants fourth fiscal quarter in the case
          of an annual report) that has materially affected, or is reasonably likely to
          materially affect, the registrants internal control over financial
          reporting; and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.    
The Registrants other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the Registrants board of directors (or persons
performing the equivalent functions);
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)     
               All significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the Registrants ability to record, process, summarize and
               report financial information; and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)     

           Any fraud, whether or not material, that involves management or other employees
          who have a significant role in the Registrants internal control over
          financial reporting.Dated: August 20, 2004
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                       
| | ----------------------------------------------------------------------
| | By:   s/ Richard T. WilliamsRichard T. WilliamsChief Executive Officer

23



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| | Exhibit 31.2
CERTIFICATION
| | --------------------------

| | I,
Mark A. Ruth, certify that:
| | ------------------------------

| | I have reviewed this Quarterly Report on Form 10-Q of Tengasco, Inc. for the quarter ended June 30, 2004.
| | ---------------------------------------------------------------------------------------------------------

| | 2.    
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.    
Based on my knowledge, the financial statements, and other information included in this
quarterly report, fairly present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the periods presented in
this report;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.    
The Registrants other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
(13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)     
               Designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made know to us by others within those entities, particularly
               during the period in which this report is being prepared:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)     

           Designed such internal control over financial reporting, or caused such
          internal control over financial reporting to be designed under our supervision,
          to provide reasonable assurance regarding the reliability of financial reporting
          and the preparation of financial statements for external purposes in accordance
          with generally accepted accounting principles;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)      

           Evaluated the effectiveness of the registrants disclosure controls and
          procedures and presented in this report our conclusions about the effectiveness
          of the disclosure controls and procedures, as of the end of the period covered
          by this report based on such evaluation, and;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)     

           Disclosed in this report any change in the registrants internal control
          over financial reporting that the occurred during the registrants most
          recent fiscal quarter (the registrants fourth fiscal quarter in the case
          of an annual report) that has materially affected, or is reasonably likely to
          materially affect, the registrants internal control over financial
          reporting; and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.    
The Registrants other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the Registrants board of directors (or persons
performing the equivalent functions);
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)     
               All significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the Registrants ability to record, process, summarize and
               report financial information; and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)     

           Any fraud, whether or not material, that involves management or other employees
          who have a significant role in the Registrants internal control over
          financial reporting.Dated: August 20, 2004
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                         
| | --------------------------------------------------------
| | By:   s/ Mark A. RuthMark A. RuthChief Financial Officer

24



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| | Exhibit 32.1
CERTIFICATION
| | --------------------------

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I hereby certify that:
          I have reviewed the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.          To the best of my knowledge this Quarterly
Report on Form 10-Q (i) fully complies with the requirements of section 13(a)  or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m (a) or 78o
          (d)); and, (ii) the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of
          Tengasco, Inc. and its subsidiaries during the period covered by this Report.Dated: August 20, 2004



| |                                                                       
| | ----------------------------------------------------------------------
| | By:   s/ Richard T. WilliamsRichard T. WilliamsChief Executive Officer

25



---

| | Exhibit 32.2 CERTIFICATION
| | --------------------------

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 I hereby certify that:
          I have reviewed the Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.          To the best of my knowledge this Quarterly
Report on Form 10-Q (i) fully complies with the requirements of section 13(a)
          or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m (a) or 78o
          (d)); and, (ii) the information contained in this Report fairly presents, in all
          material respects, the financial condition and results of operations of
          Tengasco, Inc. and its subsidiaries during the period covered by this Report.Dated: August 20, 2004

|
|



| |                                                         
| | --------------------------------------------------------
| | By:   s/ Mark A. RuthMark A. RuthChief Financial Officer

26



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