Document:

<PAGE>

                                                                   EXHIBIT 10.39
                                 PROMISSORY NOTE

$750,000.00
                                                            Knoxville, Tennessee
                                                            May 20, 2003

     FOR VALUE RECEIVED, the undersigned, TENGASCO, INC., a Tennessee
corporation and Tengasco Pipeline Corporation, a Tennessee corporation (the
"MAKER" whether one or more), promise to pay to the order of Dolphin Offshore
Partners, LP, whose address is care of Dolphin Asset Management Corporation, 129
East 17th St., New York, N.Y. its successors and/or assigns (said parties and
any subsequent holders hereinafter being collectively called the "HOLDER" at 603
Main Avenue, Suite 500, Knoxville, Tennessee 37902 (or at such other place as
the Holder hereof may designate) the principal sum of SEVEN HUNDRED AND FIFTY
THOUSAND DOLLARS ($750,000.00), (the "Principal"), plus interest (the
"Interest") at the rate set forth below on the Principal from time to time
remaining unpaid.

     Interest on the outstanding Principal balance shall accrue at a rate of
twelve percent (12%) per annum based upon a 360-day year. Interest on the unpaid
principal shall accrue from date hereof and shall be payable forty-five days
after the end of each calendar quarter. The entire unpaid Principal and any
accumulated unpaid Interest thereon shall be due (the "Due Date") on January 4,
2004.

     Maker agrees that Maker will pay the principal and all accumulated and
unpaid interest in frill within ten days of closing of any sale by the Maker of
either of the pipelines described on Exhibits A or B attached hereto to any
third party. Holder agrees, however, that as to any sale of the pipeline
described on Exhibit B which is subject to prior lien in favor of Bank One, N.A.
under Credit Agreement dated November 8, 2001, payment by Maker of this Note
shall be made only to the extent funds are released by Bank One as lienholder
thereon.

     This Note may be prepaid without penalty at any time. This Note is secured
by a lien on all of Maker's interest, either real or personal tangible or
intangible, in that certain undivided interest in pipeline facilities owned by
the Company and described in Exhibits A and B attached hereto and incorporated
herein by reference.

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

     Upon the happening of any event of default as defined herein, the Holder,
at its option, may declare the entire unpaid Principal balance of this
Promissory Note without notice or demand, together with accrued Interest, to be
immediately due and payable without notice or demand. In no event and under no
circumstances shall Holder be entitled hereunder to unaccrued or unearned
interest or other charges. In the event of default, the then unpaid principal
balance hereof shall bear interest from the time of such default at the maximum
legal rate permissible.

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

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

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

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

     5. Warranty of Title. The seller warrants that the Maker's title to the
property is free of any encumbrance other than the interests of Bank One, N.A.
as Lender under Credit Agreement dated November 8, 2001.

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

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

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

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

     Notwithstanding anything to the contrary, in no event, whether by reason of
advancement of the proceeds hereof, acceleration of maturity of the unpaid
balance hereof, or otherwise, shall the amount taken, reserved or paid, charged
or agreed to be paid, for the use, forbearance or detention of money advanced
pursuant hereto or pursuant to any other document executed in connection
herewith, exceed the maximum rate allowed by Tennessee law. If, for any
circumstances whatsoever, fulfillment of any obligation hereunder shall cause
the effective rate of interest to exceed the maximum lawful rate allowed under
Tennessee law, then, ipso facto, the obligation shall be reduced to the limit of
such validity, and any amounts received by the Holder as interest that would
exceed the maximum lawful rate allowed under Tennessee law shall be applied to
the reduction of the unpaid principal balance and not the payment of interest.
If such excessive interest exceeds the unpaid principal balance, the excess
shall be refunded. In determining whether or not the interest paid or payable
hereunder exceeds the maximum lawful rate, the Holder may utilize any law, rule
or regulation in effect from time to time and available to the Holder. This
provision shall control every other provision of all agreements between the
undersigned and Holder.

TENGASCO, INC.

By:
     ---------------------------------------------------
     Richard T. Williams, Chief Executive Officer

TENGASCO PIPELINE CORPORATION

By:
     ---------------------------------------------------
     Richard T. Williams, Chief Executive Officer

<PAGE>

     EXHIBIT A TO PROMISSORY NOTE DATED MAY 20, 2003 BETWEEN TENGASCO, INC.
AND TENGASCO PIPELINE CORPORATION AS MAKER AND DOLPHIN OFFSHORE PARTNERS, LP AS
                                    HOLDER.

     A thirty percent (30%) undivided interest in and to Tengasco Pipeline
Corporation's right, title, and interest in, to, and under pursuant to the
following rights-of-way, leases (other than the right to produce oil or gas
under any lease granting pipeline installation and use rights, and/or easements
located in Hancock County, Hawkins County, and Sullivan County, Tennessee:

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

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

                                  *************

<PAGE>

     EXHIBIT B TO PROMISSORY NOTE DATED MAY 20, 2003 BETWEEN TENGASCO, INC.
AND TENGASCO PIPELINE CORPORATION AS MAKER AND DOLPHIN OFFSHORE PARTNERS, LP AS
                                    HOLDER.

     An undivided thirty percent interest in and to Tengasco, Inc.'s existing
pipeline system, together with all easements, rights of way, and equipment and
appurtenances thereunto pertaining, located in Rush County, Kansas, consisting
of approximately the following:

         Seven miles of ten-inch diameter steel pipeline;
         Seven and one-half miles of eight-inch diameter steel pipeline;
         Sixty-nine miles of four-inch diameter steel pipeline;
         Two miles of two-inch pipeline;

     Compressor station and equipment thereon including but not limited to 3 No.
342 CAT motors with a JG2 Aerial Compression Unit.

                                  ************

<PAGE>

     EXHIBIT B TO PROMISSORY NOTE DATED MAY 20, 2003 BETWEEN TENGASCO, INC.
AND TENGASCO PIPELINE CORPORATION AS MAKER AND DOLPHIN OFFSHORE PARTNERS, LP AS
                                    HOLDER.

     An undivided thirty percent interest in and to Tengasco, Inc.'s existing
pipeline system, together with all easements, rights of way, and equipment and
appurtenances thereunto pertaining, located in Rush County, Kansas, consisting
of approximately the following:

         Seven miles of ten-inch diameter steel pipeline;
         Seven and one-half miles of eight-inch diameter steel pipeline;
         Sixty-nine miles of four-inch diameter steel pipeline;
         Two miles of two-inch pipeline;

     Compressor station and equipment thereon including but not limited to 3 No.
342 CAT motors with a JG2 Aerial Compression Unit.

                                  ************<PAGE>

                                                                   EXHIBIT 10.40

                                 PROMISSORY NOTE

$150,000.00                                                 Knoxville, Tennessee
                                                                  August 6, 2003

     FOR VALUE RECEIVED, the undersigned, TENGASCO, INC., a Tennessee
corporation and Tengasco Pipeline Corporation, a Tennessee corporation (the
"MAKER" whether one or more), promise to pay to the order of Dolphin Offshore
Partners, LP, whose address is care of Dolphin Asset Management Corporation, 129
East 17th St., New York, N.Y. its successors and/or assigns (said parties and
any subsequent holders hereinafter being collectively called the "HOLDER" at 603
Main Avenue, Suite 500, Knoxville, Tennessee 37902 (or at such other place as
the Holder hereof may designate) the principal sum of ONE HUNDRED AND FIFTY
THOUSAND DOLLARS ($150,000.00), (the "Principal"), plus interest (the
"Interest") at the rate set forth below on the Principal from time to time
remaining unpaid.

     Interest on the outstanding Principal balance shall accrue at a rate of
twelve percent (12%) per annum based upon a 360-day year. Interest on the unpaid
principal shall accrue from date hereof and shall be payable forty-five days
after the end of each calendar quarter. The entire unpaid Principal and any
accumulated unpaid Interest thereon shall be due (the "Due Date") on January 4,
2004.

     Maker agrees that Maker will pay the principal and all accumulated and
unpaid interest in full within ten days of closing of any sale by the Maker of
either of the pipelines described on Exhibits A or B attached hereto to any
third party. Holder agrees, however, that as to any sale of the pipeline
described on Exhibit B which is subject to prior lien in favor of Bank One, N.
A. under Credit Agreement dated November 8, 2001, payment by Maker of this Note
shall be made only to the extent funds are released by Bank One as lienholder
thereon.

     This Note maybe prepaid without penalty at anytime. This Note is secured by
alien on all of Maker's interest either real or personal, tangible or
intangible, in that certain undivided interest in pipeline facilities owned by
the Company and described in Exhibits A and B attached hereto and incorporated
herein by reference.

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

     Upon the happening of any event of default as defined herein, the Holder,
at its option, may declare the entire unpaid Principal balance of this
Promissory Note without notice or demand, together with accrued Interest, to be
immediately due and payable without notice or demand. In no event and under no
circumstances shall Holder be entitled hereunder to unaccrued or unearned
interest or other charges. In the event of default, the then unpaid principal
balance hereof shall bear interest from the time of such default at the maximum
legal rate permissible.

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

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

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

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

     5. Warranty of Title. The seller warrants that the Maker's title to the
property is free of any encumbrance other than the interests of Bank One, N. A.
as Lender under Credit Agreement dated November 8, 2001.

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

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

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

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

     Notwithstanding anything to the contrary, in no event, whether by reason of
advancement of the proceeds hereof, acceleration of maturity of the unpaid
balance hereof, or otherwise, shall the amount taken, reserved or paid, charged
or agreed to be paid, for the use, forbearance or detention of money advanced
pursuant hereto or pursuant to any other document executed in connection
herewith, exceed the maximum rate allowed by Tennessee law. If, for any
circumstances whatsoever, fulfillment of any obligation hereunder shall cause
the effective rate of interest to exceed the maximum lawful rate allowed under
Tennessee law, then, ipso facto, obligation shall be reduced to the limit of
such validity, and any amounts received by the Holder as interest that would
exceed the maximum lawful rate allowed under Tennessee law shall be applied to
the reduction of the unpaid principal balance and not the payment of interest.
If such excessive interest exceeds the unpaid principal balance, the excess
shall be refunded. In determining whether or not the interest paid or payable
hereunder exceeds the maximum lawful rate, the Holder may utilize any law, rule
or regulation in effect from time to time and available to the Holder. This
provision shall control every other provision of all agreements between the
undersigned and Holder.

TENGASCO, INC.

By:
     ---------------------------------------------------
     RICHARD T. WILLIAMS, Chief Executive Officer

TENGASCO PIPELINE CORPORATION

By:
     ---------------------------------------------------
     RICHARD T. WILLIAMS, Chief Executive Officer

<PAGE>

    EXHIBIT A TO PROMISSORY NOTE DATED AUGUST 6, 2003 BETWEEN TENGASCO, INC.
AND TENGASCO PIPELINE CORPORATION AS MAKER AND DOLPHIN OFFSHORE PARTNERS, LP AS
                                    HOLDER.

     A six percent (6%) undivided interest in and to Tengasco Pipeline
Corporation's right, title, and interest in, to, and under pursuant to the
following rights-of-way, leases (other than the right to produce oil or gas
under any lease granting pipeline installation and use rights, and/or easements
located in Hancock County, Hawkins County, and Sullivan County, Tennessee:

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

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

                                   **********

<PAGE>

    EXHIBIT B TO PROMISSORY NOTE DATED AUGUST 6, 2003 BETWEEN TENGASCO, INC.
AND TENGASCO PIPELINE CORPORATION AS MAKER AND DOLPHIN OFFSHORE PARTNERS, LP AS
                                    HOLDER.

     An undivided thirty percent interest in and to Tengasco, Inc.'s existing
pipeline system, together with all easements, rights of way, and equipment and
appurtenances thereunto pertaining, located in Rush County, Kansas, consisting
of approximately the following:

         Seven miles of ten-inch diameter steel pipeline;
         Seven and one-half miles of eight-inch diameter steel pipeline;
         Sixty-nine miles of four-inch diameter steel pipeline;
         Two miles of two-inch pipeline;

     Compressor station and equipment thereon including but not limited to 3 No.
342 CAT motors with a TG2 Aerial Compression Unit.

                                    *********

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