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In the second quarter of 2009, the Company recognized $2,354,629 in revenues compared to $4,633,588 in the second quarter of 2008. The decrease in earnings and revenues during the second quarter of 2009 compared to 2008 was due to a sharp decrease in oil prices in 2009. Oil prices received by Tengasco in the second quarter of 2009 averaged $52.52 per barrel compared to $117.37 per barrel in the second quarter of 2008. However, this was an improvement from oil prices received in the first quarter of 2009 that averaged $35.74.
During the first six months of 2009, the Company recognized $4,254,330 in revenues compared to $7,939,308 in the first six months of 2008. The decrease in revenues was again due to the dramatic decrease in oil prices in 2009. Oil prices in the first six months of 2009 averaged $44.13 per barrel compared to $104.37 per barrel in the first six months of 2008. The Company realized a net loss attributable to common shareholders of $(482,223) or $(0.01) per share of common stock during the first six months of 2009, compared to a net income in the first six months of 2008 to common shareholders of $7,233,718 or $0.12 per share of common stock. Approximately $4.2 million, or 58% of income in the first six months of 2008 was attributable to the net effects of recognizing the Company's deferred tax assets: the Company recorded its remaining net operating loss carry forwards of $5,227,000 and recorded non-cash income tax expense of $1,040,000 for that period.
Jeffrey R. Bailey, Chief Executive Officer, said, "Although the Company had essentially a break even outcome during the second quarter of 2009, we believe that this result reflects some improvement in view of the severely depressed commodity prices we have endured during the first six months of 2009. Oil prices were down by about $65 per barrel from a year ago, to $52.52 per barrel in the second quarter 2009. Despite the lower prices we were actually able to increase our crude oil production in the first six months from the same levels last year. A part of that increase in production came from the Riffe field purchase we made in Kansas last year, but that also helped to increase our reserve values which in turn contributed to the recent increase in the Company's borrowing base in July, 2009 at a time when many companies were still suffering dramatic decreases in their borrowing bases. Since the beginning of the year, due to cash flow constraints from low oil prices, we have been unable to complete some needed workovers on existing wells, or to drill any new wells to maintain production levels, and as a result we have seen our monthly volumes produced decrease from approximately 22,000 barrels per month in early 2009 to 17,000 barrels per month currently. To mitigate both the immediate cash flow consequences from potential future downturns in the crude oil markets as well as the impact that reduced cash flow may have on well maintenance and new drilling efforts, and thus volumes, we recently entered into an agreement to hedge approximately two-thirds of our production."
"I am also pleased to state that on August 3, 2009 we resumed sales of methane gas from the facilities operated by our subsidiary, Manufactured Methane, at Carter Valley in Tennessee to Hawkins County Gas Utility District, on a month to month basis. Manufactured Methane had previously sold the methane gas produced at the Carter Valley facility to Eastman Chemical. However, Eastman had temporarily ceased purchasing the gas until the approval by EPA of Eastman's request for clarification of certain smog season regulations applicable to Eastman's large facility, which application is still pending. We continue to look for additional ways to maximize the value of Manufactured Methane's refined methane gas, as we believe its derivation from a renewable energy source and its environmental benefit combine to make it a premium product."
Forward-looking statements made in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties which may cause actual results to differ from anticipated results, including risks associated with the timing and development of the Company's reserves and projects as well as risks of downturns in economic conditions generally, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.
SOURCE Tengasco, Inc.
http://www.tengasco.com
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