The decline in revenues was because of a reduction in oil prices in 2009 that was partly counterbalanced by a 13,071 net barrel raise in oil sales. Oil prices in the first quarter of 2009 averaged $35.74 per barrel compared with the $91.36 per barrel in the year-ago quarter.
In the first quarter of 2009, Tengasco had an operating loss of $401,630 compared with the operating income of $885,011 in the year-ago quarter. However, in the first quarter of 2008, Tengasco recorded net operating loss carry forwards of $5,227,000, resulting in $.08 of the total of $0.10 per share net income being attributable to the recordation of the carry-forwards, and only the remaining $0.02 being attributable to operations.
Jeffrey R. Bailey, chief executive officer, said, “In the first quarter of 2009 we continued to weather the economic storm of depressed commodity prices for our crude oil production. In the first quarter of 2009, our prices for crude were about $36 per barrel, or only about one third of what we received last year during the first quarter.”
“Even though prices were so much lower, we produced about 13,000 barrels more in the first quarter this year than the first quarter last year. This was due to both increased drilling and acquisitions. Nevertheless, because of the very low prices, we were unable to perform some workovers and polymer treatments on other wells that are good candidates for further production increases.”
Bailey continued: “Our next borrowing base review by the lender occurs in June 2009 and it is encouraging that we have seen some price improvement in crude oil so far in the second quarter of 2009. The borrowing base will be determined in June by the bank based on the bank’s own choices or ‘deck’ of commodity prices. Not knowing what price deck the bank may use, we will of necessity in this market keep cutting our costs and postponing expenditures but attempting to otherwise maximize our production levels as much as possible until prices improve.”
“We are also continuing to look for reasonable opportunities in this market to acquire existing production or otherwise grow the Company, but even though bargains or opportunities might become available, it may prove too difficult in these economic times to find funds to take advantage of them.”
