10SB12G

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-SB

        Registration Statement of Small Business Issuer pursunt to 
Section 12(g) of the Securities Exchange Act of 1934


                                TENGASCO, INC.
                Name of Registrant as specified in its charter


                TENNESSEE                             87-0267438
          State of Incorporation               I.R.S. Employer I.D. No.
   
        603 Main Avenue, Suite 500
            Knoxville, Tennessee                        37902
  Address of principal executive offices               Zip Code

  Issuer's Telephone Number                        (423) 523 - 1124


  Issuer's Facsimile Number                        (423) 523 - 9894



  Securities to be registered under Section 12(b) of the Act:

                             None

  Securities to be registered under Section 12(g) of the Act:

              $0.001 par value Common Voting Stock




                        TABLE OF CONTENTS

PART I ....................................................................    3


Item 1. Description of Business............................................    3

        Glossary of Terms .................................................    3
        Business Development ..............................................    4
        General ...........................................................   10
        Special Risk Factors ..............................................   13
        Limited History ...................................................   13
        Limited Market for Common Stock ...................................   14
        General Economic Risks/Potential ..................................   14
        Future Acquisitions ...............................................   15
        Future Capital Requirements; Uncertainty of Future
        Funding; Replacement of Reserves...................................   15
        Uncertainty of Reserve Estimates ..................................   16
        Operating Hazards .................................................   16
        Future Sales of Common Stock ......................................   17
        Voting Control ....................................................   18
        Competition .......................................................   18
        Dependence on Technical Personnel .................................   18
        Governmental Regulations ..........................................   19
        Indemnification of Directors, Officers and Employees ..............   19
        Going Concern .....................................................   19
        Principal Products or Services and Markets ........................   19
        Reserve Analyses ..................................................   20
        Distribution Methods of Products or Services ......................   21
        Status of Any Publicly Announced New Product or Service ...........   21
        Competitive Business Conditions, Competitive Position
        in the Industry and Methods of Competition ........................   21
        Sources and Availability of Raw Materials and Names of
        Principal Suppliers ...............................................   22
        Dependence on One or a Few Major Customers ........................   23
        Patents, Trademarks, Licenses, Franchises,
        Concessions, Royalty Agreements, Labor Contracts ..................   23
        Need for Governmental Approval of Principal
        Products or Services ..............................................   23
        Effect of Existing or Probable Governmental
        Regulations on Business ...........................................   23
        Research and Development ..........................................   25
        Cost and Effects of Compliance with Environmental Laws ............   25
        Number of Total Employees and
        Number of Full-Time Employees .....................................   25

Item 2. Management's Discussion and Analysis or Plan of

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        Operation .........................................................  25
        Plan of Operation for Existing Leases .............................  25
        Other Significant Plans ...........................................  27
        Results of Operations .............................................  27
        Liquidity .........................................................  28

Item 3. Description of Property ...........................................  29

        Property Location, Facilities, Size and Nature
          of Ownership ....................................................  29
        Disclosure of Oil and Gas Operations ..............................  30

Item 4. Security Ownership of Certain Beneficial Owners and
        Management ........................................................  31

        Security Ownership of Certain Beneficial Owners ...................  31
        Five Percent Stockholders .........................................  32
        Directors and Executive Officers ..................................  32
        Changes in Control ................................................  33

Item 5. Directors, Executive Officers. Promoters and Control
        Persons ...........................................................  33

        Identification of Directors and Officers ..........................  33
        Business Experience ...............................................  35
        Committees ........................................................  36

        Family Relationships ..............................................  36
        Certain Legal Proceedings .........................................  36

Item 6. Executive Compensation ............................................  37

        Cash Compensation .................................................  37
        Bonuses and Deferred Compensation .................................  40
        Compensation Pursuant to Plans ....................................  40
        Pension Table .....................................................  40
        Other Compensation ................................................  41
        Compensation of Directors .........................................  44
        Employment Contracts ..............................................  44
        Termination of Employment and Change of Control
        Arrangement .......................................................  44

Item 7. Certain Relationships and Related Transactions
        Transactions with Management and Others ...........................  44

        Certain Business Relationships ....................................  44
        Indebtedness of Management ........................................  45
        Parents of the Issuer .............................................  45
        Transactions with Promoters .......................................  45


Item 8. Description of Securities .........................................

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        Authorized Capital Stock ..........................................  45
        Common Stock ......................................................  45

PART II ...................................................................  47

Item 1. Market Price of and Dividends on the Common Stock and
        Other Stockholder Matters .........................................  47

        Market Information ................................................  47
        Holders ...........................................................  48
        Dividends .........................................................  48

Item 2. Legal Proceedings .................................................  49

Item 3. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure ..........................................  49

        Change from David T. Thomson, CPA to
        Charles M. Stivers, CPA ...........................................  49
        Change from Charles M. Stivers, CPA,
        to Price-Bednar, LLP, CPA .........................................  51
        Change from Price-Bednar, LLP, CPA
        to Charles M. Stivers, CPA ........................................  52
        Change from Charles M. Stivers, CPA
        to BDO Seidman, LLP ...............................................  53

Item 4. Recent Sales of Unregistered Securities ...........................  55

Item 5. Indemnification of Directors and Officers .........................  57

PART F/S ..................................................................  57

PART III ..................................................................  60

Item 1. Index to Exhibits .................................................  66

PART I

Item 1. Description of Business.

Glossary of Terms

                  Confirmed Structure: A structure that is defined due to
actual geological testing and information.


                  Farmout Agreement: A form of agreement between oil and gas
operators whereby the owner of a lease who is not interested in drilling at the
time, agrees to assign the lease or a portion of it to another operator who
wishes to drill the acreage. The assignor may or may not retain an interest
(royalty or production payment) in the production.

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                  Hydrocarbons: Organic chemical compounds of hydrogen and
carbon atoms. There are a vast number of these compounds, and they
form the basis of all petroleum products. They may exist as gases,
liquids or solids. An example of each is methane, hexane and asphalt.

                  Verified Structure: A structure that is verified by actual
geological testing and/or penetration.

                  Wildcat: A term applied to a mining company organized, or to a
mine or well dug, in an attempt to develop unproven ground far from previous
production. Any risky venture in the mining or petroleum industry.

                  Shut-in Well: A well that is not in production because of
a lack of a market or a pipeline connection.

                  Shut-in Royalty: Payment to royalty owners under the terms
of a mineral lease that allows the operator or lessee to defer production from a
shut-in well.

Business Development.

                  The Company was initially organized under the laws of the
State of Utah on April 18, 1916, under the name "Gold Deposit Mining & Milling
Company." The Company was formed for the purpose of mining, reducing and
smelting mineral ores. Copies of the initial Articles of Incorporation and the
current Bylaws of the Company are attached hereto and incorporated herein by
reference. See the Exhibit Index.

                  At the Company's inception, the Board of Directors authorized
the issuance of 600,000 shares of its then $0.10 par value common voting stock
to directors, executive officers and persons who may be deemed to have been
promoters or founders of the Company in consideration of the conveyance to the
Company of approximately 10 lode mining claims located in the Battle Mountain
Mining District, State of Nevada. The Company conducted limited mining
operations following its organization.

                  The Company's Articles of Incorporation were amended on April
12, 1966, by unanimous vote of the shareholders, to provide that the Company
shall have a perpetual existence. A copy of the Articles of Amendment effecting
this change is attached hereto and incorporated herein by reference. See the
Exhibit Index.

                  On November 10, 1972, the Company conveyed to an unaffiliated
entity substantially all of the Company's assets at that time, and the Company
ceased all business operations.

                  In connection with a change in control of the Company, in
January, 1983, the Board of Directors of the Company authorized the issuance of
1,500,000 "unregistered" and "restricted" shares of its

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common stock to certain directors and executive officers in consideration of
cash and services rendered of an aggregate value of $7,500.

                  On July 12, 1984, the Company's Articles of Incorporation were
again amended to: (i) authorize it to engage in any business or enterprise
deemed to be beneficial to the Company; (ii) increase the authorized capital of
the Company from 1,000,000 shares to 50,000,000 shares of common stock (which
allowed the Company to issue the "unregistered" and "restricted" shares referred
to in the preceding paragraph); (iii) reduce the par value of its common stock
from $0.10 to $0.001; (iv) provide that fully-paid stock shall not be liable for
any further call or assessment; and (v) provide that stockholders shall not have
preemptive rights to acquire unissued shares. There were 980,778 outstanding
voting securities of the Company on the date of the adoption of this amendment
by the stockholders of the Company, and 696,146 shares were voted in favor of
these amendments with none opposing and none abstaining. A copy of the Articles
of Amendment effecting these changes is attached hereto and incorporated herein
by reference. See the Exhibit Index.

                  From approximately 1983 to 1991, the operations of the Company
were limited to seeking out the acquisition of assets, property or businesses.

                  In contemplation of completing a "reverse" reorganization with
Onasco Biotechnologies, Inc. (" Onasco Texas"), the stockholders of the Company
adopted, ratified and approved the following amendments to the Company's
Articles of Incorporation: (i) a forward split of the then outstanding 2,480,778
shares of common stock of the Company on a basis of 2.015496 for one, resulting
in 5,000,000 post-split shares being outstanding, and retaining the par value at
$0.001 per share, with the appropriate adjustments being made in the additional
paid in capital and stated capital accounts of the Company; and (ii) a change of
the Company's name to "Onasco Companies, Inc." These amendments were subject to
the completion of the contemplated reorganization.

                  The Company entered into an Agreement and Plan of
Reorganization with Onasco Texas and all of its stockholders on December 17,
1991 (the "Onasco Plan"). Pursuant to the Onasco Plan, the Company acquired all
of the issued and outstanding shares of common stock of Onasco Texas in
consideration of the Company's issuance of an aggregate total of 15,000,000
post-split "unregistered" and "restricted" shares of its $0.001 par value common
stock to the stockholders of Onasco Texas, pro rata, in accordance with their
respective interests in Onasco Texas.

                  The Onasco Plan was effective as of December 18, 1991, the
date on which the aforesaid Articles of Amendment respecting the reorganization
with Onasco Texas were filed with the Department of Commerce of the State of
Utah. There were 2,480,778 outstanding voting securities of the Company on the
date of the adoption of this

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amendment by the stockholders of the Company, and 1,339,146 shares

were voted in favor of these amendments with none opposing and none
abstaining.  A copy of the Articles of Amendment effecting these
changes is attached hereto and incorporated herein by reference. See
the Exhibit Index.

                  Onasco Texas, which became a wholly owned subsidiary of the
Company following the completion of the Onasco Plan, was organized under the
laws of the State of Texas on October 17, 1991. The Company carried on the
business operations previously conducted by Onasco Texas, which consisted of the
development of diagnostic kits to screen for the presence of Type D retrovirus
in humans and monkeys and a putative, synthetic vaccine against such viruses.
These operations, which primarily involved research and development activities,
proved unsuccessful and were discontinued in June, 1994, and Onasco Texas was
dissolved by resolution of the Board of Directors on or about April 10, 1995.
The dissolution did not involve any bankruptcy or similar proceeding.

                  In accordance with the Utah Revised Business Corporation Law,
which became effective in 1991, on September 11, 1992, the Company's Articles of
Incorporation were further amended (i) to authorize the stockholders of the
Company to take any action without a meeting, that could have been taken at a
meeting of the stockholders, if consents are signed by stockholders holding at
least the number of shares that would be necessary to take the action at a
meeting (this action was not possible under prior law); and (ii) to provide for
the reclassification of each outstanding share of its common stock to become
one-twentieth of one share of new common stock (designated "Reconstituted Common
Stock"), effective September 15, 1992, with no fractional shares being created
and no stockholder to hold less than one share, and with no change in the par
value or the authorized capital. The net effect of this reclassification was a
one share for twenty reverse split of the outstanding shares of common stock.
There were 20,259,987 outstanding voting securities of the Company on the date
of the adoption of this amendment by the stockholders of the Company, and
14,800,000 shares were voted in favor of these amendments with none opposing and
none abstaining; the outstanding voting securities of the Company were reduced
to 1,012,999 shares as a result of the reverse split. A copy of the Articles of
Amendment effecting these changes is attached hereto and incorporated herein by
reference. See the Exhibit Index.

                  In connection with a change in control of the Company in the
summer of 1994, Duane S. Jenson and his son, Jeffrey D. Jenson,
purchased 697,500 shares of the Company's common stock, constituting
approximately 67% of the then outstanding voting securities of the
Company, from Dr. Robert C. Bohannon, Ph.D. and his family, in
consideration of the sum of $10,000.  Dr. Bohannon was formerly the
principal stockholder of Onasco Texas, and had served as the
President, CEO, Vice President and a director of the Company since the
completion of the Onasco Plan. Dr. Bohannon resigned these positions

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with the Company, effective June 13, 1994, compromised a debt of the Company to
him for past services rendered to the Company prior to the change in control,
and designated Jeffrey D. Jenson to serve as President, CEO, Secretary/Treasurer

and a director of the Company. At the time of the change of control, Dr.
Bohannon was the sole director and executive officer of the Company. The
remaining 33% of the Company's stock was held by original public shareholders.
Subsequent to the change in control, Dr. Bohannon did not perform any services
for the Company. Prior to the change in control, no director of the Company
received compensation in excess of $100,000 per annum.

                  At a special meeting of the Board of Directors held April 11,
1995, the Board of Directors adopted resolutions providing for the granting of
options to purchase "unregistered" and "restricted" shares of common stock of
the Company to certain directors, executive officers and consultants whose
service was to commence on the closing of a Purchase Agreement then being
negotiated with Industrial Resources Corporation, a Kentucky corporation
("IRC"). See the heading "Other Compensation" under the caption "Executive
Compensation," Part I, Item 6, and the "Restricted Stock Options Table," below.

                  At a special meeting of stockholders held on April 28, 1995,
the Company's stockholders voted;

                           (i) to approve the execution of the Purchase 
Agreement pursuant to which the Company would acquire certain oil and gas 
leases, equipment, securities and vehicles owned by IRC, in consideration of the
issuance of 4,000,000 post-split (as described below) "unregistered" and
"restricted" shares of the Company's common stock:

                           (ii) to amend the Articles of Incorporation of the
Company to effect a reverse split of the Company's outstanding $0.001 par value
common stock on a basis of one share for two, retaining the par value at $0.001
per share, with appropriate adjustments being made in the additional paid in
capital and stated capital accounts of the Company;

                           (iii) to change the name of the Company to "Tengasco,
Inc."; and

                           (iv) to change the domicile of the Company from the
State of Utah to the State of Tennessee by merging the Company into Tengasco,
Inc., a Tennessee corporation, formed by the Company solely for this purpose.

                  The Purchase Agreement was duly executed by the Company and
IRC, effective May 2, 1995. The reverse split, name change and change of
domicile became effective on May 4, 1995, the date on which duly executed
Articles of Merger effecting these changes were filed with the Secretary of
State of the State of Tennessee; a certified copy of the Articles of Merger from
the State of Tennessee was filed with the

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Department of Commerce of the State of Utah on May 5, 1995. Unless otherwise
noted, all subsequent computations in this Registration Statement retroactively
reflect this one for two reverse split and all other reverse splits outlined
above under this caption. There were 1,037,650 outstanding voting securities of
the Company on the date of the adoption of the amendments by the stockholders of

the Company, and 801,383 shares were voted in favor of the amendments with none
opposing and none abstaining. Copies of the Articles of Merger and Plan of
Merger to effect the change of domicile, change the name of the Company to
"Tengasco, Inc." and to effect the one for two reverse split; the Purchase
Agreement with IRC; and the Tennessee Articles of Incorporation of the
wholly-owned subsidiary formed for the purpose of changing the Company's
domicile are attached hereto and incorporated herein by reference. See the
Exhibit Index.

                  Thereafter, the Purchase Agreement was amended to provide for
the sale of certain additional assets for a price of $450,000 paid by the
execution by the Company of a promissory note in that amount.

                  The assets acquired by the Company pursuant to the Purchase
Agreement, as amended, consisted of machinery and equipment, vehicles, computer
equipment, furniture and fixtures, well equipment, land leases, intangible
drilling costs and stock of United Petroleum Corp., a public company. The book
value of these assets was $1,752,000 at the time of the acquisition. The
4,000,000 shares of the Company's stock given as consideration for those assets
had a market value, at that time, of $1,000,000 based upon a bid price of $.25
as reported by the National Quotation Bureau. The total cost of these assets to
the Company, including the $450,000 note, was $1,450,000. Copies of the
Amendment, General Bill of Sale and Promissory Note are attached hereto and
incorporated herein by reference. See the Exhibit Index.

                  On May 2, 1995, in connection with the execution of the
Purchase Agreement, Jeffrey D. Jenson, Kathleen L. Morrison and Travis
T. Jenson resigned as directors and executive officers of the Company
and the following individuals were appointed to serve as directors in
their stead: George E. Walter, Jr.; Raymond E. Johnson; Jack E.
Earnest; Edgar G. Baugh; Walter C. Arzonetti; Charles N. Manhoff; Joe
B. Mattei; William A. Moffett; John O'Hagan; and Benton L. Becker.
George E. Walter, Jr. was also appointed President/CEO of the Company,
and James C. Walter was appointed Vice President and
Secretary/Treasurer. None of the retiring directors had received
compensation in excess of $100,000 prior to May 2, 1995.

                  As compensation for services rendered and to be rendered to
the Company, including services relating to the Purchase Agreement,
on May 2, 1995, the Company also executed written compensation
agreements (the "Compensation Agreements") providing for the issuance
of a total of 505,000 "unregistered" and "restricted" shares of common
stock to the following individuals: M. E. Ratliff, Jeffrey D. Jenson;
and Leonard W. Burningham, Esq.  Copies of these Compensation
Agreements are attached hereto and incorporated herein by reference.

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See the Exhibit Index.

                  The Compensation Agreements of Messrs. Ratliff and Jenson
provided for the issuance of 215,000 and 240,000 "unregistered" and "restricted"

post-split shares (the one for two reverse split was not effected until May 4,
1995), respectively, to these individuals as compensation for services valued by
the Company at $21,500 each. Initially, Mr. Ratliff was to receive the same
number of shares as Mr. Jenson; however, he agreed to reduce the number of
shares he was to receive by 25,000 shares, with the additional shares being
allocated as part of the shares of common stock to be issued to Mr. Burningham
under one of the Compensation Agreements, as outlined below. The shares issued
to Mr. Jenson who is a non-affiliate, may be sold without restriction at any
time after May 4, 1997. The shares issued to Mr. Ratliff, who may be deemed an
affiliate, may not be sold until such time as the Company becomes a reporting
company in accordance with the Rules of the Securities and Exchange Commission.
See the caption "Recent Sales of Unregistered Securities," Part II, Item 4,
below, and the Exhibit Index.

                  The Compensation Agreement of Mr. Burningham provided for the
issuance of 50,000 "unregistered" and "restricted" post-split shares of common
stock as compensation for legal services rendered and to be rendered to the
Company, exclusive of costs. These services were valued by the Company at
$5,000. See the caption "Recent Sales of Unregistered Securities," Part II, Item
4, below, and the Exhibit Index. The shares owned by Mr. Burningham, who is not
an affiliate, became free trading on May 4, 1997 pursuant to Rule 144 of the
Rules of the Securities and Exchange Commission.

                  Effective December 31, 1995, IRC agreed to accept 164,266
"unregistered" and "restricted" shares of the Company's common stock, with a
market value of $5.37 per share on such date, as full payment for debt of
approximately $882,112.25 of the Company to IRC together with interest. This
debt included the note for $450,000 plus advances of $403,613 made by IRC in
1995, for use as working capital; for payment of salaries; for the acquisition
of leases (approximately 100 leases at a cost of $4 per acre); for expert
evaluations; and for legal services. These shares represented approximately 3%
of the outstanding shares of the Company. The price was determined based upon
the average trading price for shares of common stock of the Company on the OTC
Bulletin Board as of December 31, 1995. See the caption "Security Ownership of
Certain Beneficial Owners and Management," Part I Item 4, below, for information
regarding the voting securities of the Company owned by IRC.

                  At the annual meeting of stockholders held January 30, 1996,
the following persons were elected as directors of the Company, to
serve until the next annual meeting of the stockholders of the Company
or until their successors are elected and qualified, or their prior
resignations or terminations:  Walter C. Arzonetti; Benton L. Becker;
Charles N. Manhoff, William A. Moffett, and Lyle G. Stockstill.  At

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the annual meeting, 4,047,550 shares of the 5,239,300 outstanding voting
securities were voted in favor of the election, with none opposing and none
abstaining.

                  At the annual meeting of the directors held January 30, 1996,

immediately following the annual meeting of the stockholders, the following
persons were elected as executive officers of the Company, to serve until the
next annual meeting of the Board of Directors of the Company or until their
successors are elected and qualified, or their prior resignations or
terminations: Ted P. Scallan, President and CEO; Kelley S. Grabill, Secretary;
and Jeffrey D. DeMunnik, Treasurer. At its annual meeting, the Board of
Directors also adopted resolutions pursuant to which options to purchase
"unregistered" and "restricted" shares of common stock of the Company were
granted to Messrs. Jeffrey D. DeMunnik, Kelley S. Grabill, Ted P. Scallan and
Lyle G. Stockstill, directors or executive officers of the Company, and to
certain other persons, who were consultants or employees. See the "Restricted
Stock Options Table" under the caption "Executive Compensation," Part I, Item 6,
below.

                  Mr. Stocksill and Mr. Manhoff resigned on November February
7,1997. Mr. Valliant resigned on January 27, 1997. Mr. Becker resigned
on January 30, 1997. Mr. Arzonetti resigned on February 7, 1997. Mr.
Fetter and Mr. Wright resigned on March 13, 1997. On March 13, 1997,
Joseph Armstrong, James B. Kreamer, Shigemi Morita and Allen Sweeney
were elected by the Board of Directors to serve as directors to replace resigned
directors until the next annual meeting of shareholders.

                  Theodore P. Scallan resigned as President and CEO on
November 26, 1996 and was replaced by James E. Kaiser who served until
January 24, 1997 and was then replaced as President by Daniel G.
Follmer and as CEO by Michael E. Ratliff. Mr. Follmer has also served
as Chief Financial Officer since March 13, 1997.

                  Jeffrey DeMunnik resigned as Secretary on December 4, 1996
and as Treasurer on January 17, 1997. He was replaced as Secretary by
Elizabeth Wendelken and as Treasurer by Sheila F. Sloan.

                  Robert C. Carter was elected a Vice-President on December 4,
1996 and served until March 13, 1997 when he was elected Executive
Vice-President.

General.

                  In connection with the Purchase Agreement, the Company
acquired from IRC the following properties:

                           (i)  a 100% working interest in 41 oil and gas leases
on a total of 8,058 acres, more or less, and a 25% working interest on one lease
of 462 acres, more or less, located in Clay County, Kentucky (collectively, the
"Beech Creek Leases"). Each of these

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leases provides for a landowner royalty of 12.5% of the oil produced and saved
from the leased premises or, at the lessee's option, to pay the market price for
such 12.5% royalty. The leases also provide for a landowner royalty equal to
12.5% of the market price at the well of the gas sold or used off the premises,

except for injection for secondary recovery of oil. The lessors are also
entitled to free gas for all stoves and inside lights in the principal dwelling
house on the leased properties by making connection to the well or wells at
their own expense and risk. The Beech Creek Leases are also subject to
overriding royalties ranging from 1.25% to 5%. A true and correct copy of the
Beech Creek Lease Schedule is attached hereto and incorporated herein by
reference. See the Exhibit Index.

                           (ii)  a 100% working interest in 5 oil and gas leases
on a total of 741 acres, more or less, located in Clay County, Kentucky
(collectively, the "Wildcat Leases"). Each of these leases is subject to a 12.5%
landowner royalty, on the same terms as the Beech Creek Leases, and a 3.125%
overriding royalty. A true and correct copy of the Wildcat Lease Schedule is
attached hereto and incorporated herein by reference. See the Exhibit Index.

                           (iii)  a 100% working interest in six oil and gas
leases on a total of 744 acres, more or less, located in Clay County, Kentucky
(collectively, the "Burning Springs Leases"). Each of these leases is subject to
a 12.5% landowner royalty, on the same terms as the Beech Creek Leases and the
Wildcat Leases, and overriding royalties ranging from 3.125% to 7.5%. A true and
correct copy of the

           Burning Springs Lease Schedule is attached hereto and
incorporated herein by reference.  See the Exhibit Index.

                           (iv)  a 100% working interest in nine oil and gas
leases on a total of 2,121 acres, more or less, located in Fentress County,
Tennessee (collectively, the "Fentress County Leases"). Each of these leases is
subject to a 12.5% landowner royalty, on the same terms as the above referenced
leases, and a 19% overriding royalty; and a 25% overriding royalty on one
existing well. Section 60-1-301 of the Tennessee Code provides for a severance
tax of 3% on all gas and oil removed from the ground in Tennessee. A true and
correct copy of the Fentress County Lease Schedule is attached hereto and
incorporated herein by reference. See the Exhibit Index.

                  The initial term of each of the above referenced leases ranges
from one year to four years, with each lease to remain in effect thereafter for
as long as (i) oil, gas, casing-head gas or casing-head gasoline is being
produced on the leased premises, (ii) the Company has drilled a producing well
and shut-in royalty is paid for the right to inject, store and remove gas, or
(iii) the Company commences drilling another well or paying rentals within one
year of drilling a dry hole on the leased premises.

                  For those leases that are subject to a rental requirement, the
date of the Company's next rent payment is shown on the applicable

                                      11



lease schedules attached hereto as Exhibits. The obligation to pay rent becomes
applicable only when no well has been commenced on the leased premises by that
date. Rent may be paid annually or quarterly, and once it has been paid, the
Company has the right to defer the commencement of a well for the period for

which the rent was paid. Rent amounts vary from $1 to $5 per acre per year, with
certain leases providing for a flat rental payment of $1500.

                  The Beech Creek Leases contain four wells. These four wells
have been tested and management believes they are capable of producing gas in
paying quantities. Flow lines have been laid to connect these wells to the gas
transmission system of Wiser Oil Co., however, the wells are not presently in
production.

                  The Wildcat Leases have no wells at this time. The Company
intends to evaluate the potential of this lease block in 1997 and to schedule
promising locations for future drilling. Wiser Oil Company and Somerset Gas, two
of the oil purchasers in the area, have lines running on or adjacent to the
lease block.

                  The Burning Springs Leases contain a total of 11 gas wells,
all of which are shut-in. Several of the wells were in production in 1996 and
were hooked up to a nearby Southern Gas Company transport line. At present, the
wells are not producing since the compressors and related equipment have been
moved to the Swan Creek leases where, it is anticipated, the wells will be more
profitable. The Company intends to evaluate the wells that are listed as shut-in
for possible workover or deepening potential; after the evaluation, they will be
either reworked or plugged.

                  The Fentress County Leases currently have one well, which is
shut-in. The well will require additional work to initiate production.

                  Following the completion of the Purchase Agreement, the
Company acquired a 100% working interest in 210 oil and gas leases on a total of
30,367 acres more or less, located in Hancock, Claiborn County, Tennessee
(collectively, the "Swan Creek Leases"). Each of these leases provides for a
landowner royalty of 12.5%, leaving the Company a net royalty interest of 87.5%
in each lease.

                  The term of these leases is similar to the terms set forth
above with respect to the leases acquired from IRC.

                  There are five existing wells on the Swan Creek Leases. All of
these wells have been completed and will be available for production as soon as
the pipeline is completed. The first two wells have recently tested at 4.8
million cubic feet and 1.2 million cubic feet, respectively, of gas per day.

                  A true and correct copy of the Swan Creek Lease Schedule is
attached hereto and incorporated herein by reference.  See the Exhibit

                                      12



Index.

                  The Company also acquired a 100% working interest in four oil
and gas leases on a total of 1,003.19 acres, more or less, located in Lauderdale
County, Alabama (collectively, the "Alabama Leases"). Each of these leases

provides for a landowner royalty of 12.5%, leaving the Company a net royalty
interest of 87.5% in each lease.

                  The Alabama Leases have no existing wells. These leases will
be designated for wildcat purposes and there is no immediate plan to acquire
additional leases in the area or to begin an exploration program.

                  The term of these leases is similar to the terms described
above with respect to the leases acquired from IRC.

                  For those leases that are subject to a rental requirement, the
date of the Company's next rent payment is shown on the applicable lease
schedule attached hereto as an Exhibit. The obligation to pay rent becomes
applicable only when no well has been commenced on the leased premises by that
date. Rent may be paid annually or quarterly, and once it has been paid, the
Company has the right to defer the commencement of a well for the period for
which the rent was paid. Rent amounts are $1 per acre per year.

                  A true and correct copy of the Alabama Lease Schedule is
attached hereto and incorporated herein by reference. See the Exhibit
Index.

                  Substantial additional evaluation and remedial work will be
necessary in order to determine whether most of the Company's wells will be able
to produce oil and gas in paying quantities and to make them produce in such
quantities. The Company's ability to perform these operations will depend to a
great degree on its ability to raise sufficient funding to develop its leases,
as to which no assurance can be given. Nor can any assurance be given that if
the Company is able to obtain such funding, it will be able to produce oil and
gas in profitable quantities.

Special Risk Factors.

                  The present and intended business operations of the Company
must be considered to be highly speculative and involve substantial risks, and
an investment in securities of the Company should only be considered by those
persons who can bear the economic risk of loss of their entire investment. Among
the risk factors to be considered are the following:

                   Limited History.  Although the Company was organized in
1916, it must be regarded as being in a formative stage due to its
lack of significant business operations during recent years and the
fact that it did not acquire any oil or gas leases until 1995. Prior

                                      13



to its acquisition of these leases, the Company had never been involved in the
oil and gas business. Its future success depends upon its ability to profitably
operate its existing wells and to expand its operations through the acquisition
of additional oil and gas producing properties and/or the acquisition of
additional oil and gas leases. No assurance can be given that the Company will
be successful in making such acquisitions. If the Company is successful in

acquiring additional leases, it faces the risk that the geology reports on which
it relies are inaccurate, that the oil and/or gas reserves are less than
anticipated, that it will not have sufficient funds to drill on the property,
that it will not be able to market the oil and/or gas due to a lack of a market
or the lack of pipelines, and that fluctuations in the prices of oil and/or gas
will make development of those leases uneconomical. The Company is also subject
to all of the risks inherent in attempting to expand a relatively new business
venture. These risks include, but are not limited to, possible inability to
profitably operate its existing properties or properties to be acquired in the
future, the existence of undisclosed actual or contingent liabilities, the
inability to find the working capital requirements of such properties and the
inability to acquire additional properties that will have a positive effect on
the Company's operations. There can be no assurance that the Company will
achieve a level of profitability that will provide a return on invested capital
or that will result in an increase in the market value of the Company's
securities. See the caption "Market Price of and Dividends on the Company's
Common Stock and Other Stockholder Matters," Part II, Item 1, below.

                  Limited Market for Common Stock. Although the Company's common
stock is listed on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. (the "NASD"), the market for such shares only commenced
in May, 1995, following the completion of the Purchase Agreement with IRC; and
there can be no assurance that it will continue or be maintained. Any market
price for shares of common stock of the Company is likely to be very volatile,
and factors such as success or lack thereof in drilling, the ability or
inability to acquire additional oil and gas producing properties, competition,
governmental regulation and fluctuations in operating results may all have a
significant effect. In addition, the stock markets generally have experienced,
and continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies. These broad
market fluctuations, as well as general economic and political conditions, may
adversely affect the market price of the Company's common stock. See the caption
"Market Price of and Dividends on the Company's Common Stock and Other
Stockholder Matters," Part II, Item 1, below.

                  General Economic Risks/Potential Volatility of Stock Price.
The Company's current and future business plans are dependent, in large part, on
the state of the general economy. Adverse changes in general and local economic
conditions may cause high volatility in the

                                      14



market price of the Company's securities and may adversely affect an investment
in these securities. Oil and gas prices are extremely volatile and are subject
to substantial seasonal, political, world wide supply of oil and gas and other
fluctuations and risks, all of which are beyond the Company's control.

                  Future Acquisitions. The Company intends to develop and expand
its business, principally by developing its existing oil and gas leases and
acquiring additional oil and gas-producing properties and/or leases. See the
caption "Management's Discussion and Analysis or Plan of Operation," Part I,

Item 2, below. The Company has not selected any particular properties in
connection with its expansion plans and may not be able to locate desirable
property and/or it may not be able to provide the funds necessary to acquire
additional property.

                  Future Capital Requirements; Uncertainty of Future Funding.
The Company presently has limited operating capital. It will require substantial
additional funding in order to realize its goals of conducting oil and gas
exploration operations and acquiring additional oil and gas properties. The
Company is currently negotiating with investment banking and brokerage firms to
raise these funds through equity or debt financing, which may be very difficult
for such a highly speculative enterprise. There can be no assurance that such
additional funding will be made available to the Company, or if made available,
that the terms thereof will be satisfactory to the Company. Furthermore, any
equity funding will cause a substantial decrease in the proportional ownership
interests of existing stockholders. If such funding is not made available to the
Company, it is doubtful that the Company will be able to conduct its planned
business operations. See this caption "Management's Discussion and Analysis or
Plan of Operation," Part I, Item 2, below.

                  Replacement of Reserves. The Company's future success will
depend upon its ability to find, acquire and develop additional oil and gas
reserves that are economically recoverable. The proven reserves of the Company
will generally decline as they are produced, except to the extent that the
Company conducts revitalization activities, or acquires properties containing
proven reserves, or both. To increase reserves and production, the Company must
continue its development and drilling programs, identify and produce previously
overlooked or by-passed zones and shut-in wells, acquire additional properties
or undertake other replacement activities. The Company's current strategy is to
increase its reserve base, production and cash flow through the development of
its existing oil and gas fields and selective acquisitions of other promising
properties where the Company can utilize new and existing technology. The
Company can give no assurance that its planned revitalization, development and
acquisition activities will result in significant additional reserves or that
the Company will have success in discovering and producing reserves at
economical exploration and development costs. The Company may not be able to
locate geologically satisfactory property, particularly since

                                      15



it will be competing for such property with other oil and gas companies, many of
which have much greater financial resources than the Company. Moreover, even if
desirable properties are available to the Company, it may not have sufficient
funds with which to acquire additional leases. Furthermore, while the Company's
revenues may increase if prevailing oil and gas prices increase significantly,
the Company's exploration costs for additional reserves may also increase.

                  Uncertainty of Reserve Estimates. Oil and gas reserve
estimates and the present value estimates associated therewith are based upon
numerous engineering, geological and operational assumptions that generally are
derived from limited data. Common assumptions include such matters as the extent
and average thickness of a particular reservoir, the average porosity and

permeability of the reservoir, the anticipated future production from existing
and future wells, future development and production costs and the ultimate
hydrocarbon recovery percentage. As a result, oil and gas reserve estimates and
present value estimates are frequently revised in subsequent periods to reflect
production data obtained after the date of the original estimates. If reserve
estimates are inaccurate, production rates may decline more rapidly than
anticipated, and future production and revenues may be less than estimated.
Moreover, significant downward revisions of reserve estimates may adversely
affect the Company's ability to borrow funds in the future or have an adverse
impact on other financing arrangements.

                  In addition, any estimates of future net revenues and the
present value thereof are based upon period ending prices and on cost
assumptions made by the Company which only represent its best estimate. If these
estimates of quantities, prices and costs prove inaccurate and the Company is
unsuccessful in expanding its oil and gas reserves base, and/or declines in and
instability of oil and gas prices occur, write-downs in the capitalized costs
associated with the Company's oil and gas assets may be required. The Company
will also rely to a substantial degree on reserve estimates in connection with
the acquisition of producing properties. If the Company overestimates the
potential oil and gas reserves of a property to be acquired, or if its
subsequent operations on the property are not successful, the acquisition of the
property could result in substantial losses to the Company. See the Reports of
Coburn Petroleum Engineering, copies of which are attached hereto and
incorporated herein by reference, and all of which are modified by the foregoing
unknown factors. See the Exhibit Index. Also, see the heading "General" of this
caption, above, and the caption "Description of Property," Part I, Item 3.

                  Operating Hazards. Oil and gas operations involve a high
degree of risk. Natural hazards, such as excessive underground pressures, may
cause costly and dangerous blowouts or make further operations on wells
financially or physically impractical. Similarly, the testing and recompletion
of oil and gas wells involves a high degree of risk arising from operational
failures, such as blowouts, fires, pollution, collapsed casing, loss of
equipment and numerous

                                      16



other mechanical and technical problems. Any of the foregoing hazards may result
in substantial losses or liabilities to third parties, including claims for
bodily injuries, reservoir damage, loss of reserves, environmental damage and
other damage to persons or property.

                  Future Sales of Common Stock. IRC currently beneficially owns
approximately 2,771,671 shares of the common stock of the Company or
approximately 45.3% of its outstanding voting securities. This amount is based
upon 6,124,216 shares being outstanding or beneficially owned, and assumes the
exercise of 497,097 shares vested under options granted by the Company as of May
31, 1996. Effective June 30, 1997, 2,698,101 shares of the common stock owned by
IRC will have been beneficially owned for two years, and subject to compliance
with the applicable provisions of Rule 144 of the Securities and Exchange
Commission, IRC may then commence to sell these "restricted securities" in an

amount equal to up to 1% of the then outstanding securities of the Company, or
the average weekly trading volume in the securities of the Company on any
recognized automated system during the four weeks preceding any Notice of Sale
pursuant to Rule 144, in any three month period, provided the Company satisfies
the "current public information available" requirements of Rule 144 at that
time. In such event, such sales could have a substantial adverse effect on any
public market that may then exist in the Company's common stock. Sales of any of
these shares by IRC could severely affect the ability of the Company to secure
the necessary debt or equity funding for the Company's proposed business
operations. For additional information concerning the present market for shares
of common stock of the Company, see the caption "Market Price of and Dividends
on the Company's Common Stock and Other Stockholder Matters," Part II, Item 1,
below. For information regarding common stock ownership of IRC and the Ratliff
family, see the caption "Security Ownership of Certain Beneficial Owners and
Management," Part I, Item 4; below. The additional 164,266 shares of common
stock of the Company acquired by IRC in exchange for debt of the Company as
outlined under the heading "Business Development" of this caption, above (76,557
shares were issued in March, 1996, and 87,709 shares were issued in April,
1996), will have satisfied the present two year Rule 144 holding period in March
and April, 1998, respectively, and will also then be available for resale
pursuant to Rule 144.

                  A total of 505,000 "unregistered" and "restricted" shares of
the Company's common stock were issued to Jeffrey D. Jenson, M. E. Ratliff and
Leonard W. Burningham, Esq., pursuant to the Compensation Agreements that were
executed on May 2, 1995. Pursuant to Rule 144 of the Securities and Exchange
Commission the shares owned by Messrs. Jenson and Burningham, who are
non-affiliates, may now be sold without restriction. The shares owned by M. E.
Ratliff, who is an affiliate, may not be sold until the Company is subject to
the reporting requirements of Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 Act, as amended (the "1934 Act"). The resale of these
securities may also have a substantial adverse impact on any

                                      17



then-existing public market for the Company's common stock.  See the
caption "Recent Sales of Unregistered Securities," Part II, Item 4,
below.

                  The availability of Rule 144 for resales of "restricted
securities" by affiliates is primarily conditioned upon the Company being a
"reporting company" under the 1934 Act, and being current" in all reports
required to be filed, or having "currently publicly available" the type of
information usually provided to broker-dealers effecting transactions in
securities of a company as required by Rule l5c2-1 1 (a)(5) of the Securities
and Exchange Commission. If the Company was not a "reporting company" at the
time any holder of "restricted securities" had held such securities for one year
(two years in the case of an affiliate), this type of information would have had
to have been provided to stockholders of the Company on a periodic basis over
the previous two years, and the Company's balance sheet and income statement at
such time should be not less than six months old. Further, this type of
information should also have been provided to nationally recognized manuals,

broker-dealers effecting transactions in the securities of the Company and
newspapers of general circulation, where possible, in order for the Company to
satisfy the requirements of having the required information "currently publicly
available." Assuming this Registration Statement becomes effective, and the
Company thereafter files all reports required to be filed by it with the
Securities and Exchange Commission, the Company would have the required
information "currently publicly available" concerning it as required by
subparagraph (c)(l) of Rule 144. Shares held by non-affiliates may be sold
without restriction after a holding period of two years and may be sold in
limited quantities after a holding period of one year.

                  Voting Control. By virtue of IRC's present ownership of
approximately 45.3% of the Company's outstanding voting securities, the
management of IRC has the ability to effect significantly the election of the
Company's directors, who in turn elect all executive officers. The management of
IRC may be deemed to have substantial control over the management and affairs of
the Company. See the caption "Security Ownership of Certain Beneficial Owners
and Management," Part I, Item 4, below.

                  Competition. The Company's oil and gas exploration activities
are centered in a highly competitive field. In seeking any other suitable oil
and gas properties for acquisition, or drilling rig operators and related
personnel and equipment, the Company will be competing with a number of other
companies, including large oil and gas companies and other independent operators
with greater financial resources. Management does not believe that the Company's
initial competitive position in the oil and gas industry will be significant.
See the heading "Competition" under this caption.

                  Dependence on Technical Personnel.  Certain members of
present management have substantial expertise in the areas of endeavor

                                      18



presently conducted and to be engaged in by the Company. To the extent that
their services become unavailable, the Company will be required to retain other
qualified personnel. There can be no assurance that it will be able to recruit
and hire qualified persons upon acceptable terms. See the caption "Directors,
Executive Officers, Promoters and Control Persons," Part I Item 5, below.

                  Similarly, the oil and gas exploration industry requires the
use of personnel with substantial technical expertise. In the event that the
services of its current technical personnel become unavailable, the Company will
need to hire qualified personnel to take their place; no assurance can be given
that it will be able to recruit and hire such persons on mutually acceptable
terms.

                  Governmental Regulations. The Company is subject to numerous
state and federal regulations, environmental and otherwise, that may have a
substantial negative effect on its ability to operate at a profit. For a
discussion of the risks involved as a result of such regulations, see the
headings "Effect of Existing or Probable Governmental Regulations on Business"
and "Costs and Effects of Compliance with Environmental Laws," of this caption.


                  Indemnification of Directors, Officers, Employees and Agents.
Section 48-18-502 of the Tennessee Business Corporation Act allows a corporation
to indemnify any director in any civil or criminal proceeding (other than a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation or any other proceeding in which he or she
was adjudged liable on the basis that he or she improperly received a personal
benefit) by reason of service as a director if the person to be indemnified
conducted himself or herself in good faith and in a manner reasonably believed
to be in, or not opposed to, the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
the conduct was unlawful. Section 48-18-507 extends certain indemnification
rights to officers, employees and agents of a corporation as well. The foregoing
is only a brief summary of the right of indemnification allowed a corporation
under the Tennessee Business Corporation Act, and is modified in its entirety by
this reference. The Board of Directors of the Company has adopted these
provisions to indemnify its directors, executive officers and agents. See the
caption "Indemnification of Directors and Executive Officers," Part II Item 5,
below.

                  Going Concern The Company's accountants have expressed doubts
about the ability of the Company to function as a going concern in view of its
substantial losses and its lack of sufficient funding.

Principal Products or Services and Markets

                  The Company will conduct exploration and production

                                      19



activities to produce crude oil and natural gas. The principal markets for these
commodities are local refining companies, major natural gas transmission
pipeline companies, local utilities and private industry end users, which
purchase the crude oil, and natural gas pipeline companies, which purchase the
gas. There are currently two gas transmission lines that run through the Beech
Creek Leases; these lines can be accessed to sell gas produced from the leases.
There are two more transmission lines within approximately two miles of these
leases.

                  In Hancock County, gas production from the Swan Creek Leases
will be delivered into the major transmission line of East Tennessee Natural
Gas. At the present time, there is no completed pipeline from these leases to
the East Tennessee Natural Gas pipeline. The Company is in the process of
constructing such a pipeline which is approximately 70% completed and is
expected to be completed during the last quarter of 1997. The pipeline will be
approximately 23 miles long and is made of 8 inch steel pipe. The cost to date
has been approximately $1,500,000. Completion is expected to cost approximately
an additional $700,000. The Company has acquired all necessary regulatory
approvals and 99% of necessary property rights to complete this pipeline. It
anticipates having the remaining property rights within two months. The
Company's pipeline will not only service the Company's wells, but, will provide
transportation of gas for small independent producers in the local area as well.

It is anticipated that direct sales could also be made to some local towns and
industries. No assurance can be given that the Company will be able to produce a
sufficient quantity of crude oil or natural gas to make these operations
profitable.

Reserve Analyses

                  Coburn Petroleum Engineering of Tulsa, Oklahoma, has performed
reserve analyses of all the Company's productive leases. R. W. Coburn, a
registered petroleum engineer, and the owner of Coburn Petroleum Engineering,
has no interest in the Company or IRC, and performed these services at his
standard rate ($90 per hour was billed and paid for these reports). The net
reserve values used hereafter were obtained from a report dated June 18, 1997
prepared by Coburn Petroleum Engineering. A copy of that report is annexed
hereto and incorporated herein by reference. See the Exhibit Index. In
substance, the report, used estimates of oil and gas reserves based upon
standard petroleum engineering methods which include decline curve analysis,
volumetric calculations, pressure history, analogy, various correlations and
technical judgment. Information for this purpose was obtained from owners of
interests in the areas involved, state regulatory agencies, commercial services,
outside operators and files of Coburn Petroleum Engineering.

                  Discounting the net reserve values by 10%, before taxes,
results in a present value of $33,874,577 for the Swan Creek Field,

                                      20



$5,929,992 for the Beech Creek Leases, $996,280 for the Fentress County Leases
and $547,248 for the Burning Springs Leases. Reserve analyses are at best
speculative, especially when based upon limited production; no assurance can be
given that the reserves attributed to these leases exist or will be economically
recoverable. See the heading "Special Risk Factors" specifically the risk factor
entitled "Uncertainty of Reserve Estimates," of this caption.

                  It is standard in the industry for reserve analyses such as
these to be used as a basis for financing of drilling costs. Thus, based upon
the reserve analyses for the Swan Creek leases, Enserch has agreed to provide
funds for drilling in that field.

Distribution Methods of Products or Services

                  Crude oil is normally distributed in this area by tank truck
and natural gas is distributed and transported via pipeline. Gas purchasers in
the area include Delta Natural Gas Company, Inc., Wiser Oil Company, Southern
Gas Company of Delaware, Inc., Somerset Gas and East Tennessee Natural Gas.
Delta and Wiser operate a gas gathering system that runs through the center of
the Company's Beech Creek leases. The existing Beech Creek wells have been tied
into the Wiser Oil Company system in anticipation of future production. The
Burning Springs wells are connected to Southern Gas Company's gathering system.

                  Should the Company decide to use transmission lines owned by
other businesses, it will have to negotiate the prices to be paid with the owner

of that transmission line, provided capacity is available. There can be no
assurance that prices can be negotiated which will enable the Company to sell
its products profitably.

                  Oil from the Fentress County Leases will be stored in a tank
battery consisting of two 210 barrel tanks while awaiting shipment by tank
truck.

                  Gas production from the Swan Creek Leases will go into the
East Tennessee Natural Gas transmission system through use of the pipeline
presently under construction by the Company, as described above.

                  The Company has no farmout agreements with any entity.

Status of Any Publicly Announced New Product or Service

                  The Company does not have any publicly announced new product
or service.

Competitive Business Conditions, Competitive Position in the Industry
and Methods of Competition

                                      21



                  The Company's contemplated oil and gas exploration activities
in the States of Kentucky and Tennessee will be undertaken in a highly
competitive and speculative business atmosphere. In seeking any other suitable
oil and gas properties for acquisition, the Company will be competing with a
number of other companies located in the State of Kentucky and elsewhere,
including large oil and gas companies and other independent operators with
greater financial resources. Management does not believe that the Company's
initial competitive position in the oil and gas industry will be significant.

                  At the local level, the Company has only two competitors in
the area of its acreage blocks in the State of Kentucky, who are: Equitable
Resources and Ashland Oil. Its principal competitors in the State of Tennessee
are Ashland Oil and Miller Services; and in the State of Alabama are Engineering
Development Corp. and Torch Operating Co. In the area of the Company's pipeline,
the Company is in a favorable position since it will own the only pipeline
within a 20 mile radius. Within that area, the Company owns leases on
approximately 30,367 acres. In addition, remaining landowners will find it
difficult to deal with any other oil and gas companies since such companies will
not have access to a pipeline. Geological studies indicate the existence of many
possible productive fields in the area of the Company's pipeline.

                  Management does not foresee any difficulties in procuring
drilling rigs or the manpower to run them in the area of its operations. The
experience of management has been that in most instances, drilling rigs have
only a one or two day waiting period; however, several factors, including
increased competition in the area, may limit the availability of drilling rigs,
rig operators and related personnel and/or equipment; such an event may have a
significant adverse impact on the profitability of the Company's operations.


                  The Company anticipates no difficulty in procuring well
drilling permits which are obtained from the Tennessee Oil and Gas Board. They
are usually issued within one week of application. The Company generally does
not apply for a permit until it is actually ready to commence drilling
operations. The Company presently has five well drilling permits for use
anywhere in Tennessee.

                  The prices of the Company's products are controlled by the
world oil market and the United States natural gas market; thus, competitive
pricing behaviors are considered unlikely; however, competition in the oil and
gas exploration industry exists in the form of competition to acquire the most
promising acreage blocks and obtaining the most favorable prices for
transporting the product. Management believes that the Company is
well-positioned in these areas because of the transmission lines that run
through and adjacent to the properties it leases and because it holds relatively
large acreage blocks in what management believes are promising areas.

                                      22



Sources and Availability of Raw Materials and Names of Principal
Suppliers

                  Excluding the development of oil and gas reserves and the
production of oil and gas, the Company's operations are not dependent
on the acquisition of any raw materials.  See the headings
"Competitive Business Conditions, Competitive Position in the Industry
and Methods of Competition," of this caption.

Dependence on One or a Few Major Customers

                  The Company will be dependent on local purchasers of
hydrocarbons in the areas where its properties are located for sales of its
products. The five purchasers in the areas of the Company's operations are
Wiser, Southern, Delta, Somerset and East Tennessee Natural Gas. The only
customers with which the Company has a written            contract are 
Hawkins County Utilities and Powell Valley Electric Cooperative. Copies of those
contracts are annexed hereto and incorporated herein by reference. See the
Exhibit Index. Those entities have agreed to purchase gas from the Company's
Hancock County fields upon completion of the pipeline. It is anticipated that
sales to Hawkins County Utilities will amount to approximately 4,000 MCF per
day. Sales to Powell Valley Electric Cooperative are to be determined at a
future date.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts, including Duration

                  Royalty agreements relating to oil and gas production are
standard in the industry. The amount of the Company's royalty payments varies
from lease to lease. See the heading "General" under this caption. The amounts
of the royalties on each of the Company's leases are listed on the attached
lease schedules. See the Exhibit Index.


Need for Governmental Approval of Principal Products or Services

                  None of the principal products or services offered by the
Company require governmental approval; however, permits are required for
drilling oil or gas wells. See the heading "Effect of Existing or Probable
Governmental Regulations on Business, " of this caption.

Effect of Existing or Probable Governmental Regulations on Business

                  Exploration and production activities relating to oil and gas
leases are subject to numerous environmental laws, rules and regulations. The
Federal Clean Water Act requires the Company to construct a fresh water
containment barrier between the surface of each drilling site and the underlying
water table. This involves the insertion of a seven-inch diameter steel casing
into each well, with cement on the outside of the casing. The cost of compliance
with this environmental regulation is approximately $10,000 per well.

                                      23




                  The State of Kentucky also requires oil and gas drillers to
obtain a permit for their activities and to post with the Division of Oil and
Gas of the Kentucky Department of Minerals and Mines (the "Kentucky Division") a
bond to ensure that each well is properly plugged when it is abandoned. These
bonds are based on $1 per foot, Each of the Kentucky wells has a $5,000 bond
which was originally posted by IRC and remains in place. The Kentucky Division
will retain the bond until the subject wells are plugged.

                  The State of Tennessee also requires the posting of a bond to
ensure that the Company's wells are properly plugged when abandoned. A separate
$2,000 bond is required for each well drilled. The Company currently has a
$10,000 bond on deposit with the State of Tennessee. See the heading "Disclosure
of Oil and Gas Operations" of the caption "Description of Property," Part I,
Item 3, below.

                  The State of Alabama also requires the posting of a bond to
ensure that the Company's wells are properly plugged when abandoned. A
single-well bond, which varies between $5,000 and $50,000, depending upon well
depth, or a blanket bond of $100,000, may be obtained for wells drilled
on-shore. At the present time, the Company does not have plans to drill any
wells in the State of Alabama.

                  The Company's operations are also subject to laws and
regulations requiring removal and cleanup of environmental damages under certain
circumstances. Laws and regulations protecting the environment have generally
become more stringent in recent years, and may in certain circumstances impose
"strict liability," rendering a corporation liable for environmental damages
without regard to negligence or fault on the part of such corporation. Such laws
and regulations may expose the Company to liability for the conduct of
operations or conditions caused by others, or for acts of the Company which were
in compliance with all applicable laws at the time such acts were performed. The

modification of existing laws or regulations or the adoption of new laws or
regulations relating to environmental matters could have a material adverse
effect on the Company's operations. In addition, the Company's existing and
proposed operations could result in liability for fires, blowouts, oil spills,
discharge of hazardous materials into surface and subsurface aquifers and other
environmental damage, any one of which could result in personal injury, loss of
life, property damage or destruction or suspension of operations.

                  The Company believes it is presently in compliance with all
applicable federal, state or local environmental laws, rules or regulations;
however, continued compliance (or failure to comply) and future legislation may
have an adverse impact on the Company's present and contemplated business
operations.

                  At Board of Directors' meetings held June 6 and 7, 1995, the
Board of Directors adopted resolutions to form an Environmental Response Policy
and Emergency Action Response Policy Program; this

                                      24



program has not yet been implemented, and will entail an analysis of
specific operations.

                  The foregoing is only a brief summary of some of the existing
environmental laws, rules and regulations to which the Company's business
operations are subject, and there are many others, the effects of which could
have an adverse impact on the Company. Future legislation in this area will no
doubt be enacted and revisions will be made in current laws. No assurance can be
given as to what effect these present and future laws, rules and regulations
will have on the Company's current and future operations.

Research and Development

                  The Company has not expended any material amount in research
and development activities during the last two fiscal years. Research done in
conjunction with its exploration activities will consist primarily of running
radiometric surveys on the lease blocks and conducting geological research on
the surface. This work will fall under the job description of the geologist to
be hired for these activities and will not have a material cost of anything more
than his or her standard salary. See the heading "Number of Total Employees and
Number of Full-Time Employees," of this caption.

Cost and Effects of Compliance With Environmental Laws

                  See the heading "Effect of Existing or Probable Governmental
Regulations on Business," of this caption.

Number of Total Employees and Number of Full-Time Employees

                  The Company presently has ten full-time employees and eight
part-time employees. When it commences its full-scale oil and gas operations,
the Company plans to add additional full-time employees, exclusive of executive

officers.

                  The Company has hired a full-time geologist at a salary of
$40,000 per year. His duties for the Company include: surface and sub-surface
geology, log correlation, surface and sub-surface mapping, field--research
(i.e., radiometric, gravity, magnetic and geochemical research) and well-site
geology.

Item 2.  Management's Discussion and Analysis of Plan of Operation.

Plan of Operation for Existing Leases

                  The Company intends to commence full scale development of its
Swan Creek Leases. The Swan Creek structure is confirmed at the surface on
geologic quadrangle maps showing the Clinchport thrust fault controlling the
structure. Additionally, the structure is verified at depth by the successful
drilling of the Reed #1 and Sutton #1, completed in the early 1980s. The Reed #1
and Sutton #1 could be

                                      25



expected to cumulatively produce approximately six billion cubic feet of gas at
an initial rate of approximately 3,500,000 cubic feet per day. The Reed #1
tested at 4,800,000 cubic feet per day of gas in the Knox Formation on a 32/64
inch choke. The well exhibited a flowing pressure of 800 psi during the test.
The Sutton #1 well is two miles to the northeast of the Reed well. This well
tested 1,200,00 cubic feet per day on a 32/64 inch choke, with a flowing
pressure of 150 psi. Management's assertions with respect to the capacity of
these wells is based upon engineering reports and confirmation of estimates
based upon the results from the completed wells. Copies of the reports are
annexed hereto and incorporated herein by reference. See the Exhibit Index.

                  The Company's present plans call for the drilling of
approximately fifty additional wells on the Swan Creek leases over a two to
three year period at a cost of approximately $225,000 per well. Completion of
the pipeline presently being constructed by the Company and which is necessary
in order for the Company to be able to sell its gas is anticipated by the end of
1997 at an additional cost of approximately $750,000.

                  Thereafter, the Company plans to construct two extensions to
its pipelines so as to enable it to exploit other leases which are part of the
Swan Creek leases. These extensions which will be approximately 40 miles in
length will cost approximately $4,000,000. The Company's ability to expand its
operations in this manner is dependent upon the success of the Company's
drilling program. Moreover, no assurance can be given that the Company will be
able to obtain the required rights of way to construct any such pipeline, and
the pipeline currently under construction will only serve production from a
portion of the Swan Creek Field.

                  It is presently expected to fund these activities by means of
financing to be provided by Enserch as well as by the use of revenues derived
from the sale of gas produced by the wells.


                  Exploitation of the other leases held by the Company is being
placed on hold at the present time.

                  The sales price for gas is determined on the basis of an index
used by all suppliers and users of gas. The price fluctuates between $2.50 per
MCF and $4.50 per MCF, usually higher during the cold weather months. The cost
of production from the well averages approximately $.22 per MCF. Transportation
costs are approximately $.40 per MCF which includes amortization of the
pipeline. In addition, the Company anticipates receiving revenue from third
parties who desire to use the pipeline.

                  To date, the Company has not drilled any dry wells.

                  There can be no assurance, of course, that all of the
funding necessary for the completion of the wells will become

                                      26



available by reason of the agreement with Enserch since Enserch has the option
of discontinuing funding after providing funds for completion of the pipeline
and the drilling of two more wells. The continued involvement of Enserch will be
directly related to the success of the drilling program in producing marketable
quantities of gas in view of the speculative nature of "reserve analyses" relied
upon by the Company. Reference is also made to the heading "Special Risk
Factors" of the caption "Description of Business," Part I, Item 1, above. In the
event the required funds are not made available by Enserch, the Company will
still have a completed pipeline and several wells which will be producing which
will provide revenue to enable the Company to drill additional wells, albeit on
a much slower timetable. In such event, the Company will seek funding elsewhere.
It has no present plans for attempts to obtain other funding.

                  It is anticipated that the Company will implement development
programs on the Beech Creek and Fentress County Leases sometime in the future
The Swan Creek Leases are being given first priority because of their higher
economic attractiveness.

                  Management anticipates both short term and long term increases
in oil and gas prices which should have a positive effect on the Company's
income and profits.

                  The Company has no plans, at present, to increase the number
of its employees significantly.

Other Significant Plans

                  The Company also intends to actively pursue the gas marketing
business on the Eastern seaboard. The Eastern seaboard, and Tennessee in
particular, has numerous industrial end users of natural gas that are currently
exposed to a limited number of gas suppliers. The Company has entered into an
agreement with Enserch Energy Services, Inc., ("Enserch") pursuant to which the
Company and Enserch will market each other's product in Tennessee. A copy of

that agreement is annexed hereto and incorporated herein by reference. See the
Exhibit Index.

                  In addition to an active drilling program the Company intends
to continue strategically acquiring leases in promising areas in the States of
Kentucky and Tennessee. No assurance can be given that the Company will be able
to identify or acquire any such leases or that if it does acquire any such
leases, they will be profitable.

                  This plan of operation is based upon many variables and
estimates, all of which may change or prove to be other than or different from
information relied upon.

Results of Operations

                  Effective May 2, 1995, and pursuant to a Purchase

                                      27



Agreement, the Company acquired certain oil and gas-leases, equipment,
marketable securities and vehicles, from IRC. Following the completion of this
transaction, the Company changed its domicile to the State of Tennessee on May
5, 1995. Prior to the completion of this Purchase Agreement, the Company had
been inactive from 1993, and had little or no assets or operations. The assets
reflected as being owned on December 31, 1995, were all primarily acquired from
IRC.

                  During the year ended December 31, 1996, the Company had
revenues of $26,253 as compared with revenues of $28,526 for the year ended
December 31, 1995. The Company has shut in the wells which produced that gas,
transferring some of the equipment to the Swan Creek lease in anticipation of
the completion of the pipeline.

                  Depletion, depreciation and amortization expense increased
from $89,528 for 1995 to $133,187 for 1996 as a result of the fact that the
Company did not acquire its assets from IRC until May, 1995 so that there were
only seven months of depreciation during 1995.

                  Unrealized holding losses on marketable equity securities
($593,792) in 1995) were a one-time event and were not incurred in 1996.

                  General and administrative expense also increased
substantially during the same periods as the result of the addition of four full
time employees and salaried executive officers, and increased rental for new
executive offices which were leased in January, 1996.

                  Interest expense increased from $32,594 to $145,302 in 1996
due to the amortization of long-term debt discounts associated with certain
stock warrants granted in connection with such debt.

                  The increase in net loss from operations during the year ended
December 31, 1996 as compared with the year ended December 31, 1995 was due to

the increased general and administrative expense, offset somewhat by the
non-recurrence of losses on marketable securities.

                  The Company had no revenues during the six month period ending
June 30, 1997 since it shut in the wells which it had been operating in 1996 in
order to concentrate on the pipeline and the Swan Creek leases.

Liquidity

                  Loans in the aggregate total of $882,112 were advanced by IRC,
a related party and an "affiliate" of the Company during the year ended December
31, 1995, and 164,266 "unregistered" and "restricted" shares of the Company's
common stock were issued as of December 31, 1995, in full payment of this
indebtedness.

                                      28



                  Revenues from operations during the year ended December 31,
1996 and the six months ended June 30, 1997 were insufficient to fund the
Company's operations. The Company has relied upon loans of $1,000,000 from third
parties in 1996 and a loan of $750,000 from a third party in 1997 to fund its
activities. In addition, during 1996, loans of approximately $941,000 were
advanced by IRC and $110,350 by M.E.Ratliff. These loans plus accrued interest
were satisfied by the issuance of 101,146 shares of the Company's common stock
to IRC and 13,320 shares to M.E. Ratliff.

                  In 1997, IRC advanced $323,005 to the Company, M.E. Ratliff
advanced $12,000 and Tracmark, Inc., a subsidiary of IRC, advanced $133,420.
These loans, plus accrued interest, were satisfied by the issuance of 59,328
shares of the Company's common stock to IRC, 2,204 shares to M.E. Ratliff and
24,552 shares to Tracmark, Inc. The Company anticipates meeting its operating
needs for 1997 by means of its agreement with Enserch.

                  During 1996, the Company sold 166,667 shares of stock it had
acquired from IRC pursuant to the Purchase Agreement for $250,000; received
$91,119 from the exercise of options; $280,690 from a private placement of its
stock.

                  These revenues and loans accounted for substantially all of
the Company's liquidity during this year.

Item 3. Description of Property

Property Location, Facilities, Size and Nature of Ownership

                  The Company holds oil and gas leases on the following
properties located near Manchester, Kentucky: (i) 8,058 acres in the Beech Creek
Leases; (ii) 744 acres in the Wildcat Leases; and (iii) 741 acres in the Burning
Springs Leases. The Company also holds leases on 2,121 acres in Fentress County,
Tennessee, near Jamestown. There are currently two producing wells on the
Tennessee acreage, only one of which is owned by the Company. Additionally, the
Company holds leases on 30,363 acres in Hancock County, Tennessee, and 1,003.19

acres in Lauderdale County, Alabama. The initial terms of these leases varies
from one to four years. Many of them can be extended at the option of the
Company by payment of annual rent. Some of them will terminate unless the
Company has commenced drilling. However, the Company does not anticipate any
difficulty in continuing those leases, particularly in Hancock County, since the
Company's pipeline will be the only means available to landowners in that area
to sell any gas produced from wells on their property. See the heading "General"
under the caption "Description of Business," Part I, Item 1, above.

                  The Beech Creek Leases provide for a landowner royalty of
12.5% of the oil produced and saved from the leased premises or, at the lessee's
option, to pay the market price for such 12.5% royalty.

                                      29



The leases also provide for a landowner royalty equal to 12.5% of the market
price at the well of the gas sold or used off the premises, except for injection
for secondary recovery of oil. The lessors are also entitled to free gas for all
stoves and inside lights in the principal dwelling house on the leased
properties by making connection to the well or wells at their own expense and
risk. The Beech Creek Leases are also subject to overriding royalties ranging
from 1.25% to 5%.

                  The Wildcat Leases provide for a 12.5% landowner royalty, on
the same terms as the Beech Creek Leases, and a 3.125% overriding royalty.

                  The Burning Springs Leases are subject to a 12.5% landowner
royalty, on the same terms as the Beech Creek Leases and the Wildcat Leases, and
overriding royalties ranging from 3.125% to 7.5%.

                  The Fentress County Leases are subject to a 12.5% landowner
royalty, on the same terms as the above referenced leases, and a 19% overriding
royalty; and a 25% overriding royalty on one existing well. Section 60-1-301 of
the Tennessee Code provides for a severance tax of 3% on all gas and oil removed
from the ground in Tennessee.

                  The Company leases its principal executive offices, consisting
of approximately 4,731 square feet located at 603 Main Avenue, Suite 500,
Knoxville, Tennessee, at a monthly rent of $3,942.50.

                  In addition, the Company has drilling equipment and vehicles
which it acquired from IRC. All of this equipment is in satisfactory operating
condition. The securities which the Company acquired from IRC were sold during
1996 for $250,000.

Disclosure of Oil and Gas Operations

                  On May 2, 1995, upon the execution of the Purchase Agreement
with IRC, the Company acquired the rights to certain oil and gas leases in the
State of Kentucky (the "Beech Creek Leases," "Wildcat Leases" and "Burning
Springs Leases") and the State of Tennessee (then "Fentress County Leases").
Subsequently, the Company also acquired additional acreage in Tennessee (the

"Swan Creek Leases") and in Alabama (the "Alabama Leases"). Copies of the lease
schedules listing these leases are attached hereto and are incorporated herein
by reference. See the headings "Business Development" and "General" under the
caption "Description of Business," Part I, Item 1, above, and the Exhibit Index.

                  The Company was not engaged in the business of oil and gas
exploration and development prior to the date of the IRC Purchase Agreement.
IRC, the entity from which the Company acquired certain of these properties,
drilled four wells on the Beech Creek Leases in the past three years. All of
these wells are capable of producing gas in

                                      30



paying quantities, according to tests run on the wells. IRC also drilled a well
on one of the Fentress County Leases; this well is currently shut in and
awaiting a workover.

                  Eleven wells on the Burning Springs leases are currently
shut-in. There are two completed wells on the Swan Creek leases, the Reed #1 and
the Sutton #1, which discovered and proved the structure in the early 1980s.
These wells have recently tested at 4,800,000 and 1,200,000 cubic feet of gas
per day. The Company has drilled three additional wells in 1996. Development of
the Swan Creek Field will require the completion of the pipeline to deliver gas
to a transmission company with the tie-in point being located approximately 23
miles away from the field. The pipeline is approximately two-thirds completed
and is expected to be complete by the end of the year.

                  Tests to date on the completed wells on the Swan Creek leases
indicate substantial potential for future deliverability. Based upon engineering
reports, management believes that the wells drilled to date have a life
expectancy of approximately 37 years on a declining basis.

                  The Company does not pay any taxes on its leased property and
does not carry any insurance on the vacant land.

                  The Alabama Leases have no existing wells. These leases are
"wildcat" explorations and there is no immediate plan to acquire additional
leases in the area or to begin an exploration program.

                  No estimate of total, proved net oil or gas reserves has been
filed with or included in reports to any federal authority since the beginning
of the Company's last fiscal year.

                  The Company is currently not a party to any contract or
agreement obligating it to provide a fixed and determinable quantity of oil or
gas in the future, but anticipates entering into such contracts for delivery of
gas commencing as early as December, 1997.

Item 4.  Security Ownership of Certain Beneficial Owners and
         Management.

Security Ownership of Certain Beneficial Owners


                  The following tables set forth the share holdings of the
Company's directors and executive officers and those persons who own more than
5% of the Company's common stock as of June 30, 1997 with these computations
being based upon 6,124,216 shares of common stock being outstanding and assumes
the exercise of 281,376 shares vested under options granted by the Company as of
June 30, 1997. (See the heading "Other Compensation" and the "Restricted Stock
Options Table," under the caption "Executive Compensation," Part I, Item 6,
below).

                                      31




                           Five Percent Stockholders
                           -------------------------

                                                  Number of Shares      Percent
Name and Address              Title               Beneficially Owned    of Class
- -----------------             -----               ------------------    --------

Industrial Resources        Stockholder               2,777,671           45.3%
Corporation (1)
Ste. 500-600 Main Ave.
Knoxville, TN 37902

M. E. Ratliff               Stockholder                 252,485            4.1%
12608 Avallon Place
Knoxville, Tennessee 37922


                       Directors and Executive Officers
                       --------------------------------


                                               Shares Beneficially      Percent
Name and Address              Title                  Owned              of Class
- -----------------             -----            -------------------      --------

Joseph Earl Armstrong        Director                      0              0
2624 Selma Avenue
Knoxville, TN 37914

Robert M. Carter             Exec. Vice               23,000              0 .4%
317 Heathermoor Drive        President
Knoxville, TN 37922

Daniel G. Follmer            President                     0              0
8219 Mecklenburg Ct.         & CFO
Knoxville, TN 37923

James B. Kreamer             Director                      0              0
3621 Cabin Creek Rd.

London, KY 40741

- --------
  (1) James Ratliff is the sole owner of the outstanding securities of IRC, and,
accordingly, he may be deemed to be an affiliate of the Company. He is also the
father of M.E. Ratliff, who received 215,000 shares of common stock of the
Company pursuant to one of the compensation Agreements. See the heading
"Business development" of the caption "Description of Business", Part I, Item 1.

                                      32



William A. Moffett           Director                37,397                0.6%
1073 Encantado Drive
Santa Fe, NM 87501

Shigemi Morita               Director               114,300                1.9%
80 Park Avenue
New York, N.Y. 10016

Michael E. Ratliff(2)        CEO                    252,485               4.12%
12008 Avallon Place
Knoxville, TN

Sheila F. Sloan              Treasurer                2,000                  0
121 Oostanali Way
Loudon, TN 37774

Allen H. Sweeney             Chairman of            100,500                1.6%
1400 Oak Tree Drive          the Board
Edmund, OK 73003

Elizabeth Wendelken          Secretary                    0                  0
8023 Stanley Road
Powell, TN 37849

Changes in Control

                  Except as indicated below, to the knowledge of the Company's
management, there are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.

Item 5.  Directors, Executive Officers, Promoters and Control
         Persons.

Identification of Directors and Executive Officers

                  The following table sets forth the names of all former and
current directors and executive officers of the Company during the preceding
calendar year and to the date hereof. These persons will serve until the next
annual meeting of stockholders (to be held at such time as the Board of
Directors shall determine) or until their successors are elected or appointed
and qualified, or their prior resignations or terminations.


- -----------
   (2) The principal shareholder of IRC is the father of Michael
E. Ratliff. 103,500 shares of stock are owned by Tracmark, Inc.,
a corporation, the principal shareholders of which are Michael E.
Ratliff and his father.

                                      33



                                                   Date  of         Date of
                               Positions          Election or      Termination
Name                              Held            Designation     or Resignation
- ----                           ---------          -----------     --------------

Jeffrey D. Jenson              President              6/94              5/95
1787 E.Ft. Union Blvd.
Salt Lake City, UT 84121

Kathleen L. Morrison           Secretary/            10/94              5/95
1787 East Ft. Union Blvd.      Treasurer
Salt Lake City, UT 84121

Travis D. Jenson               Vice-President        10/94              5/95
1787 E. Ft. Union Blvd.
Salt Lake City, UT 84121

Walter C. Arzonetti            Director               5/95             2/7/97
11 Avenue de la Mer
Palm Coast, FL 32137

Charles N. Manhoff             Director               5/95             2/7/97
11 19 Rocky Point Ct.
Albuquerque, NM 87123,

Edgar G. Baugh                 Director               5/95            1/30/96
76 Arrowhead Way
Darien, CT 06820

Raymond E. Johnson             Director               5/95            12/9/95
(Deceased)                                                       (Date of Death)
415 North State Street
Bellingham, WA 98225

Joe B. Mattei                  Director               5/95            1/30/96
72 Sugarberry Circle
Houston, TX 77024

John P. O'Hagan                Director               5/95            1/31/96
P.O. Box 635
Signal Mountain, TN 37377

George E. Walter, Jr.          Director, CEO          5/95            1/25/96

3907 Northfield Ct.            and President
Midland, TX 79707

James C. Walter                Vice President,        5/95            1/18/96
96 Canberra Drive              Secretary,
Knoxville, TN 37923            Treasurer

William A. Moffett             Director               5/95           Present
1073 Encantado Drive

                                      34



Santa Fe, NM 87501

Benton L. Becker              Chairman of            6/95            1/30/97
1550 Madruga Ave. #329        the Board of
Coral Gables, FL 33146        Directors

Kelly S. Grabill              Secretary              9/95            5/2/96
9109 Lullabye Lane            Treasurer              9/95           1/30/96
Oak Ridge, TN 37830

Jeffrey D. DeMunnik           Treasurer              1/96           1/17/97
1100 Fox Road                 Secretary/             6/96           12/4/96
Knoxville, TN 37922

Ted P. Scallan                President              1/96          11/26/96
1613 Kilmer Drive
Knoxville, TN 37922

Lyle G. Stockstill            Director               1/96          11/25/96
560 Bellemeade Blvd.
Gretna, LA 70056

James B. Kreamer              Director              3/13/97        Present
3621 Cabin Creek Road
London, KY 40741

Shigemi Morita                Director              3/13/97        Present
80 Park Avenue
New York, N.Y. 10016

Allen Sweeney                 Chairman of           3/13/97        Present
1400 Oak Tree Drive           Board
Edmund, OK73003

Joseph E. Armstrong           Director              3/13/97        Present
2624 Selma Avenue
Knoxville, TN 37914

Business Experience


                  Joseph Earl Armstrong is 40 years old and a resident of
Knoxville, Tennessee. He is a graduate of the University of Tennessee and
Morristown College where he received a Bachelor of Science Degree in Business
Administration. From 1988 to the present, he has been an elected State
Representative for Legislative District 15 in Tennessee. From 1994 to the
present he has been in charge of government relations for the Atlanta Life
Insurance Co. From 1981 to 1994 he was a District Manager for the Atlanta Life
Insurance Co.

                  James B. Kreamer is 58 years old. He earned a Degree in
Business from the University of Kansas in 1963. He has been the owner

                                      35



of several business enterprises. In 1982, he purchased a seat on the Kansas City
Board of Trade where he served on several committees working on the development
of futures trading. Since 1979, he has been engaged in the oil and gas business
as an investor. He currently serves as a member of the Board of Directors of
Panaco, Inc., a NASDAQ energy company.

                  William A. Moffett is 63 years old. He received a BS Degree in
Geological Engineering from Oklahoma University in 1956. From 1977 to 1982, he
was Operations Manager for Esso Exploration and Production in the United
Kingdom. From 1982 to 1984, he was General Production Manager for Intercol ( an
affiliate of Exxon in Colombia). From 1984 to 1991 he was CEO for Stan Vac
Indonesia, a joint Exxon/Mobil affiliate. From 1991 until his employment by the
Company, Mr. Moffett was retired.

                  Shigemi Morita is 62 years old. He received an A.B. Degree
from Elon College in North Carolina. From 1969 to 1996 he was the
President and CEO of Morita & Co., an insurance agency specializing
in insurance for Japanese companies doing business in the United
States. In 1996, Morita & Co., Inc. was acquired by Tokio Marine
Management, Inc., Mitsubishi International Corporation in New York and
Mitsubishi International, Ltd. in Tokyo. He remains as President and
as a consultant.

                  Allen H. Sweeney is 47 years old. He received an MBA in
finance from Oklahoma City University in 1972 and a Bachelor Degree in
Accounting from Oklahoma State University in 1969. From 1978 to 1980, he served
as Treasurer and CEO of Phoenix Resources Company. From 1980 to 1981, he served
as Vice-President-Finance for Plains Resources, Inc. From 1982 to 1984, he was
Vice-President-Finance for Wildcat Mud, Inc. From 1984 to 1992 he operated an
independent consulting service under the name of AHS and Associates, Inc. Since
1992, he has served as Director and President of Columbia Production Company and
Mid-America Waste Management, Inc. Mr. Sweeney is a Director of Frontier Natural
Gas Corporation of Houston, Texas, a public corporation.

Committees

                  At the present time, the Company has no operating committees.
Family Relationships


                  There are no family relationships between any of the present
directors or executive officers of the Company.

Involvement in Certain Legal Proceeding

                  Except as indicated below and/or hereinbefore, to the

                                      36



knowledge of management, during the past five years, no present or former
director, executive officer, affiliate or person nominated to become a director
or an executive officer of the Company:

          (1) Filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed by
a court for the business or property of such person, or any partnership in which
he or she was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he or she was an
executive officer at or within two years before the time of such filing;

          (2) Was convicted in a criminal proceeding or named subject of
a pending criminal proceeding (excluding traffic violations and other minor
offenses);

          (3) Was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him or her from or otherwise limiting his
or her involvement in any type of business, securities or banking activities;

          (4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated any federal or state securities law, and the
judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.

Item 6. Executive Compensation.

Cash Compensation

                  The following table sets forth the aggregate cash compensation
paid by the Company for services rendered during the periods indicated to its
directors and executive officers:

                                      37






                       SUMMARY CASH COMPENSATION TABLE (3)

                       -----------------------------------

    Name & Position                Year                                   Salary
    ---------------                ----                                   ------
 
Walter C. Anzonetti                1994                                       0
      Director                     1995                                       0
                                   1996                                       0

Edgar G. Baugh                     1994                                       0
      Director                     1995                                       0
                                   1996                                       0

Benton L. Becker                   1994                                       0
      Chairman of                  1995                                       0
      the Board                    1996                                       0

Robert M. Carter(4)                1994                                       0
      Vice-President               1995                                       0
                                   1996                                 $31,570

Jeffrey DeMunnik                   1994                                       0
      Secretary                    1995                                       0
      Treasurer                    1996                                 $34,077

Jack E. Earnest                    1994                                       0
      Director                     1995                                       0
                                   1996                                       0

Daniel G. Follmer(5)               1994                                       0
      Chief Financial              1995                                       0
      Officer                      1996                                 $ 2,885

Kelly S. Grabill                   1994                                       0
      Secretary                    1995                                 $10,653
                                   1996                                 $ 7,104

Raymond E. Johnson                 1994                                       0
      Director                     1995                                       0
                                   1996                                       0
- ----------------
         (3) No other compensation was received by any officer or director. 

         (4) Has 75,000 options exercisable at $5.00 per share which expire on 
February 24, 1999. 22,346 are vested.

         (5) Has 100,000 options exercisable at $5.00 per share, which expire
on February 24, 1999. 29,795 are vested.

                                      38


James E. Kaiser                   1994                                       0
     President                    1995                                       0

                                  1996                                 $20,000

Charles N. Manhoff                1994                                       0
     Director                     1995                                       0
                                  1996                                       0

Joe B.Mattei                      1994                                       0
     Director                     1995                                       0
                                  1996                                       0

William A. Moffett                1994                                       0
     CEO & Director               1995                                       0
                                  1996                                       0

John P. O'Hagan                   1994                                       0
     Director                     1995                                       0
                                  1996                                       0

Ted P. Scallan                    1994                                       0
     President                    1995                                       0
                                  1996                                 $53,120

Sheila Sloan(6)                   1994                                       0
     Treasurer                    1995                                       0
                                  1996                                 $17,850

Lyle Stocksill                    1994                                       0
     Director                     1995                                       0
                                  1996                                       0

George E. Walter Jr.              1994                                       0
     President and                1995                                 $ 2,584
     Director                     1996                                     923

James C. Walter                   1994                                       0
     Vice-President               1995                                 $23,076
     Secretary/Treasurer          1996                                   3,077

Elizabeth Wendelken(7)            1994                                       0
     Secretary                    1995                                       0
                                  1996                                 $14,500


- -----------
         (6) Has 10,000 options exercisable at $5.00 per share, which expire on
6/12/98. 3,333 are vested,

         (7) Has 10,000 options exercisable at $5.00 per share which expire on
June 12, 1998. 3,333 are vested.

                                      39




                  The following table sets forth the options exercised during
the past 18 months by each of the directors and executive officers, the exercise
price, the number of unexercised options and the value of the unexercised
options as of June 30,1997:

      Name                  Options          Exercise  Unexercised    Value of
                           Exercised          Price      Options    Unexercised
                                                                      Options
- --------------------------------------------------------------------------------

Walter C. Arzonetti         88,493             .275       11,507       $133,768

Robert M. Carter            25,000             .275            0              0

Jeffrey D. DeMunnik         20,644             .275        4,366         50,754

Kelly S. Grabill            12,500             .275            0              0

Raymond Johnson, Dec'd      10,000             .275            0              0

Charles N. Manhoff          88,356             .275       11,644        135,361

Joseph B. Mattei            37,000             .275       63,000        732,375

William A. Moffett          37,397             .275       62,613        727,876

Allen Sweeney               66,849             .275            0              0

James C. Walter             35,616             .275       64,384        748,464


Bonuses and Deferred Compensation

                  None; not applicable.

Compensation Pursuant to Plans

                  The Company does not presently have any stock option, stock
incentive, bonus or similar plan for its directors, executive officers or
employees; however, options have been granted to directors and executive
officers and certain consultants of the Company to purchase shares of
"unregistered" and "restricted" common stock of the Company at various prices.
See the heading "Other Compensation" and the "Restricted Stock Options Table" of
this caption, below.

Pension Table

                  The Company does not presently have a pension or similar plan
for its directors, executive officers or employees. Management intends to adopt
a 401(k) plan and full liability insurance for directors and executive officers
and a health insurance plan for employees in the near future.

                                      40




Other Compensation

                  On April 11, 1995, the Board of Directors resolved that each
member of the Board of Directors would receive compensation in the form of an
option to purchase 100,000 "unregistered" and "restricted" post-split shares of
the Company's common stock at a price of $0.25 per share. Pursuant to a
resolution of the Board of Directors on May 2, 1995, the exercise price of such
options was increased to $0.275 per share, which amount was then equal to 110%
of the average bid prices for the Company's common stock on the OTC Bulletin
Board on the date of the grant.

                  Commencing on May 4, 1995, certain other officers and
consultants were induced to serve as executive officers or consultants of the
Company in consideration of the grant of a similar option, and these options
were ratified by the Board of Directors at meetings held June 6 and 7, 1995, in
Nashville, Tennessee. At the annual meeting of the Board of Directors which was
held on January 30, 1996, immediately following the annual meeting of
stockholders, the Board of Directors also granted certain other directors,
executive officers, consultants and employees options to acquire shares of the
Company's "unregistered" and "restricted" shares of common stock of the Company.

                  The following table sets forth the names of the optionees, the
number of shares granted, the dates granted, the exercise price the expiration
dates, the number of shares vested and the market value of the shares as of June
30,1996.

                                      41






                        RESTRICTED STOCK OPTIONS TABLE

===================================================================================================================================
Name of Option                    Number         Issue      Price         Date             Amount         Amount        Value as
Holder                            of             Date                     Expires         Exercised       Vested         of June
                                  Options                                                                June 30,       June 30,
                                                                                                          1997           1997
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Joseph Armstrong                 50,000         3/13/97      5.0  *       6/12/98               0         16,666        193,671
- -----------------------------------------------------------------------------------------------------------------------------------
Walter C. Arzonetti             100,000         5/4/95       0.275        5/7/97           88,493              0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Wesley Baker                     10,000         3/13/97      5.0  *       6/12/98               0          3,333         38,729
- -----------------------------------------------------------------------------------------------------------------------------------
Edgar G. Baugh                  100,000         5/4/95       0.275        4/29/96               0              0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Benton L. Becker                100,000         5/4/95       0.275        5/4/97                0              0              0
- -----------------------------------------------------------------------------------------------------------------------------------

Jeff Brockman                   100,000         5/4/95       0.275        8/4/97           72,329         27,671        321,537
- -----------------------------------------------------------------------------------------------------------------------------------
Robert M. Carter                 25,000         5/4/95       0.275        8/4/97           25,000              0              0
                                 75,000         11/26/96     5.0  *       2/25/99               0         22,346        259,661
- -----------------------------------------------------------------------------------------------------------------------------------
Jeffrey DeMunnik                 25,000         5/4/95       0.275        4/17/97          20,644              0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Jack E. Earnest                 100,000         5/4/95       0.275        4/29/96               0              0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Daniel G. Follmer               100,000         1/26/96      5.0  *       2/24/99               0         29,795        346,218
- -----------------------------------------------------------------------------------------------------------------------------------
Kelly S. Grabill                 25,000         5/4/95       0.275        8/2/96           12,500              0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Raymond E. Johnson,             100,000         5/4/95       0.275        3/10/96          10,000              0              0
Dec'd
- -----------------------------------------------------------------------------------------------------------------------------------
Kenny Securities                100,000         1/30/96      6.375*       5/4/99                0         100,000      1,162,000
- -----------------------------------------------------------------------------------------------------------------------------------
James Kreamer                    50,000         3/13/97      5.0  *       6/12/98               0          16,667        193,671
- -----------------------------------------------------------------------------------------------------------------------------------


                                      42






===================================================================================================================================
Name of Option                    Number         Issue      Price         Date             Amount         Amount        Value as
Holder                            of             Date                     Expires         Exercised       Vested         of June
                                  Options                                                                June 30,       June 30,
                                                                                                          1997           1997
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Charles N. Manhoff              100,000         5/4/95       0.275        5/7/97            88,356             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Joseph B. Mattei                100,000         5/4/95       0.275        4/29/96           37,000             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Michael McCown                   50,000         11/26/96     5.0  *       2/25/99                0        14,897        173,103
                                 50,000         5/4/95       0.275        8/4/97            50,000             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Willilam A. Moffett             100,000         5/4/95       0.275        8/4/97               All             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
James Morita                     50,000         3/13/97      5.0  *       6/12/98                0        16,667        193,671
- -----------------------------------------------------------------------------------------------------------------------------------
John P. O'Hagan                 100,000         5/4/95       0.275        4/29/96                0             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Russell Ratliff                 100,000         5/4/95       0.275        5/2/96            37,534             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Ted P. Scallan                  100,000         7/17/95      4.0          2/26/97                0             0              0
                                100,000         1/30/96      6.375        2/26/97                0             0              0
- -----------------------------------------------------------------------------------------------------------------------------------

Sheila Sloan                     10,000         3/13/97      5.0  *       6/12/98                0         3,333         38,729
- -----------------------------------------------------------------------------------------------------------------------------------
Lyle G. Stocksill               100,000         1/30/96      6.375        2/25/97                0             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Allen H. Sweeney                100,000         5/2/95       0.275        8/02/97              All             0              0
                                 50,000         3/13/97      5.0  *       6/12/98                0        16,667        193,671
- -----------------------------------------------------------------------------------------------------------------------------------
George E. Walter,               400,000         5/4/95       0.275        4/29/96                0             0              0
Jr.
- -----------------------------------------------------------------------------------------------------------------------------------
James C. Walter                 100,000         5/4/95       0.275        4/19/96           35,616             0              0
- -----------------------------------------------------------------------------------------------------------------------------------
Elizabeth Wendelken              10,000         3/13/97      5.0  *       6/12/98                0         3,333         38,729
====================================================================================================================================
                  * Below Market


                                      43






Compensation of Directors

                  The Board of Directors has resolved to compensate members of
the Board of Directors for attendance at meetings at the rate of $250 per day,
together with direct out-of-pocket expenses incurred in attendance at the
meetings, including travel.
 
                  Members of the Board of Directors may also be requested to
perform consulting or other professional services for the Company from time to
time. The Board of Directors will set a rate of compensation for such services
which may be no less favorable to the Company than if the services had been
performed by an independent third party contractor. The Board of Directors has
reserved to itself the right to review all directors' claims for compensation on
an ad hoc basis.

Employment Contracts

                  There are presently no employment contracts relating to any
member of management. However, depending upon the Company's operations and
requirements, the Company may offer long term contracts to directors, executive
officers or key employees in the future.

Termination of Employment and Change of Control Arrangement

                  None.

Item 7. Certain Relationships and Related Transactions.

Transactions with Management and Others


                  With the exception of the Compensation Agreements of M. E.
Ratliff and Jeffrey D. Jenson, and the issuance of "unregistered" and
"restricted" shares of the Company's common stock to IRC in cancellation of
debt, all as outlined under the heading "Business Development" of the caption
"Description of Business," Part I, Item 1, above, and those options outlined
under the caption "Executive Compensation," Part I, Item 6, above, there have
been no material transactions, series of similar transactions or currently
proposed transactions, to which the Company or any of its subsidiaries was or is
to be a party, in which the amount involved exceeds $60,000 and in which any
director or executive officer or any security holder who is known to the Company
to own of record or beneficially more than 5% of the Company's common stock, or
any member of the immediate family of any of the foregoing persons, had a
material interest. See the caption "Description of Business," Part I, Item 1,
above, and the Exhibit Index.

Certain Business Relationships

                                      44






                  There are no business relationships, existing or planned,
between the Company or any of its subsidiaries and any director or executive
officer or any security holder who is known to the Company to own of record or
beneficially more than 5% of the Company's common stock, or any member of the
immediate family of any of the foregoing persons.

Indebtedness of Management

                  No officer, director or security holder known to the Company
to own of record or beneficially more than 5% of the Company's common stock or
any member of the immediate family of any of the foregoing persons is indebted
to the Company.

Parents of the Issuer

                  Unless IRC may be deemed to be a parent of the Company by
virtue of its stock ownership, the Company has no parents.

Transactions with Promoters

                  With the exception of the Compensation Agreements of M. E.
Ratliff and Jeffrey D. Jenson, and the issuance of "unregistered" and
"restricted" shares of the Company's common stock to IRC in cancellation of
debt, all as outlined under the heading "Business Development" of the caption
"Description of Business," Part I, Item 1, above, and those options outlined
under the caption "Executive Compensation," Part I, Item 6, above, there have
been no material transactions, series of similar transactions, currently
proposed transactions, or series of similar transactions, to which the Company
or any of its subsidiaries was or is to be a party, in which the amount involved
exceeds $60,000 and in which any promoter or founder or any member of the

immediate family of any of the foregoing persons, had a material interest. See
the caption "Description of Business," Part I, Item 1, above, and the Exhibit
Index.

Item 8.  Description of Securities.

Authorized Capital Stock

                  The authorized capital stock of the Company consists of
50,000,000 shares of common stock, $0.001 par value per share.

                  Common Stock. The holders of the common stock are entitled to
one vote per share on each matter submitted to a vote at any meeting of
stockholders. Shares of common stock do not carry cumulative voting rights, and
therefore, a majority of the shares of outstanding common stock will be able to
elect the entire Board

                                      45





of Directors and, if they do so, minority stockholders would not be able to
elect any persons to the Board of Directors. The Company's Bylaws provide that a
majority of the issued and outstanding shares of the Company shall constitute a
quorum for stockholders meetings except with respect to certain matters for
which a greater percentage quorum is required by statute or the By-laws.

                  Stockholders of the Company have no preemptive rights to
acquire additional shares of common stock or other securities. The common stock
is not subject to redemption and carries no subscription or conversion rights.
In the event of liquidation of the Company, the shares of common stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. Holders of common stock are entitled to receive such dividends as
the Board of Directors may from time to time declare out of funds legally
available for the payment of dividends. The Company seeks growth and expansion
of its business through the reinvestment of profits, if any, and except as
indicated under the heading "Dividends" of the caption "Market Price of and
Dividends On the Company's Common Equity and Other Stockholder Matters," Part
II, Item 1, below, the Company does not anticipate that it will pay dividends in
the foreseeable future.

                  The Board of Directors has the authority to issue the
authorized but unissued shares of common stock without action by the
stockholders. The issuance of such shares would reduce the percentage ownership
held by existing shareholders and may dilute the book value of their shares.

                  There are no provisions in the By-laws or Articles of
Incorporation of the Company which would delay, defer or prevent a change in
control of the Company.

                                      46







                                   PART II

Item 1. Market Price of and Dividends on the Company's Common Stock
and Other Stockholder Matters.

Market Information

                  The Company's common stock is listed on the OTC Bulletin Board
of the NASD; however, the market for shares of the Company's common stock was
extremely limited until the closing of the Purchase Agreement with IRC in May of
1995. No assurance can be given that the present market for the Company's common
stock will continue or will be maintained, and the sale of the Company's
"unregistered" and "restricted" common stock pursuant to Rule 144 by IRC or
others as outlined under the heading "Special Risk Factors" of the caption
"Description of Business," Part I, Item 1, above, of this Registration Statement
may have a substantial adverse impact on any such public market. See the
specific risk factor entitled "Future Sales of Common Stock," therein.

                  The Company's common stock has been listed on the OTC Bulletin
Board since the quarter ended March 31, 1994. The high and low bid prices for
shares of common stock of the Company since that period ( including inter-dealer
transactions) are as follows:

                   - THIS SPACE INTENTIONALLY LEFT BLANK -

                                      47





                                                 Bid

Quarter ending:                        High                Low

March 31, 1994 (8)                      0.25                 2

June 30, 1994                           0.25              0.125

September 30, 1994                      0.25              0.125

December 31, 1994                       0.25              0.25

March 31, 1995                          0.25              0.25

June 30, 1995                           3.75              0.25

September 30, 1995                      9.00              3.125


December 31, 1995                       8.00              5.375

February 29, 1996                       7.625             4.875

March 31, 1996                         11.00              7.625

June 30,1996                           14.50              5.50

September 30, 1996                     18.00              8.25

December 31, 1996                      18.50              9.50

March 31, 1997                         17.25             10.00

June 30, 1997                          14.50             10.50



                  These bid prices were obtained from the National Quotation
Bureau, Inc. ("NQB") and do not necessarily reflect actual transactions, retail
markups, mark downs or commissions. The transactions include inter-dealer
transactions.

Holders

                  The number of record holders of the Company's common stock as
of December 31, 1996, was approximately 341.

Dividends

- ------------
         (8) The high bid price for the quarter ended March 31, 1994 is a
trading price only.

                                      48







                  There are no present material restrictions that limit the
ability of the Company to pay dividends on common stock or that are likely to do
so in the future. The Company has not paid any dividends with respect to its
common stock, and does not intend to pay dividends in the foreseeable future.

Item 2.  Legal Proceedings

                  Except as described hereafter, the Company is not a party to
any pending material legal proceeding. To the knowledge of management, no
federal, state or local governmental agency is presently contemplating any
proceeding against 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 has a material interest adverse to the Company in any proceeding.

                  The Company is a defendant in an action in the Supreme Court
of New York County in New York, New York, by a lender seeking the recovery of
$250,000 based upon a promissory note. The Company has moved to dismiss that
action. The Company has filed an action in Tennessee against that lender and two
other lenders to invalidate warrants which were issued in connection with those
loans.

Item 3.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure.

Change from David T. Thomson, CPA to Charles M. Stivers, CPA

                  David T. Thomson, Certified Public Accountant, of Salt
Lake City, Utah, audited the financial statements of Onasco
Companies, Inc. (the Company's predecessor), for the years ended
December 31, 1992, 1993 and 1994. These financial statements accompany this
Registration Statement.

                  Charles M. Stivers, Certified Public Accountant, of
Manchester, Kentucky, was engaged as the Company's accountant on May 4, 1995,
and audited the financial statement of the Company for the year ended December
31, 1995. This financial statement accompanies this Registration Statement.

                  There were no disagreements between the Company and Mr.
Thomson, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused him to make reference to
the subject matter of the disagreement in connection with his report.

                  The report of Mr. Thomson did not contain any adverse
opinion or disclaimer of opinion, and was not qualified or modified

                                      49






as to uncertainty, audit scope or accounting principles.

                  The decision to change principal accountants was not submitted
for approval to the Board of Directors; the change was made by the Company's
President to Mr. Stivers because Mr. Stivers was the accountant who audited the
cost basis of the principal assets of the Company acquired from IRC pursuant to
the Purchase Agreement in May of 1995, and the Company had little or no
operations prior to the completion of the Purchase Agreement.

                  Also, during the Company's two most recent fiscal years, and
since then, Mr. Thomson has not advised the Company that any of the following
exist or are applicable:


                   (1)     That the internal controls necessary for the Company
                           to develop reliable financial statements do not 
                           exist, that information has come to his attention 
                           that has led him to no longer be able to rely on 
                           management's representations, or that has made him
                           unwilling to be associated with the financial
                           statements prepared by management,

                   (2)     That the Company needs to expand significantly the 
                           scope of its audit, or that information has come to 
                           his attention that if further investigated may 
                           materially impact the fairness or reliability of a 
                           previously issued audit report or the underlying 
                           financial statements or any other financial 
                           presentation, or cause him to be unwilling to rely 
                           on management's representations or be associated 
                           with the Company's financial statements for the 
                           foregoing reasons or any other reason; or

                   (3)     That he has advised the Company that information has
                           come to his attention that he has concluded 
                           materially impacts the fairness or reliability of 
                           either a previously issued audit report or the 
                           underlying financial statements for the foregoing 
                           reasons or any other reason.

                  Further, during the Company's two most recent fiscal years and
since then, the Company has not consulted Mr. Thomson regarding the application
of accounting principles to a specified transaction, either completed or
proposed; or the type of audit opinion that might be rendered on the Company's
financial statements or any other financial presentation whatsoever.

                  The Company has provided Mr. Thomson with a copy of the

                                      50






disclosure provided under this caption of the Registration Statement, and has
advised him to provide the Company with a letter addressed to the Securities and
Exchange Commission as to whether he agrees or disagrees with the disclosures
made herein. A copy of his response is attached hereto and incorporated herein
by reference. See the Exhibit Index.

Change from Charles M. Stivers, CPA, to Price-Bednar, LLP, CPA

                  Price-Bednar, LLP, Certified Public Accountants, were engaged
as the Company's accountants as of February 22, 1996, to audit the financial
statements of the Company for the calendar year ending December 31, 1995.


                  There were no disagreements between the Company and Mr.
Stivers, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused him to make reference to
the subject matter of the disagreement in connection with his unaudited reports.

                  The unaudited reports of Mr. Stivers did not contain any
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope or accounting principles.

                  The decision to change principal accountants was submitted for
approval to the Board of Directors; the change was made to Price-Bednar because
the Company was seeking to find a larger accounting firm with more in-depth
experience in Securities and Exchange Commission filings.

                  Also, during the Company's most recent fiscal year, and since
then, Mr. Stivers has not advised the Company that any of the following exist or
are applicable:

                  (1)      That the internal controls necessary for the
                           Company to develop reliable financial statements do
                           not exist, that information has come to his
                           attention that has led him to no longer be able to
                           rely on management's representations, or that has
                           made him unwilling to be associated with the
                           financial statements prepared by management;

                  (2)      That the Company needs to expand significantly the
                           scope of its audit, or that information has come to
                           his attention that if further investigated may
                           materially impact the fairness or reliability of a
                           previously issued audit report or the underlying
                           financial statements or any other financial
                           presentation, or cause him to be unwilling to rely
                           on management's representations or be associated
                           with the Company's financial statements for the

                                      51






                           foregoing reasons or any other reason; or

                  (3)      That he has advised the Company that information
                           has come to his attention that he has concluded
                           materially impacts the fairness or reliability of
                           either a previously issued audit report or the
                           underlying financial statements for the foregoing
                           reasons or any other reason.

                  Further, during the Company's most recent fiscal year and

since then, the Company has not consulted Mr. Stivers regarding the application
of accounting principles to a specified transaction, either completed or
proposed or the type of audit opinion that might be rendered on the Company's
financial statements or any other financial presentation whatsoever.

                  The Company has provided Mr. Stivers with a copy of the
disclosure provided under this caption of the Registration Statement, and has
advised him to provide the Company with a letter addressed to the Securities and
Exchange Commission as to whether he agrees or disagrees with the disclosures
made herein. A copy of his response is attached hereto and incorporated herein
by reference. See the Exhibit Index.

Change from Price-Bednar, LLP, CPA to Charles M. Stivers, CPA

                  The Company had engaged the services of another accountant to
complete certain preparatory on-site audit activities for preliminary review by
Price-Bednar. These services were not timely provided by the other accountant.
Also, many of the records of Industrial Resources Corporation, a predecessor of
the Company, were unavailable, and, Price-Bednar required a number of these
records to be reconstructed prior to its completion of the audit. During the
week of May 20, 1996, the Company was advised that the principal accountant of
Price-Bednar, who was responsible for the Company's audit, would be out of town
for the following week, and it became clear that Price-Bednar would not be able
to complete the audit for at least three weeks, because certain information
requested by them had not yet been provided by the Company. Price-Bednar was
terminated by the President, effective June 7, 1996, and Charles M. Stivers,
CPA, who had been engaged to conduct the preparatory on-site audit activities
for Price-Bednar when the other accountant failed to perform as promised,
indicated that he could timely deliver the required audit report and was
promptly engaged to do so by the Board of Directors.

                  Also, during, the Company's two most recent fiscal years, and
since then, Price-Bednar has not advised the Company that any of the following
exist or are applicable:

                  (1)      That the internal controls necessary for the

                                      52






                           Company to develop reliable financial statements do
                           not exist, that information has come to their 
                           attention that has led them to no longer be able to
                           rely on management's representations, or that has
                           made them unwilling to be associated with the 
                           financial statements prepared by management;

                  (2)      That the Company needs to expand significantly
                           the scope of its audit, or that information has come
                           to their attention that if further investigated may

                           materially impact the fairness or reliability of a 
                           previously issued audit report or the underlying 
                           financial statements or any other financial 
                           presentation, or cause them to be unwilling to rely
                           on management's representations or be associated 
                           with the Company's financial statements for the 
                           foregoing reasons or any other reason; or

                  (3)      That they have advised the Company that information 
                           has come to their attention that they have 
                           concluded materially impacts the fairness or 
                           reliability of either a previously issued report or
                           the underlying financial statements for the 
                           foregoing reasons or any other reason.

                  Further, during the Company's two most recent fiscal years and
since then, the Company has not consulted Price-Bednar regarding the application
of accounting principles to a specified transaction, either completed or
proposed; or the type of audit opinion that might be rendered on the Company's
financial statements or any other financial presentation whatsoever.

                  The Company has provided Price-Bednar with a copy of the
disclosure provided under this caption of the Registration Statement, and has
advised them to provide the Company with a letter addressed to the Securities
and Exchange Commission as to whether they agree or disagree with the
disclosures made herein. A copy of their response is attached hereto and
incorporated herein by reference. See the Exhibit Index

Change from Charles M. Stivers, CPA, to BDO Seidman

                  The Company terminated Charles M. Stivers, CPA and retained
BDO Seidman effective to conduct the audit of the Company's financial statements
for the year ended December 31, 1996 because it became apparent that Charles M.
Stivers, as an individual practitioner, would not be able to perform the
required

                                      53






audit on a timely basis.

                  During, the Company's two most recent fiscal years, and since
then, Charles M. Stivers has not advised the Company that any of the following
exist or are applicable:

                  (1)      That the internal controls necessary for the Company
                           to develop reliable financial statements do not 
                           exist, that information has come to his attention 
                           that has led him to no longer be able to rely on 
                           management's representations, or that has made him

                           unwilling to be associated with the financial
                           statements prepared by management;

                  (2)      That the Company needs to expand significantly the 
                           scope of its audit, or that information has come to
                           his attention that if further investigated may 
                           materially impact the fairness or reliability of a 
                           previously issued audit report or the underlying 
                           financial statements or any other financial
                           presentation, or cause him to be unwilling to rely 
                           on management's representations or be associated 
                           with the Company's financial statements for the 
                           foregoing reasons or any other reason; or

                  (3)      That he has advised the Company that information has 
                           come to his attention that he has concluded 
                           materially impacts the fairness or reliability of 
                           either a previously issued report or the underlying
                           financial statements for the foregoing reasons or 
                           any other reason.

                  Further, during the Company's two most recent fiscal years and
since then, the Company has not consulted Charles M. Stivers regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements or any other financial presentation
whatsoever.

                  The Company has provided Charles M. Stivers with a copy of the
disclosure provided under this caption of the Registration Statement, and has
advised him to provide the Company with a letter addressed to the Securities and
Exchange Commission as to whether they agree or disagree with the disclosures
made herein. A copy of their response is attached hereto and incorporated herein
by reference. See the Exhibit Index

                                      54






Item 4.  Recent Sales of Unregistered Securities.

                  The following table provides information with respect to the
sale of all "unregistered" and "restricted" securities sold by the Company
during the past three years, which were not registered under the 1933 Act:

                                             Number
                                Date          Of       Aggregate
Name of Owner                  Acquired      Shares   Consideration

Robert C. Bohannon, Ph.D.      11/8/94        8,750         1


Henry H. Tate, Jr.             11/8/94        3,750         1

Industrial Resources           5/4/95     4,000,000         2
Corporation

M. E. Ratliff                  5/15/95      215,000         3

Jeffrey D. Jenson              5/15/95      240,000         3

Leonard W. Burningham, Esq.    5/15/95       50,000         3

Duane S. Jenson                9/29/95        4,000         4

Craig Carpenter                9/29/95        4,000         4

Industrial Resources           3/29/96       76,557         5
Corporation                    4/10/96       87,709         5

Allen Sweeney                 12/31/96       33,151         6

Russell Ratliff                3/29/96       37,534         6

James C. Walter                3/22/96       35,616         6

Mike Johnson                   3/26/96       10,000         6

Raymond E. Johnson              4/3/96       10,000         6

Charles N. Manhoff             4/10/96       88,356         6

Joseph B. Mattei               4/19/96       37,000         6

William A. Moffett             4/23/96       37,397         6
                               6/25/97       72,603         6

Jeffrey DeMunnik               5/29/96       16,644         6
                               3/15/97        4,000         6

Robert M. Carter               6/15/96       15,671         6

                                      55






                               8/26/96        2,000         6

                               6/30/97        7,329         6

Kelly S. Grabill               7/29/96       12,500         6

Jeff Brockman                  7/29/96       10,000         6

                               8/29/96       62,329         6
Robert Janda                   9/5/96        22,730  $187,520

Donald Janda                   9/5/96         2,131  $ 17,580

William Evans                  9/5/96        12,121  $100,000

Walter C.  Arzonetti           4/22/97       88,493         6

Neil Harding                   5/21/97      100,000         8

Michael McCown                 6/30/97       50,000         6





                  1        Issued in consideration of services rendered to the
                           Company.

                  2        Issued to IRC in consideration of the conveyance by
                           IRC to the Company of certain oil and gas leases,
                           equipment, securities and vehicles pursuant to the
                           Purchase Agreement. See the heading "Business
                           Development," of the caption "Description of
                           Business," Part I, Item 1, above.

                  3.       Issued in consideration of services rendered to the
                           Company. See the heading "Business Development," of
                           the caption "Description of Business," Part I, Item
                           1, above.

                  4        Issued in consideration of the conveyance of an
                           Eimco Caterpillar.

                  5        Issued in consideration of the cancellation of debt
                           owed by the Company to IRC. See the heading "Business
                           Development" of the caption "Description of
                           Business," Part I, Item 1, above.

                  6        Issued pursuant to Stock Option Agreements adopted
                           by the Board of Directors granting these persons an
                           option to purchase "unregistered" and "restricted"
                           shares of the Company's common stock at a price of
                           $0.275 per share.  See the "Restricted Stock
                           Options Table" under the heading "Other

                                      56







                           Compensation" of the caption "Executive 
                           Compensation," Part I, Item 6, above.

                  7        Issued in exchange for an oil drilling rig.

                  8        Issued as consideration for the granting of a loan
                           in the amount of $1,000,000.

                  Management believes that all of the foregoing persons were
either "accredited investors" as that term is defined under applicable federal
and state securities laws, rules and regulations, or were persons who by virtue
of background, education and experience, either alone or through the aid and
assistance of a personal representative, could accurately evaluate the risks and
merits attendant to an investment in the securities of the Company. Further, all
such persons were provided with access to all material information regarding the
Company, prior to the offer or sale of these securities, and each had an
opportunity to ask of and receive answers from directors, executive officers,
attorneys and accountants for the Company. The offers and sales of the foregoing
securities are believed to have been exempt from the registration requirements
of Section 5 of the 1933 Act, as amended, pursuant to Section 4(2) thereof, and
from similar state securities laws, rules and regulations covering the offer and
sale of securities by available state exemptions from such registration.

Item 5.  Indemnification of Directors and Officers.

                  Section 48-18-502 of the Tennessee Business Corporation Act
(the "Act") authorizes a Tennessee corporation to indemnify any director against
liability incurred in a legal proceeding if (i) he or she conducted himself or
herself in good faith; and (ii) he or she reasonably believed that his or her
conduct was in the best interest of the company or, if the conduct was not
undertaken in his or her official capacity, that it was not opposed to the
company's best interests. In the case of a criminal proceeding, the director
must have had no reasonable cause to believe that his or her conduct was
unlawful. A corporation may not indemnify a director under Section 48-18-502 in
connection with a proceeding "by or in the right of the corporation in which the
director was adjudged liable to the corporation" or in connection with any other
proceeding charging improper personal benefit to him or her, in which he or she
was adjudged liable on the basis that he or she improperly received a personal
benefit.

                  Unless limited by its charter, Section 48-18-503 of the Act
requires a corporation to indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he or she was a
party because of his or her role as director against reasonable expenses
incurred in connection with the proceeding. The Company's charter does not
provide any limitations on this right of indemnification.

                                      57








                  Pursuant to Section 48-18-504 of the Act, the Company may
advance a director's expenses incurred in defending any proceeding upon receipt
of an undertaking and a statement of the director's good faith belief that he or
she has met the standard of conduct described in Section 48-18-502.

                  Section 48-18-505 permits a court, upon application of a
director, to order indemnification if it determines that the director is
entitled to mandatory indemnification under Section 48-18-503 or that be or she
is fairly and reasonably entitled to indemnification, whether or not he or she
met the standards set forth in Section 48-18-502.

                  Section 48-18-506 limits indemnification under Section
48-18-502 to situations in which either (i) the majority of a disinterested
quorum of directors; (ii) independent special legal counsel; or (iii) the
stockholders determine that indemnification is proper under the circumstances.

                  Unless the corporate charter provides otherwise, Section
48-18-507 extends the rights to indemnification and advancement of expenses to
officers, employees and agents. The Company's corporate charter does not provide
for any limitations on these rights of indemnification.

                  Regardless of whether a director, officer, employee or agent
has the right to indemnity under Section 48-18-502 or Section 48-18-503, Section
48-18-508 allows the corporation to purchase and maintain insurance on his or
her behalf against liability resulting from his or her corporate role.

                  Section 48-18-509 provides that the rights to indemnification
and advancement of expenses shall not be deemed exclusive of any other rights
under any bylaw, agreement, stockholder vote or vote of disinterested directors;
however, no indemnification may be made where a final adjudication adverse to
the director establishes his or her liability for breach of duty or loyalty to
the corporation or its stockholders or for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law.

                  The Company is seeking bids from insurance companies to
provide Directors' and Executive Officers' Insurance, and has adopted the
provisions of the Act.

                                   PART F/S

                        Index to Financial Statements

Financial Statements    
                                      58




                                   PART F/S

                        Index to Financial Statements

Financial Statements    


                  Audited Financial Statements for the year ended
                  December 31, 1994.  .............................  F-1

                  Independent Auditor's Report ....................  F-1

                  Balance Sheet, December 31, 1994 ................  F-2
  
                  Statement of Operations for the year ended
                  December 31, 1994 ...............................  F-4

                  Statement of Stockholders' Equity for the
                  year ended  December 31, 1994 ...................  F-5

                  Statement of Cash Flow for the year ended
                  December 31, 1994 (Unaudited) ...................  F-6

                  Notes to Financial Statements ...................  F-7

                  Audited Financial Statements for the years ended
                  December 31, 1995 and December 31, 1996 .........  F-10

                  Independent Auditors' Reports ...................  F-12

                  Balance Sheet, December 31, 1995 and
                  December 31, 1996 ...............................  F-14

                  Consolidated Statements of Loss for the years
                  ended December 31, 1995 and December 31, 1996 ...  F-16

                  Statement of Stockholder's Equity for the
                  years ended December 31, 1995 and December
                  31, 1996 ........................................  F-17

                  Statement of Cash Flow for the years ended
                  December 31, 1995 and December 31, 1996,
                  during the development stage ....................  F-18

                  Notes to the Financial Statements ...............  F-19

                  Unaudited Financial Statements for the six months
                  ended June 30, 1997 .............................  F-39

                                      59







                  Balance Sheet June 30, 1997 .....................  F-41

                  Statement of Loss for the six months
                  ended June 30, 1997 .............................  F-43

                  Statement of Stockholder's Equity for the
                  six months ended June 30, 1997 ..................  F-44

                  Statement of Cash Flow for the six months
                  ended June 30, 1997 .............................  F-45

                  Notes to Financial Statement ....................  F-46

                                      60




[Letterhead of David T. Thompson P.C.]

INDEPENDENT AUDITOR'S REPORT

Board of Directors
ONASCO COMPANIES, INC.
(Formerly Gold Deposit Mining and Milling Company)

I have audited the balance sheets of Onasco Companies, Inc. (Formerly Gold
Deposit Mining and Milling Company) (a development stage company) as of
December 31, 1994, 1993 and 1992, and the related statements of operations,
stockholders' equity and cash flows from November 1, 1991 to December 31,
1994. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audits. The financial statements of Onasco
Companies, Inc. and its Subsidiary as of October 31, 1991 and from
development stage inception (October 17, 1991) to October 31, 1991 were
audited by other auditors whose reports dated November 6, 1991 and November
18, 1991 expressed unqualified opinions on those statements.

I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statements presentation. I believe that my audits provide
a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Onasco Companies, Inc.
as of December 31, 1994, 1993 and 1992 and the results of its operations
and its cash flows from November 1, 1991 to December 31, 1994, in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the
Company is in the development stage and its ability to establish itself as
a going concern is dependent upon the Company obtaining sufficient
financing to continue its development activities and, ultimately, to
achieve profitable operations (See Note 8). These items raise substantial
doubt about the Company's ability to continue as a going concern.

                                                    /s/ David T. Thomson P.C.

Salt Lake City, Utah
April 14, 1995

                                      F-1



                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                        (A Development Stage Company)
                                BALANCE SHEETS
                              December 31, 1994

                                    ASSETS
                                    ------

                                                         December 31, 1994
Current assets:                                          -----------------

  Cash and cash equivalents                                        0
  Production receivable
  Prepaid expenses
  Other current assets

          Total current assets                                     0

Oil and gas properties using full cost
accounting (Notes 4 and 5):
  Properties being amortized
  Properties not subject to amortization                        
                                                                -------- 
                                                                   0
  Less accumulated depletion                                    
                                                                -------- 
                                                                   0

Other Assets
  Other property and equipment, less accumulated
    depreciation $55,300 (Note 6)
  Deposits
Organizational costs net of accumulated                            0
  amortization of $400                                          
                                                                -------- 
                                                                   0



                                     F-2




                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                        (A Development Stage Company)
                                BALANCE SHEETS
                              December 31, 1994

                     LIABILITIES AND STOCKHOLDER'S EQUITY
                     -------------------------------------


                                                            December 31, 1994
                                                            -----------------

Current liabilities:

  Accounts payable - trade                                                0
  Production payable
  Accrued and other liabilities
  Long-term debt - current (Note 8)
  Stockholder advances payable                                          500
  Net current liabilities of discontinued operations                 27,500
                                                                    -------

     Total current Liabilities                                       28,000

Long-term debt (Note 8)

     Total liabilities                                               28,000
Commitments and Contingencies (Note 9)
Stockholders' equity:
  Common Stock, $.001 par value; 50,000,000 shares authorized
   5,229,300, 1,037,600, 1,012,600 shares issued,                     1,000
   and outstanding respectively                                        
  Additional paid-in capital                                          5,300
  Deficit accumulated during the development stage                  (34,300)
                                                                    --------
     Total stockholder's equity                                     (28,000)
                                                                    --------

Total liabilities and stockholder's equity                                0 


                                     F-3



                               TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                        (A Development Stage Company)
                           STATEMENT OF OPERATIONS

                For the years ended December 31, 1994 and 1993
                   Cumulative During the Development Stage

                                                                     Cumulative
                                 For the Year       For the Year     During the
                                     ended             ended        Development
                                 Dec. 31, 1994      Dec. 31, 1993      Stage 
                                 -------------      -------------   -----------
Revenues:
  Oil and gas revenues                    0                  0         27,800
  Other revenues                                                          700
                                     ------             ------       --------  
        Total revenues                    0                  0         28,500

Cost and expense:
  Lease operating expense                                              18,900
  Production taxes                                                      1,200
  Depletion, depreciation and
    amortization                                                       59,100
  Interest expense                                                     32,600
  General and administrative costs                         100        434,200
                                                        ------       --------  
          Total costs and expenses        0                100        546,000
                                     ------             ------       --------  

  Net (loss) from continuing
   operations                             0               (100)      (517,500)

  Discontinued Operations
    Net (Loss) from discontinued
      operations                     (8,200)            (5,700)       (78,900) 

  Extraordinary Items
    Income from debt forgiveness     38,300                            38,300
    Utilization of net operating
      loss carry forward              6,700                             6,700
    Add: Loss of purchased company
      prior to date of acquisition                                        200
                                     ------              ------      --------  


Net Income (loss)                    36,800             (5,800)      (551,200) 
                                     ------              ------      --------



                                     F-4


                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                        (A Development Stage Company)
                    STATEMENT OF STOCKHOLDER'S EQUITY

                For the years ended December 31, 1994 and 1993


                                                                  Deficit
                                                                Accumulated
                              Commmon Stock      Additional      During the
                              -------------        Paid in      Development
                            #Shares     Amount     Capital         Stage
                            ------------------   ----------     -----------

BALANCE, December 31, 1992  1,014,100   $1,000      5,300         (65,300)

  Shares compiled under
    stock option re-
    purchase agreement
    on April 10, 1993
    at $.001 per share         (1,500)       0          0               0

Net income (loss) for
  the year ended
  December 31, 1993                 0        0          0          (5,800)
                            ---------    ------     -------      ---------

BALANCE

  December 31, 1993         1,012,600    1,000      5,300         (71,100)

  Shares issued from
  October 1, 1994 to
  December 31, 1994            25,000        0          0               0

Net income (loss) for
the year ended
December 31, 1994                   0        0          0          36,800
                            ----------    ------     ------       --------

BALANCE
  December 31, 1994         1,037,600    1,000      5,300         (34,300)
                                  


                                     F-5




                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                        (A Development Stage Company)
                           STATEMENT OF CASH FLOWS

                For the years ended December 31, 1994 and 1993



                                                                                                                   Cumulative
                                                                          Year ended           Year ended          During the
                                                                           Dec. 31              Dec. 31            Development   
                                                                            1994                 1993                Stage
                                                                         ----------            ----------         -------------
                                                                                                        
Cash Flows from operating activities:
  Net income (loss)                                                      $     0              $    (100)             (517,500)
    Adjustments to reconcile net loss to net cash provided
      by operating activities:            
  Depletion, depreciation and amortization                                                                             59,100
    Changes in assets and liabilities:
    Deposits                                                                                                           (4,900)
    Production receivable                                                                                              (9,000)
    Prepaid expenses                                                                                                   (4,100)
    Other current assets                                                                                                 (600)
    Accounts payable - trade                                                                        100                47,100
    Production payable                                                                                                  1,700
    Accrued and other liabilities                                                                                      19,900 
    Stockholder Advances Payable                                                                                         (500)
    Net current liabilities of discontinued operations                                                                (26,900)
                                                                         ----------            ----------         -------------
Net cash used by operating activities                                          0                      0              (435,700)  

Cash Flow used in investing activities:
  Additions to machinery and equipment                                         0                      0              (656,300)
  Additions to oil and gas properties - amortized                                                                    (484,100) 
  Additions to oil and gas properties - unamortized                                                                   (60,600)
  Marketable Securities                                                                                              (250,000)
  Organizational cost                                                                                                  (6,600)
                                                                         ----------            ----------         -------------
    Net cash used in investing activities                                      0                      0            (1,457,600)

Cash Flow from financing activities:
  Proceeds from issuance of debt, net                                          0                      0                93,000
  Proceeds from issuance of common stock                                                                            1,801,000
                                                                         ----------            ----------         -------------
Net cash provided by financing                                                 0                      0            (1,894,000
                                                                         ----------            ----------         -------------
Net increase (decrease) in cash and cash equivalents                           0                      0                   700     
Cash and cash equivalents at beginning of year                                 0                      0                     0
                                                                         ----------            ----------         -------------

Cash and cash equivalent at end of year                                        0                      0                   700
                                                                         ----------            ----------         -------------
Supplemental schedule of cash flow information
  Cash paid during the years for 
   Income taxes                                                                0                      0                     0
                                                                         ----------            ----------         -------------  
   Interest                                                                    0                      0                 9,600
                                                                         ----------            ----------         -------------

                                     F-6




                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                        (A Development Stage Company)
                        NOTES TO FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization - TENGASCO, INC. (the "Company"), a publicly held corporation, was
organized under the laws of the State of Utah on April 18, 1916, as Gold Deposit
Mining and Milling Company. The Company subsequently changed its name to Onasco
Companies, Inc.

The corporate offices are located in Knoxville, Tennessee.

2.  EARNINGS PER SHARE

Earnings per common and common equivalent shares are based upon the weighted
average of common and common equivalent shares outstanding during the year.
Primary and fully diluted earnings per share are the same. The number of common
and common equivalent shares utilized in per share computations were 1,037,600,
and 1,012,600 in years 1994 and 1993.

EARNINGS PER SHARE:

                                                 1994       1993
                                            ---------   -------- 
Loss from continuing operations                     0       (100)

Net income (loss)                              36,800      5,800
                                            ---------   -------- 

Primary earnings (loss) per common share:
 Income (loss) from continuing operations           0          0

 Discontinued operations                         (.01)         0

 Extraordinary items                              .04          0
                                            ---------   -------- 

Earnings (loss) per common share                  .03          0
                                            ---------   -------- 
Fully diluted earnings (loss)
per common share:

 Income (loss) from continuing operations           0          0

 Dicontinued operations                          (.01)         0

 Extraordinary items                              .04          0
                                            ---------   -------- 


Eaernings (loss) per common share                 .03          0
                                            ---------   -------- 



                                     F-7




                            TENGASCO, INC.
                   (Formerly Onasco Companies, Inc.)
                     (A Development Stage Company)
                     NOTES TO FINANCIAL STATEMENTS


3.   DISCONTINUED OPERATION

In April 1995, the Company dissolved the subsidiary company based in Texas. The
dissolution was approved by Texas in April 1995. For accounting purposes, the
Company has treated the dissolved subsidiary as a discontinued operation. The
results of the subsidiary have been reported separately as a component of
discontinued operations in the Statement of Operations for the periods
presented. At the time of dissolution, the Company wrote-off its investment and
assumed obligations of the subsidiary. The following is a summary of subsidiary
operation.


                                                                    Cumulative
                               For the Year       For the Year      During the
                                  ended              ended          Development
                              Dec. 31, 1994      Dec. 31, 1993         Stage
                              -------------      -------------      ------------
                              
Revenue:

  Sales                       $           0      $       1,100      $   1,700

  Cost of Sales                                                          (800)  
                              --------------     -------------      ----------
    Gross Margin                          0              1,100            900
                              --------------     -------------      ----------

 Expense:
  Rent                                                                  1,000
  Depreciation                          200                400            900
  Amortization                          300                500          1,400
  Utilities                                                800          3,800
  Professional Fees                                                    10,200
  Salaries                            1,400              4,100         12,200
  Office Supplies                                          200            900
  Shipping                                                 200            500
  Equipment Rental                                         100          1,500
  Research                                                 300         25,600
  Marketing                                                100         11,300
  Other Taxes                                                             900
  Other Expenses                                           100          3,300
  Write-off Organization 
   Factor                                                                 100
  Write-off Patent costs              6,300                             6,200
                              --------------     -------------      ----------

    Total Expenses                    8,200              6,800         79,800
                              --------------     -------------      ----------
Net Loss related to
  Discontinued Operations            (8,200)            (5,700)       (78,900)  
                              --------------     -------------      ----------

                                     F-8



                              TENGASCO, INC.
                     (Formerly Onasco Companies, Inc.)
                       (A Development Stage Company)
                       NOTES TO FINANCIAL STATEMENTS

4. DEVELOPMENTAL STAGE OPERATIONS

Although the Company was organized in 1916, it must be regarded as being in
a formative stage due to its lack of significant business operations during
recent years. Its future success depends upon the ability to operate its
existing wells and to expand its operations. No assurance can be given that
the Company will be successful in making acquisitions.

5. GOING CONCERN.

The Company has experienced startup losses for the year ended December 31,
1994. In light of this circumstance, the ability of the Company to continue
as a going concern may be in doubt. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.




                                      F-9



                                         Tengasco, Inc.

                      (formerly Onasco Companies, Inc.)

- --------------------------------------------------------------------------------
                                               Consolidated Financial Statements

                                          Years Ended December 31, 1996 and 1995




                                      F-10



                                                      Tengasco, Inc.
                                   (formerly Onasco Companies, Inc.)

                                                            Contents

____________________________________________________________________________


       Report of Independent Certified Public Accountants          2

       Report of Independent Certified Public Accountants          3


       Consolidated Financial Statements

          Balance sheets                                           4

          Statements of loss                                       5

          Statements of stockholders' equity                       6

          Statements of cash flows                                 7

          Notes to financial statements                         8-27










                                     F-11



                      [Letterhead of Charles M. Stivers]



Report of Independent Certified Public Accountants

Board of Directors
Tengasco, Inc.
Knoxville, Tennessee

I have audited the balance sheet of Tengasco, Inc. as of December 31, 1995,
and the related statements of loss, stockholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on 
these financial statements based on our audit.

I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. I believe that our audit provides
a reasonable basis for our opinion.

In my opinion financial statements referred to above present fairly, in all
material respects, the financial position of Tengasco, Inc. as of December 31, 
1995, and the results of their operations and their cash flows for the
year then ended in conformity with generally accepted accounting principles.


The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered losses from operations and
has a working capital deficiency that raise substantial doubt about its
ability to continue as a going concern.

/s/Charles M. Stivers
Charles M. Stivers
Certified Public Accountant

Manchester, Kentucky
June 5, 1997

                                   F-12



[LOGO]       BDO Seidman, LLP             285 Peachtree Center Avenue, Suite 800
             Accountants and Consultants  Atlanta, Georgia 30303-1230
                                          Telephone: (404) 688-6841
                                          Fax: (404) 688-1075
                                          


Report of Independent Certified Public Accountants


Board of Directors
Tengasco, Inc
Knoxville, Tennessee

We have audited the accompanying consolidated balance sheet of Tengasco,
Inc. and subsidiary as of December 31, 1996, and the related consolidated
statements of loss, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Tengasco, Inc. and subsidiary as of December 31, 1996, and the results of
their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from
operations and has a working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. In addition, as of
December 31, 1996, management estimates that additional costs of
approximately $l,200,000 are required to complete its pipeline facilities
under construction. Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

                                             /s/ BDO Seidman, LLP

Atlanta, Georgia
June 5, 1997

                                     F-13



================================================================================

December 31,                                           1996          1995
- --------------------------------------------------------------------------------

Assets (Note 9)    

Current
  Cash and cash equivalents                         $  146,554     $      712
  Marketable equity securities (Note 5)                     --        250,000
  Accounts receivable                                    4,658          9,018
  Prepaid expenses and other                             7,463          4,786
- --------------------------------------------------------------------------------

Total current assets                                   158,675        264,516

Oil and gas properties, net (on the basis
  of full cost accounting) (Note 6)                  1,287,142        658,082  

Pipeline facilities under construction, 
  at cost (Note 7)                                     887,315             --

Property and equipment, net (Notes 8 and 10)           203,244        247,401

Other                                                  190,845         10,970
- --------------------------------------------------------------------------------

                                                    $2,727,221     $1,180,969   
================================================================================
          
                                     F-14



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)
                                
                                                     Consolidated Balance Sheets


- --------------------------------------------------------------------------------


December 31,                                              1996             1995
- --------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current
  Notes payable (Note 9)                            $  780,000        $      - 
  Loans payable to affiliates (Note 4)                  48,190               -
  Current maturities of long-term debt (Note 10)        14,017          34,038 
  Accounts payable - trade                             347,093          46,922
  Accrued liabilities                                   35,086          21,623
- --------------------------------------------------------------------------------

Total current liabilities                            1,224,386         102,583 

Long term debt, less current maturities (Note 10)       47,828          59,000
- --------------------------------------------------------------------------------

Total liabilities                                    1,272,214         161,583
- --------------------------------------------------------------------------------

Commitments and contingencies (Notes 7, 9 and 11)

Stockholders' equity (Note 9)
  Common stock, $.001 par value; 50,000,000 shares
   authorized                                            5,708           5,229
  Additional paid-in capital                         4,783,369       2,425,185
  Unamortized stock option awards                     (292,186)       (130,208)
  Accumulated deficit                               (3,041,884)     (1,280,820)
- --------------------------------------------------------------------------------

Total stockholders' equity                           1,455,007       1,019,386
- --------------------------------------------------------------------------------

                                                    $2,727,221      $1,180,969
- --------------------------------------------------------------------------------
                  
                   See accompanying notes to consolidated financial statements.




                                     F-15



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                                 Consolidated Statements of Loss

- --------------------------------------------------------------------------------

Years ended December 31,                                1996         1995
- -------------------------------------------------------------------------
Revenues
 Oil and gas revenues                             $   26,253  $    27,802
 Other revenues                                            -          724
- -------------------------------------------------------------------------

Total revenues                                        26,253       28,526
- -------------------------------------------------------------------------

Costs and expenses
 Production costs and taxes                           17,138       20,072
 Depletion, depreciation and amortization            133,187       89,528
 General and administrative costs                  1,491,690      539,061
 Unrealized holding loss on marketable equity
  securities (Note 5)                                      -      593,752
 Interest expense                                    145,302       32,594
- -------------------------------------------------------------------------

Total costs and expenses                           1,787,317    1,275,007
- -------------------------------------------------------------------------

Net Loss                                         $(1,761,064) $(1,246,481)
- --------------------------------------------------------------------------

Net loss per common share                             $(0.32)      $(0.36)
- --------------------------------------------------------------------------

Weighted average common shares outstanding         5,427,247    3,484,207
- --------------------------------------------------------------------------


              See accompanying notes to consolidated financial statements.



                                     F-16

                                                                 Tenegasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                 Consolidated Statements of Stockholders' Equity



- ------------------------------------------------------------------------------------------------------------------
                                                                                      Unamortized
                                                    Common Stock        Additional          stock
                                                --------------------       paid-in         option    Accumulated
                                                 Shares      Amount        capital         awards        deficit
- ------------------------------------------------------------------------------------------------------------------
                                                                                      
Balance, December 31, 1994                      1,037,600    $1,038     $    5,300     $       -     $  (34,339)

  Net effect of 1 for 2 reverse split            (518,800)     (519)             -             -              -

  Common stock issued to acquire assets
    of Industrial Resources Corporation         4,000,000     4,000       1,215,460            -              -

  Common stock issued to individuals              505,000       505          47,500            -              -

  Common stock issued for equipment                 8,000         8           2,200            -              -

  Common stock issued for exercised options        33,200        33           9,100            -              -

  Common stock subscribed for the 
    extinguishment of debt                        164,300       164         881,900            -              -

  Stock option awards                                   -         -         190,625     (190,625)   

  Amortization of stock option awards                   -         -               -        60,417             -

  Common stock options granted to
    non-employees                                       -         -          45,000             -             -

 Transfer of debt to equity by shareholder              -         -          28,100             -             -

  Net loss for the year ended
    December 31, 1995                                   -         -               -             -    (1,246,481)         
- ------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1995                      5,229,300     5,229       2,425,185      (130,208)   (1,280,820)

  Common stock issued for exercised options       327,079       327          90,792             -             -

  Common stock issued for the 
    extinguishment of debt                         65,569        66         638,823             -             -

  Common stock subscribed for the
    extinguishment of debt                         48,897        49         421,052             -             -

  Stock option awards                                   -         -         225,000      (225,000)            -


  Amortization of stock option awards                   -         -               -        63,022             -

  Common stock options granted to
    non-employees                                       -         -         371,864             -             -

  Common stock issued for private
    placements                                     36,982        37         280,653             -             -

  Stock warrants issued in connection with 
    notes payable                                       -         -         330,000             -             -

  Net loss for the year ended
    December 31, 1996                                   -         -               -             -    (1,761,064)
- ------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1996                      5,707,827    $5,708      $4,783,369     $(292,186)  $(3,041,884)
- ------------------------------------------------------------------------------------------------------------------

         See accompanying notes to consolidated financial statements.

                                     F-17





                                                                Tengasco, Inc.
                                              (formerly Onasco Companies, Inc.)

                                          Consolidated Statements of Cash Flows

- -------------------------------------------------------------------------------

Years ended December 31,                                 1996             1995
- -------------------------------------------------------------------------------
Operating activities
 Net loss                                         $(1,761,064)     $(1,246,481)
 Adjustments to reconcile net loss to net cash
  used in operating activities:
   Depletion, depreciation and amortization           133,187           89,528 
   Unrealized holding loss on marketable
    equity securities                                      --          593,752
   Loss on disposal of property and equipment           3,671               -- 
   Compensation paid in stock options                 434,886          105,417
   Amortization of imputed value of stock warrants  
    issued in connection with notes payable           110,000               --
   Changes in assets and liabilities:
    Accounts receivable                                 4,360           (9,018)
    Prepaid expenses and other                         (2,677)          (4,786)
    Accounts payable                                  300,171           19,422
    Accrued liabilities                                13,463           21,623
    Stockholder advances payable                           --             (500) 
- -------------------------------------------------------------------------------

Cash used in operating activities                    (764,003)        (431,043)
- -------------------------------------------------------------------------------

Investing activities
 Proceeds from sale of marketable equity 
  securities                                          250,000               --
 Additions to property and equipment                  (60,754)         (86,786)
 Net additions to oil and gas properties             (644,951)              --
 Additions to pipeline facitlities under
  construction                                       (887,315)              --
- -------------------------------------------------------------------------------

Cash used in investing activites                   (1,343,020)         (86,786)
- -------------------------------------------------------------------------------

Financing activities
 Payment of loan costs and other                     (238,798)         (10,970)
 Proceeds from borrowings                           2,156,581           93,038
 Repayments of borrowings                             (36,727)              --
 Proceeds from issuance of common stock               371,809          436,473
- -------------------------------------------------------------------------------


Cash provided by financing activities               2,252,865          518,541
- -------------------------------------------------------------------------------

Net increase in cash and cash equivalents             145,842              712

Cash and cash equivalents, beginning of year              712               --
- -------------------------------------------------------------------------------

Cash and cash equivalents, end of year            $   146,554      $       712
- -------------------------------------------------------------------------------
                   See accompanying notes to consolidated financial statements.

                                     F-18


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

1. Summary of                          Organization 
   Significant Accounting 
   Policies                            Tengasco, Inc. (the "Company"), a
                                       publicly held corporation, was organized
                                       under the laws of the State of Utah on
                                       April 18, 1916, as Gold Deposit Mining
                                       and Milling Company. The Company
                                       subsequently changed its name to Onasco
                                       Companies, Inc.

                                       On May 2, 1995, pursuant to a Purchase
                                       and Exchange Agreement, the Company
                                       acquired from Industrial Resources
                                       Corporation, a Kentucky corporation
                                       ("IRC"), certain oil and gas leases,
                                       equipment, marketable securities and
                                       vehicles in exchange for common stock
                                       (see Note 3).

                                       The Company changed its domicile from the
                                       State of Utah to the State of Tennessee
                                       on May 5, 1995 and its name was changed
                                       from "Onasco Companies, Inc." to
                                       "Tengasco, Inc."

                                       The Company's principal business consists
                                       of oil and gas well drilling, production
                                       and related property management in the
                                       Appalachian region of eastern Tennessee
                                       and eastern Kentucky. The Company's
                                       corporate offices are in Knoxville,
                                       Tennessee.

                                       During 1996, the Company formed Tengasco
                                       Pipeline Corporation, a wholly-owned
                                       subsidiary, to manage the construction
                                       and operation of a 23-mile gas pipeline.

                                       Consolidation

                                       The consolidated financial statements
                                       include the accounts of the Company and
                                       Tengasco Pipeline Corporation. All
                                       significant intercompany balances and
                                       transactions have been eliminated.


                                       Cash Equivalents

                                       The Company considers all investments
                                       with a maturity of three months or less
                                       when purchased to be cash equivalents.

                                       Oil and Gas Properties

                                       The Company follows the full cost method
                                       of accounting for oil and gas property
                                       acquisition, exploration and development
                                       activities. Under this method, all
                                       productive and nonproductive costs
                                       incurred in connection with the
                                       acquisition of, exploration for and
                                       development of oil and gas reserves for
                                       each cost center

                                     F-19



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       are capitalized. Capitalized costs
                                       include lease acquisitions, geological
                                       and geophysical work, delay rentals and
                                       the costs of drilling, completing and
                                       equipping oil and gas wells. Gains or
                                       losses are recognized only upon sales or
                                       dispositions of significant amounts of
                                       oil and gas reserves. Proceeds from all
                                       other sales or dispositions are treated
                                       as reductions to capitalized costs.

                                       The capitalized costs of oil and gas
                                       properties, plus estimated future
                                       development costs relating to proved
                                       reserves and estimated costs of plugging
                                       and abandonment, net of estimated salvage
                                       value, are amortized on the
                                       unit-of-production method based on total
                                       proved reserves. The costs of unproved
                                       properties are excluded from amortization
                                       until the properties are evaluated,
                                       subject to an annual assessment of
                                       whether impairment has occurred. The

                                       costs of significant development projects
                                       awaiting completion of pipeline
                                       facilities are excluded from amortization
                                       until such time as the pipeline 
                                       facilities are completed. The Company's
                                       proved gas reserves were estimated by
                                       Coburn Petroleum Engineering, independent
                                       petroleum engineers, as of December 31,
                                       1996.

                                       The capitalized oil and gas property and
                                       pipeline costs, less accumulated
                                       depreciation, depletion and amortization
                                       and related deferred income taxes, if
                                       any, are generally limited to an amount
                                       (the ceiling limitation) equal to the sum
                                       of: (a) the present value of estimated
                                       future net revenues computed by applying
                                       current prices in effect as of the
                                       balance sheet date (with consideration of
                                       price changes only to the extent provided
                                       by contractual arrangements) to estimated
                                       future production of proved oil and gas
                                       reserves, less estimated future
                                       expenditures (based on current costs) to
                                       be incurred in developing and producing
                                       the reserves using a discount factor of
                                       10% and assuming continuation of existing
                                       economic conditions; and (b) the cost of
                                       investments in unevaluated properties
                                       excluded from the costs being amortized.

                                       Pipeline Facilities Under Construction

                                       Pipeline facilities under construction
                                       are carried at cost. The Company will
                                       provide for depreciation of the pipeline
                                       facilities using the straight-line method
                                       over the estimated useful life of the
                                       asset once the pipeline is completed and
                                       placed in service. The pipeline
                                       facilities are expected to be completed
                                       during the

                                   F-20

                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------


                                       third quarter of 1997. Accordingly, no
                                       depreciation expense has been recorded
                                       for 1996 and 1995 relating to the
                                       pipeline facilities.

                                       Property and Equipment

                                       Property and equipment are carried at
                                       cost. The Company provides for
                                       depreciation of property and equipment
                                       using the straight-line method over the
                                       estimated useful lives of the assets
                                       which range from five to seven years.

                                       Other Assets

                                       Other assets consist principally of
                                       deferred loan costs that the Company is
                                       amortizing over the term of the
                                       respective loans, which is six months.

                                       Income Taxes

                                       The Company accounts for income taxes in
                                       accordance with Statement of Financial
                                       Accounting Standards No. 109, "Accounting
                                       for Income Taxes" which requires the use
                                       of the "liability method." Accordingly,
                                       deferred tax liabilities and assets are
                                       determined based on the temporary
                                       differences between the financial
                                       statement and tax bases of assets and
                                       liabilities, using enacted tax rates in
                                       effect for the year in which the
                                       differences are expected to reverse.

                                       Concentration of Credit Risk

                                       The Company's primary business activities
                                       include oil and gas sales to several
                                       customers in the states of Tennessee and
                                       Kentucky. The related trade receivables
                                       subject the Company to a concentration of
                                       credit risk within the oil and gas
                                       industry.

                                       Loss Per Common Share

                                       Loss per share amounts are computed by
                                       dividing net loss by the weighted average
                                       number of common shares outstanding
                                       during the year. Common stock equivalents
                                       have not been considered because their
                                       effect would be anti-dilutive.


                                 F-21



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       Accounting Estimates

                                       The accompanying financial statements are
                                       prepared in conformity with generally
                                       accepted accounting principles which
                                       requires management to make estimates and
                                       assumptions that affect the reported
                                       amounts of assets and liabilities and
                                       disclosure of contingent assets and
                                       liabilities at the date of the financial
                                       statements and the reported amounts of
                                       revenues and expenses during the
                                       reporting period. The actual results
                                       could differ from those estimates.

                                       Fair Values of Financial Instruments

                                       Fair values of cash and cash equivalents
                                       and short-term debt approximate cost due
                                       to the short period of time to maturity.
                                       Fair values of long-term debt are based
                                       on quoted market prices or pricing models
                                       using current market rates.

                                       Significant Risks and Uncertainties

                                       The Company's operations are subject to
                                       all of the environmental and operational
                                       risks normally associated with the oil
                                       and gas industry. The Company maintains
                                       insurance that is customary in the
                                       industry; however, there are certain
                                       risks for which the Company does not
                                       maintain full insurance coverage. The
                                       occurrence of a significant event that is
                                       not fully covered by insurance could have
                                       a significant adverse effect on the
                                       Company's financial position.

                                       New Accounting Pronouncements


                                       On March 3, 1997, the Financial
                                       Accounting Standards Board issued
                                       Statement of Financial Accounting
                                       Standards No. 128, Earnings Per Share
                                       (SFAS 128). This pronouncement provides a
                                       different method of calculating earnings
                                       per share than is currently used in
                                       accordance with Accounting Principles
                                       Board Opinion No. 15, Earnings Per
                                       Share. SFAS 128 provides for the
                                       calculation of "Basic" and "Diluted"
                                       earnings per share. Basic earnings per
                                       share includes no dilution and is
                                       calculated by dividing income available
                                       to common shareholders by the weighted
                                       average number of common shares
                                       outstanding for the period. Diluted
                                       earnings per share reflects the potential
                                       dilution of securities that could share
                                       in the earnings of an entity, similar to
                                       fully diluted earnings per share. The
                                       Company will adopt SFAS

                                   F-22


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------


                                       128 in 1997 and its implementation is not
                                       expected to have a material effect on the
                                       consolidated financial statements.

2. Going Concern                       The Company has experienced losses 
                                       totaling $1,761,064 and $1,246,481 for
                                       the years ended December 31, 1996 and
                                       1995, respectively, and has a working
                                       capital deficit of $1,065,711 at December
                                       31, 1996. These matters raise substantial
                                       doubt about the Company's ability to
                                       continue as a going concern. In addition,
                                       as of December 31, 1996, management
                                       estimates that additional costs of
                                       approximately $1,200,000 are required to
                                       complete its pipeline facilities under
                                       construction. Management's plans include
                                       raising additional capital in order to
                                       complete the pipeline facilities and

                                       drill additional oil and gas wells. In
                                       addition, the Company is seeking joint
                                       venture partners to assist in the sales
                                       and marketing of its energy services (see
                                       Note 14). The accompanying financial
                                       statements do not include any adjustments
                                       relating to the recoverability and
                                       classifications of recorded asset
                                       amounts or the amounts and
                                       classifications of liabilities that might
                                       be necessary should the Company be unable
                                       to continue as a going concern.

3.  Business Acquisition               Effective May 2, 1995, the Company 
                                       acquired approximately 60% of the assets
                                       of IRC in a reverse acquisition in which
                                       IRC's stockholders acquired voting
                                       control of the Company. The acquisition
                                       was accomplished through the Company's
                                       issuance of 4,000,000 shares of Tengasco,
                                       Inc. common stock and a $450,000 8%
                                       promissory note payable to IRC. The
                                       promissory note was converted into 83,799
                                       shares of Tengasco, Inc. common stock in
                                       December 1995 (see Note 15). For
                                       financial reporting purposes, the portion
                                       of IRC'S assets involved in the
                                       transaction is deemed to be the acquiring
                                       entity. Since the Company had no
                                       significant assets or operations at the
                                       acquisition date, as required by the
                                       Securities and Exchange Commission, the
                                       accounts of the Company have been
                                       recorded at IRC's cost basis.




                                   F-23


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       The following unaudited pro forma
                                       information indicates what the revenues
                                       and net loss of the Company would have
                                       been if the acquisition had occurred on
                                       January 1, 1995:


                                       Revenues                     $    47,555
                                       ----------------------------------------

                                       Net loss                     $(1,393,520)
                                       ----------------------------------------

                                       Net loss per common share    $     (0.40)
                                       ----------------------------------------


4. Related Party Transactions          The Company has loans payable due to 
                                       affiliates aggregating $48,190. A major
                                       stockholder of the Company is also a
                                       major stockholder of the affiliates. The
                                       loans bear interest at the rate of 8% per
                                       annum and are due on demand.

                                       During 1996, the Company converted
                                       approximately $1,060,000 of debt payable
                                       to IRC, a related party, to common stock
                                       and common stock subscribed (see Note
                                       15). The Company also converted
                                       approximately $100,000 of debt payable to
                                       a major stockholder to common stock
                                       subscribed (see Note 15).

5. Marketable Equity  Securities       Marketable securities were carried at the
                                       lower of cost or market. The marketable
                                       securities were acquired in the Purchase
                                       and Exchange Agreement with IRC on May 2,
                                       1995 and consisted of 500,000 shares of
                                       United Petroleum Corporation stock. The
                                       United Petroleum Corporation stock had a
                                       one-for-three reverse stock split on June
                                       13,1995 which left the Company with
                                       166,667 shares. The marketable securities
                                       were written down to market in 1995,
                                       resulting in a loss of approximately
                                       $594,000. The United Petroleum
                                       Corporation stock was sold in January
                                       1996 for $250,000.



                                   F-24


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements


- --------------------------------------------------------------------------------

6.  Oil and Gas Properties   The following table sets forth 
                             information concerning the Company's 
                             oil and gas properties at December 31:

                                                          1996        1995
                             -----------------------------------------------
                             Evaluated                 $1,288,243   $654,258
                             Unevaluated                   26,317     15,352
                             -----------------------------------------------
                                                        1,314,560    669,610
                             Accumulation depreciation,
                             depletion and amortization   (27,418)   (11,528)
                             -----------------------------------------------
                                                       $1,287,142   $658,082
                             -----------------------------------------------

                             Evaluated costs excluded from
                             amortization at December 31, 1996 consist
                             of approximately $730,000 of costs
                             relating the Company's Swan Creek
                             development project which is awaiting the
                             completion of a gas pipeline expected to
                             be completed in the third quarter of 1997.

7.  Pipeline  Facilities     During the fourth quarter of 1996, the 
    Under Construction       Company began construction of a 23-mile gas
                             pipeline which will (1) connect the Swan Creek
                             development project to a gas purchaser
                             and (2) enable the Company to develop gas
                             transmission business opportunities in
                             the future. 

                             As of December 31, 1996, management
                             estimates the costs to complete the
                             pipeline are approximately $l,200,000.

                             In January 1997, the Company entered into
                             an agreement with the Tennessee Valley
                             Authority ("TVA") whereby the TVA will
                             allow the Company to bury the pipeline
                             within the TVA's transmission line 
                             rights-of-way. In return for this right,
                             the Company paid $35,000 plus agreed to
                             annual payments of approximately $6,200
                             for 20 years. This agreement expires in
                             2017 at which time the parties may renew
                             the agreement for another 20 year term in
                             consideration of similar inflation-adjusted 
                             payment terms.

                                   F-25



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

8. Property and Equipment              Property and equipment consisted of the 
                                       following:


                    
                                                                                        1996         1995
                                       ------------------------------------------------------------------------------ 
                                                                                              
                                       Machinery and equipment                        $245,756      $260,693
                                       Vehicles                                         83,299        85,455
                                       Other                                            42,113        20,991
                                       ------------------------------------------------------------------------------ 

                                                                                       371,168       367,139

                                       Less accumulated depreciation                  (167,924)     (119,738)
                                       ------------------------------------------------------------------------------ 

                                       Property and equipment - net                   $203,244      $247,401
                                       ------------------------------------------------------------------------------ 

9. Notes Payable

                                       Notes payable consisted of the following:
                                                                                        1996           1995   
                                      ------------------------------------------------------------------------------ 

                                       Note payable to an
                                       investment company
                                       due May 1997 with
                                       interest payable
                                       monthly at 10% per
                                       annum; less
                                       unamortized discount
                                       of $123,750 relating
                                       to stock warrants
                                       issued; collateralized by a
                                       subordinated security
                                       interest in all
                                       assets of the Company (A).             
                                                                                      $376,250        $  -

                                       Note payable to an
                                       individual due April
                                       1997 with interest

                                       payable monthly at
                                       10% per annum; less
                                       unamortized discount
                                       of $48,125 relating
                                       to stock warrants
                                       issued; collateralized by all
                                       assets of the Company (B).                      201,875           -

                                       Note payable to a
                                       company due April
                                       1997 with interest
                                       payable monthly at
                                       10% per annum; less
                                       unamortized discount
                                       of $48,125 relating
                                       to stock warrants
                                       issued; collateralized by all
                                       assets of the Company (A).                      201,875           -
                                       ------------------------------------------------------------------------------ 

                                                                                      $780,000        $  -
                                       ------------------------------------------------------------------------------ 


                                     F-26


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       In conjunction with the issuance of the
                                       notes payable listed above, the Company
                                       granted the lenders detachable stock
                                       warrants which enable the holder to
                                       obtain up to 200,000 shares of the
                                       Company's common stock at a price of $5
                                       per share.

                                       (A) These notes had not been repaid as
                                       of the above noted due dates. As noted
                                       in (C) below, the Company has filed a
                                       claim against the lenders.

                                       (B) In March 1997, the individual note
                                       holder (above) filed a lawsuit asserting
                                       the Company was in default of the
                                       $250,000 note. This action seeks the
                                       principal amount, interest, and costs of
                                       collection. No additional costs have

                                       been accrued in the accompanying
                                       consolidated financial statements in
                                       connection with this lawsuit. Management
                                       believes it has certain defenses to this
                                       motion as noted in (C) below.

                                       (C) Also in March 1997, the Company
                                       filed a claim against the above three
                                       lenders and a former officer of the
                                       Company asserting that the Company did
                                       not authorize the issuances of certain
                                       stock warrants related to the borrowings
                                       and seeking rescission of the warrant
                                       agreements. The Company is disputing
                                       the validity of the stock warrant
                                       agreements based upon certain provisions
                                       which were not authorized by the board
                                       of directors. If the Company is
                                       unsuccessful in its attempt to rescind
                                       these stock warrant agreements, these
                                       provisions could result in the lenders
                                       obtaining additional shares.



                                   F-27



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------


10. Long Term Debt         Long-term debt consisted of the following:


                          
                                                                          1996           1995
                           --------------------------------------------------------------------
                                                                                  
                           11% installment note, payable $667
                           monthly, including interest, due
                           December 2001, collateralized by a
                           vehicle                                        $30,563          $ -

                           10.7% installment note, payable $423
                           monthly, including interest, due May
                           2000, collateralized by a vehicle               14,466         17,800


                           12% installment note, payable $385
                           monthly, including interest, due April
                           2000, collateralized by a vehicle               12,545         15,500

                           10.5% installment note, payable $789
                           monthly, including interest, due
                           August 2000, collateralized by a vehicle           -           25,000

                           Loan payable to an equipment
                           supplier, due in monthly installments
                           of $5,300                                          -           15,900

                           Other                                            4,271         18,838
                           ----------------------------------------------------------------------
                           Total long term debt                            61,845         93,038
                           Less current  maturities                       (14,017)       (34,038)
                           ----------------------------------------------------------------------
                           Long term debt, less current maturities        $47,828        $59,000
                           ----------------------------------------------------------------------






                                   F-28

                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       The approximate future maturities of
                                       debt were as follows:

                                              Year                        Amount
                                       _________________________________________

                                              1997                      $ 14,017
                                              1998                        15,259
                                              1999                        14,849
                                              2000                        10,166
                                              2001                         7,554
                                       _________________________________________

                                                                         $61,845
                                       =========================================

11.  Commitments                       As of December 31, 1996, the future 
                                       minimum payments to be made under
                                       noncancellable operating leases were:


                                               Year                       Amount
                                       _________________________________________

                                              1997                      $ 51,000
                                              1998                        51,000
                                              1999                        51,000
                                              2000                        47,000
                                       _________________________________________
                                                                   
                                                                        $200,000
                                       =========================================

                                       Rent expense was approximately $54,000
                                       and $5,000 for the years ended December
                                       31, 1996 and 1995, respectively.


                                     F-29


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------


12. Stock Options  Changes that occurred in options outstanding in 1996 and 
                   1995 are summarized below:

                                               1996                  1995
                                     -----------------------  ------------------
                                              Average                    Average
                                             Exercise                   Exercise
                                     Shares    Price           Shares    Price
                   -------------------------------------------------------------

                   Outstanding, 
                    beginning
                    of year         1,791,849   $0.483               -   $    -
                   Granted            730,000    5.566       1,825,000    0.479
                   Exercised         (327,079)   0.275         (33,151)   0.275
                  Expired/canceled   (992,350)   0.275               -        -
                                    ----------               ---------- 
 
                   Outstanding
                    end of year     1,202,420    3.295       1,791,849    0.483

                   Exercisable 
                    end of year       538,805    1.882         562,260    0.427


                   ------------------------------------------------------------
                    
                   The following table summarizes information about stock 
                   options outstanding at December 31, 1996:


                            Options Outstanding             Options Exercisable
                   ---------------------------------------  -------------------
                                       Average
                   Exercise          Remaining    Average               Average
                    Price            Contractual  Exercise             Exercise
                    Range   Shares      Life       Price     Shares      Price
                   ------------------------------------------------------------

                  $0.275   472,420   0.58 yrs.    $0.275    365,687      $0.275
                   4.000-  730,000   1.19 yrs.     5.565    173,118       5.275 
                   6.375
                           -------                          -------

                   Total 1,202,420   0.95 yrs.     3.269    538,805       1.882
                   ------------------------------------------------------------
                                   
                                     F-30


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       The fair value of stock options used to
                                       compute compensation expense to
                                       non-employees is the estimated present
                                       value at grant date using the
                                       Black-Scholes option-pricing model with
                                       the following weighted average
                                       assumptions for 1996 and 1995: expected
                                       volatility of 54% for both years; a
                                       risk-free interest rate of 5.21% in
                                       1996 and 6.40% in 1995; and an expected
                                       option life of 2.45 years in 1996 and
                                       2.25 years in 1995. The amount of
                                       compensation expense included in general
                                       and administrative costs in the
                                       accompanying consolidated statements of
                                       loss was approximately $372,000 and
                                       $45,000 at December 31, 1996 and 1995,
                                       respectively.

                                       Statement of Financial Accounting
                                       Standards No. 123, (SFAS 123),

                                       "Accounting for Stock-Based
                                       Compensation" was implemented in January
                                       1996. As permitted by SFAS 123, the
                                       Company has continued to account for
                                       stock compensation to employees by
                                       applying the provisions of Accounting
                                       Principles Board Opinion No. 25. If the
                                       accounting provisions of SFAS 123 had
                                       been adopted, net loss and loss per share
                                       would have been as follows:


                                                           1996             1995
                                       _________________________________________
                                       
                                       Net loss    
                                         As reported  $(1,761,064)  $(1,246,481)
                                         Pro forma     (1,932,628)   (1,307,960)
                                       ________________________________________

                                       Loss per share
                                         As reported       $(.32)        $(0.36)
                                         Pro forma          (.36)         (0.38)
                                       ________________________________________
                                       
                                       For employees, the fair value of stock
                                       options used to compute pro forma net
                                       loss and loss per share disclosures is
                                       the estimated present value at grant
                                       date using the Black-Scholes
                                       option-pricing model with the following
                                       weighted average assumptions for 1996
                                       and 1995: Expected volatility of 54% for
                                       both years; a risk free interest rate
                                       of 5.52% in 1996 and 6.32% in 1995; and
                                       an expected option life of 2.72 years in
                                       1996 and 2.25 years in 1995.


                                     F-31


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

13. Income Taxes                       The Company had no taxable income during
                                       the years ended December 31, 1996 and
                                       1995. 
          

                                       A reconciliation of the statutory U.S.
                                       Federal income tax and the income tax
                                       provision included in the accompanying
                                       consolidated statements of loss is as 
                                       follows:

                                       

                                       Year ended December 31,                     1996          1995
                                       ----------------------------------------------------------------
                                                                                       
                                      
                                       Statutory  rate                                34%            34%
                                       Tax (benefit) at statutory rate         $(599,000)     $(424,000)
                                       State income tax (benefit)                (99,000)       (75,000)
                                       Other                                       3,000         17,000
                                       Increase in deferred tax asset
                                         valuation allowance                     695,000        482,000
                                       ----------------------------------------------------------------
                                       Total income tax provision              $       -      $       -
                                       ----------------------------------------------------------------

                                       The components of the net deferred tax assets and liabilities are 
                                       as follows:

                                       Year ended December 31,                      1996           1995
                                       ----------------------------------------------------------------
                                       Deferred tax asset:
                                        Basis  difference in marketable
                                         equity  securities                  $        -       $ 238,000
                                        Net operating loss carryforward          798,000        218,000
                                        Capital loss carryforward                238,000             -
                                        Accrued expenses                         223,000         39,000
                                       ----------------------------------------------------------------

                                                                               1,259,000        495,000 

                                       Valuation allowance                    (1,177,000)      (482,000)
                                       ----------------------------------------------------------------
                                                                                  82,000         13,000
                                       ----------------------------------------------------------------

                                       Deferred tax liability:
                                        Oil and gas properties                    81,000         13,000
                                        Property and equipment                     1,000              -
                                       ----------------------------------------------------------------
                                                                                  82,000         13,000
                                       ----------------------------------------------------------------
                                       Net deferred taxes                    $         -      $       -
                                       ---------------------------------------------------------------- 

                                     F-32



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------


                                       The Company recorded a valuation
                                       allowance at December 31, 1996 and 1995
                                       equal to the excess of deferred tax
                                       assets over deferred tax liabilities as
                                       management is unable to determine that
                                       these tax benefits are more likely than
                                       not to be realized.

                                       As of December 31, 1996, the Company had
                                       net operating loss carryforwards for
                                       federal income tax purposes of
                                       approximately $l,995,000 which will
                                       expire, if not utilized, as follows:

                                              Year            Amount
                      ----------------------------------------------------------
                                              2010          $ 546,000

                                              2011          1,449,000
                      ----------------------------------------------------------
                                              Total        $1,995,000
                      ----------------------------------------------------------

                                       Additionally, at December 31, 1996, the
                                       Company has a capital loss carryforward
                                       of approximately $594,000 which will
                                       expire, if not offset against a capital
                                       gain, in 2001.

14.  Subsequent Events                 In May 1997, the Company entered into a
                                       term loan with an individual for
                                       aggregate proceeds of $l,000,000 which
                                       the Company will receive at various
                                       times in the second and third quarters
                                       of 1997. The Company provided the lender
                                       with 100,000 shares of common stock as a
                                       loan origination fee. The loan, which
                                       is due December 31, 1997, bears interest
                                       at 11% per annum and is secured by
                                       equipment owned by a major shareholder
                                       of the Company. IRC is serving as
                                       guarantor on the loan facility. In
                                       conjunction with the loan agreement, the
                                       lender has an option to purchase 300,000
                                       shares of the Company's common stock
                                       from IRC.


                                       In May 1997, the Company entered into a
                                       joint venture agreement with Enserch
                                       Energy Services, Inc. ("EES") whereby
                                       the Company will share equally in the
                                       gross profit from any sales to customers
                                       the parties refer to each other for
                                       energy services. The agreement is in
                                       effect until 2002 at which time the
                                       Company and EES can continue the
                                       agreement for successive one-year terms.



                                   F-33


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------


15. Supplemental Disclosure of 
    Cash Flows                         The Company paid approximately $26,000 
                                       and $33,000 for interest in 1996 and
                                       1995, respectively. The Company paid $0
                                       for income taxes in 1996 and 1995.

                                       In 1996, the Company transferred
                                       property and equipment with a net book
                                       value of $46,539 to lenders in exchange
                                       for debt reductions aggregating $42,865
                                       resulting in a loss of $3,674.
                   
                                       In 1996, the Company issued 114,466
                                       shares of common stock and common stock
                                       subscribed to extinguish approximately
                                       $1,060,000 of debt, which approximated
                                       fair value of the shares.

                                       In 1995, The Company issued 4,000,000
                                       shares of common stock and a $450,000 8%
                                       promissory note to IRC (see Note 3) to
                                       acquire approximately $l,752,000 of
                                       assets including property, plant, and
                                       equipment, oil and gas properties and
                                       marketable equity securities. The
                                       Company recorded these assets at the
                                       lower of market or IRC's historical
                                       cost basis, except for the marketable

                                       equity securities which were brought
                                       over at their lower market value.

                                       In 1995, the Company issued
                                       approximately 164,300 shares of common
                                       stock to extinguish approximately
                                       $882,000 of debt, which approximated
                                       fair value of the shares. The
                                       extinguished debt included the $450,000
                                       8% promissory note, discussed above.

16.  Supplemental  Oil 
     and Gas Information               Information with respect to the 
                                       Company's oil and gas producing 
                                       activities is presented in the following
                                       tables. Estimates of reserve quantities,
                                       as well as future production and
                                       discounted cash flows before income
                                       taxes, were determined by Coburn
                                       Petroleum Engineering, independent
                                       petroleum engineer, as of December 31,
                                       1996 and 1995.

                                       Oil and Gas Related Costs

                                       The following table sets forth
                                       information concerning costs related to
                                       the Company's oil and gas property
                                       acquisition, exploration and development
                                       activities in the United States during
                                       the years ended December 31, 1996 and
                                       1995:


                                   F-34



                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                                          1996            1995
                     ----------------------------------------------------------

                     Property  acquisition 
                      Proved                         $   78,991        $607,809
                      Unproved                           25,274          15,352
                     Less - proceeds from sales of
                      properties                       (100,000)              -

                     Development costs                  673,022          43,210
                     -----------------------------------------------------------

                                                      $ 677,287        $666,371
                     -----------------------------------------------------------

                     Results of Operations from Oil and Gas Producing Activities

                     The following table sets forth the Company's results of
                     operations from oil and gas producing activities for the
                     years ended December 31, 1996 and 1995:

                                                         1996             1995
                     -----------------------------------------------------------
                     Revenues                          $ 26,253        $ 27,802
                     Production costs and taxes         (17,138)        (20,072)
                     Depreciation, depletion and
                       amortization                     (52,145)        (24,011)
                     -----------------------------------------------------------

                     Results of operations before 
                       income taxes                     (43,030)        (16,281)
                     Income taxes                             -               -
                     -----------------------------------------------------------

                     Results of operations from oil
                      and gas producing activities     $(43,030)       $(16,281)
                     -----------------------------------------------------------

                     In the presentation above, no deduction has been made for 
                     indirect costs such as  corporate overhead or interest
                     expense. No income taxes are reflected above due to the
                     Company tax loss carryforwards. For the years ended 
                     December 31, 1996 and 1995, the depreciation, depletion 
                     and amortization rate per barrel of oil equivalent 
                     production was $20.16 and $90.84, respectively.

                     Oil and Gas Reserves (unaudited)

                     The following table sets forth the Company's net proved oil
                     and gas reserves at December 31, 1996 and 1995 and the
                     changes in net proved oil and gas reserves for the years
                     then ended. Proved 


                                    F-35


                                                                 Tengasco, Inc.
                                              (formerly Onasco Companies, Inc.)

                                     Notes to Consolidated Financial Statements

- -------------------------------------------------------------------------------


                                       reserves represent the estimated 
                                       quantities of crude oil and natural gas
                                       which geological and engineering data
                                       demonstrate with reasonable certainty to
                                       be recoverable in the future years from
                                       known reservoirs under existing economic
                                       and operating conditions. The reserve
                                       information indicated below requires
                                       substantial judgment on the part of the
                                       reserve engineers, resulting in estimates
                                       which are not subject to precise
                                       determination. Accordingly, it is
                                       expected that the estimates of reserves
                                       will change as future production and
                                       development information becomes available
                                       and that revisions in these estimates
                                       could be significant.



                                                                                Oil (bbls)           Gas (Mcf)
                                       ------------------------------------------------------------------------
                                                                                            
                                       Proved reserves
                                        Balance,  January 1, 1995                       -                   -
                                         Acquisition of proved reserves           101,565           5,337,978
                                         Production                                     -              (1,586)
                                       ------------------------------------------------------------------------
                                       
                                        Balance,  December 31,  1995              101,565           5,336,392
                                         Discoveries and extensions                     -          17,212,571
                                         Revisions of previous estimates                -              33,902
                                         Production                                     -             (15,510)
                                       -------------------------------------------------------------------------
                                        Balance, December 31, 1996                101,565          22,567,355
                                       -------------------------------------------------------------------------

                                       Proved developed non-producing
                                        reserves at, December 31, 1996                  -           7,167,350
                                       -------------------------------------------------------------------------
                                       Proved developed non-producing
                                        reserves at, December 31, 1995                  -           2,536,388
                                       -------------------------------------------------------------------------



                                       Of the Company's total proved reserves as
                                       of December 31, 1996, approximately 31%
                                       were classified as proved developed
                                       nonproducing and approximately 69% were
                                       classified as proved undeveloped. All of
                                       the Company's reserves are located in the
                                       continental United States.


                                     F-36


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)

                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       Standardized Measure of Discounted
                                       Future Net Cash Flows (unaudited)

                                       The standardized measure of discounted
                                       future net cash flows from the Company's
                                       proved oil and gas reserves at December
                                       31, 1996 and 1995 is presented in the
                                       following table:



                                                                                                       1996                   1995
                                       ---------------------------------------------------------------------------------------------
                                                                                                               
                                       Future cash inflows                                     $84,106,507             $11,892,672
                                       Future production costs and taxes                        (6,219,598)             (1,818,322)
                                       Future  development costs                                (5,775,000)               (600,000)
                                       Future income tax expenses                              (18,909,520)             (2,156,985)
                                       ---------------------------------------------------------------------------------------------
                                       Net future cash flows                                    53,202,389               7,317,365

                                       Discount at 10% for timing of cash flows                (22,823,876)             (3,653,903)
                                       ---------------------------------------------------------------------------------------------
                                       Discounted future net cash
                                         flows from proved reserves                             30,378,513              $3,663,462
                                       ---------------------------------------------------------------------------------------------
                                       The following table sets forth the
                                       changes in the standardized measure of
                                       discounted future net cash flows from
                                       proved reserves during 1996 and 1995:

                                                                                                      1996                     1995
                                       ---------------------------------------------------------------------------------------------
                                                                                                                
                                       Balance, beginning of year                              $ 3,663,462              $         -
                                       ---------------------------------------------------------------------------------------------
                                       Sales, net of production costs
                                        and taxes                                                   (9,115)                  (7,730)
                                       Acquisition of proved reserves                                    -                4,665,382
                                       Discoveries and extensions                               33,874,577                        - 
                                       Changes in prices and
                                        production costs                                         2,374,267                        -
                                       Revisions of quantity estimates                              42,164                        - 

                                       Net change in income taxes                               (9,975,394)                (994,190)
                                       Interest factor - accretion of discount                     465,765                        -
                                       Changes in production  rates 
                                        and other                                                  (57,213)                       -
                                       ---------------------------------------------------------------------------------------------
                                       Balance, end of year                                    $30,378,513               $3,663,462 
                                       ---------------------------------------------------------------------------------------------


                                     F-37


                                                                  Tengasco, Inc.
                                               (formerly Onasco Companies, Inc.)


                                      Notes to Consolidated Financial Statements

- --------------------------------------------------------------------------------

                                       Estimated future net cash flows
                                       represent an estimate of future net
                                       revenues from the production of proved
                                       reserves using current sales prices,
                                       along with estimates of the operating
                                       costs, production taxes and future
                                       development and abandonment costs (less
                                       salvage value) necessary to produce such
                                       reserves. The average prices used at
                                       December 31, 1996 and 1995 were $19.10
                                       and $17.00 per barrel of oil and $2.94
                                       and $l.91 per mcf of gas, respectively.
                                       No deduction has been made for
                                       depreciation, depletion or any indirect
                                       costs such as general corporate overhead
                                       or interest expense.

                                       Operating costs and production taxes are
                                       estimated based on current costs with
                                       respect to producing gas properties.
                                       Future development costs are based on
                                       the best estimate of such costs assuming
                                       current economic and operating
                                       conditions.

                                       Income tax expense is computed based on
                                       applying the appropriate statutory tax
                                       rate to the excess of future cash
                                       inflows less future production and
                                       development costs over the current tax
                                       basis of the properties involved, less
                                       applicable carryforwards, for both
                                       regular and alternative minimum tax.


                                       The future net revenue information
                                       assumes no escalation of costs or
                                       prices, except for gas sales made under
                                       terms of contracts which include fixed
                                       and determinable escalation. Future
                                       costs and prices could significantly
                                       vary from current amounts and,
                                       accordingly, revisions in the future
                                       could be significant.



                                   F-38



                                TENGASCO, INC.
                      (formerly Onasco Companies, Inc.)


                      CONSOLIDATED FINANCIAL STATEMENTS
     
                           For the Six Months Ended
                                June 30, 1997





                                     F-39




                                TENGASCO, INC.
                      (formerly Onasco Companies, Inc)

                                   CONTENTS

Consolidated Financial Statements

     Balance sheets                                  2

     Statements of loss                              3

     Statements of stockholders' equity              4

     Statements of cash flows                        5

     Notes to financial statements                   6




                                     F-40



                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                                Balance Sheets
                                June 30, 1997


                                    ASSETS
                                       

                                                June 30,        December 31,
                                                  1997             1996
                                              (Unaudited)        (Audited)
                                             -------------     -------------
Current Assets:
  Cash and cash equivalents                  $     220,937     $     146,554
  Accounts Receivable                                2,561             4,658
  Other current assets                               3,076             7,463
                                             -------------     -------------

Total current assets                               226,574           158,675

Oil and gas properties, net (on the basis 
  of full cost accounting)                       1,351,798         1,287,142
                                             -------------     -------------

Pipeline facilities, under construction,
  at cost                                        1,167,192           887,315

Property and equipment, net                        235,791           203,244

Other                                               18,901           190,845
                                             -------------     -------------




                                             $   3,000,256     $   2,727,221
                                             =============     =============



  The accompanying notes are an integral part of these financial statements




                                     F-41




                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)
                         CONSOLIDATED BALANCE SHEETS
                                June 30, 1997


                     LIABILITIES AND STOCKHOLDERS' EQUITY

                                                June 30,       December 31,
                                                  1997             1996
                                              (Unaudited)       (Audited)
                                              -----------      -------------

Current liabilities

  Notes payable                               $  1,750,000     $    780,000
  Loans payable to affiliates                            0           48,190
  Current maturities of long-term debt              24,742           14,017
  Accounts payable - trade                         249,916          347,093
  Accrued liabilities                               62,769           35,086
                                              ------------     ------------
Total current liabilities                        2,087,427        1,224,386

Long term debt, less current maturities             85,137           47,828
                                              ------------     ------------
Total liabilities                                2,172,564        1,272,214
                                              ------------     ------------

Stockholders' equity

  Common stock, $.001 par value, 
    50,000,000 shares authorized                     6,123            5,708 
  Additional paid-in capital                     5,400,615        4,783,369
  Unamortized stock award                         (179,377)        (292,186)
  Deficit                                       (4,399,669)      (3,041,884)
                                              -------------     ------------
Total stockholders' equity                         827,692        1,455,007
                                              -------------    -------------

                                              $  3,000,256     $  2,727,221
                                              =============    =============




  The accompanying notes are an integral part of these financial statements


                                     F-42




                            TENGASCO, INC.
                   (Formerly Onasco Companies, Inc.)

                           STATEMENT OF LOSS
                              (Unaudited)



                                             For the Six      For the Six
                                            Months ended     Months ended
                                              June 30,         June 30, 
                                                1997             1996
                                            ------------     ------------

Revenues:
  Oil and gas revenues                       $        0       $   18,400
                                             ----------       ----------

        Total Revenues                                0           18,400
                                             ----------       ----------


Costs and other deductions
  Field Expenses                                 41,718            6,103
  Depletion, depreciation and amortization       33,296           40,860
  Amortization of deferred loan costs           170,833                0
  Interest expense                              300,322            7,001
  General and administrative costs              811,606          641,800
                                             ----------       ----------
Total costs and other deductions              1,357,785          695,764
                                             ----------       ----------
Net loss                                     (1,357,785)        (677,364)
- ----------------------------------           ----------       ----------
Loss per share of common stock                     (.24)            (.12)
- ----------------------------------           ==========       ==========




The accompanying notes are an integral part of these financial statements

                                 F-43



                                TENGASCO, INC.
                      (Formerly Onasco Companies, Inc.)

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (Unaudited)



 
                                                                                    Additional     Unamortized
                                                              Common Stock            Paid-in         Stock       
                                                           -------------------        Capital         Award            Deficit
                                                           # Shares     Amount       ----------    ------------       -------- 
                                                           ---------    ------
                                                                                                     

Balance December 31, 1996                                5,707,827     $5,708        $4,783,369   $(292,186)        $(3,041,884)

  Common Stock issued for exercised options                330,305        329            90,504                

  Common stock subscribed for the
    extinguishment of debt                                  86,084         86           484,135

  Stock option award                                                                     30,000     (30,000)

  Amortization of stock award                                                           (69,061)    142,809

  Common stock options issued                                                            81,668

  Net loss for period ended June 30, 1997                                                                            (1,357,785)
- ---------------------------------------------------------------------------------------------------------------------------------


Balance June 30, 1997                                    6,124,216     $6,123        $5,400,615   $(179,377)        $(4,399,669)
                                                         =========     ======        ==========   ==========        ============



  The accompanying notes are an integral part of these financial statements

                                     F-44
 



                            TENGASCO, INC.
                   (Formerly Onasco Companies, Inc.)

                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Unaudited)


                                             For the Six          For the Six
                                            Months Ended         Months Ended
                                            June 30, 1997        June 30, 1996
                                           --------------       --------------
Operating activities
  Net loss                                 $   (1,357,785)      $     (677,364)
  Adjustments to reconcile net loss to
  cash used in operating activities:
   Depletion, depreciation and amortization        33,296               40,860
   Amortization of deferred loan costs            170,833                    0
   Amortization of imputed value of stock
    warrants issued                               220,000                    0
   Compensation paid in stock options             155,416              119,200
   Changes in assets and liabilities:
     Accounts receivable                            2,097                4,818
     Prepaid expenses and other                     4,387              (49,310)
     Accounts payable                             (97,177)             223,812
     Accrued liabilities                           27,683                1,605
     Stockholder advances payable                 (48,190)                   0
                                           --------------       --------------

Cash used in operating activities                (889,440)            (336,379)
                                           --------------       --------------

Investing activities
  Proceeds from sale of marketable equity
   secuurities                                          0              250,000
  Additions to property and equipment             (64,735)             (18,935)
  Additions to oil and gas properties             (64,656)            (610,740)
  Additions to pipeline facilities               (279,877)                   0
                                           --------------       --------------

Cash used in investing activities                (409,268)            (379,675)
                                           --------------       --------------

Financing activities
  Proceeds from borrowings                        809,387               27,750
  Repayments of borrowings                        (11,350)              (5,350)
  Proceeds from issuance of common stock          575,054              685,200
                                           --------------       --------------

Cash provided by financing activities      $    1,373,091        $     707,600
                                           --------------       --------------


Net increase (decrease) in cash and cash
  equivalents                                      74,383               (8,454)

Cash and cash equivalents, beginning of
  period                                          146,554                  712

Cash and cash equivalents, end of period   $      220,937        $      (7,742)
                                           ==============        =============


   The accompanying notes are an integral part of these financial statements


                                     F-45



                              TENGASCO, INC.
                     (Formerly Onasco Companies, Inc.)

                Notes to Consolidated Financial Statements


     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 l0-Q and
Rule 10-01 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 month period ended June 30, 1997 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1997. For
further information, refer to the Company's consolidated financial
statements and footnotes thereto for the year ended December 31, 1996,
included in Form 10-SB, which are incorporated by reference herein.




                                   F-46





                                   PART III

Item 1. Index to Exhibits.

                  The following exhibits are filed as a part of this
Registration Statement:

   Number                      Description

    3.1             Initial Articles of Incorporation

    3.2             Bylaws

    3.3             Articles of Amendment dated April 12, 1966

    3.4             Articles of Amendment dated July 12, 1984

    3.5             Articles of Amendment dated December 18, 1991

    3.6             Articles of Amendment dated September 11, 1992

    3.7             Articles of Incorporation of the Tennessee wholly-owned 
                    subsidiary **

    3.8             Articles of Merger and Plan of Merger (taking into account
                    the formation of the Tennessee wholly-owned subsidiary for
                    the purpose of changing the Company's domicile and effecting
                    reverse split)

    5.1             Opinion or Robson & Miller, LLP

   10.1(a)          Purchase Agreement with IRC

   10.1(b)          Amendment to Purchase Agreement with IRC

   10.1(c)          General Bill of Sale and Promissory Note

   10.2(a)          Compensation Agreement - M. E. Ratliff

   10.2(b)          Compensation Agreement - Jeffrey D. Jenson

   10.2(c)          Compensation Agreement - Leonard W. Burningham, Esq.

   10.3             Agreement with The Natural Gas Utility District of Hawkins
                    County, Tennessee

   10.4             Agreement with Powell Valley Electric Cooperative, Inc.

   10.5             Agreement with Enserch Energy Services, Inc.


                                      61







   16.1             Letter of David T. Thompson, CPA, Regarding
                    Change in Certifying Accountant

   16.2             Letter of Charles M. Stivers, CPA, Regarding
                    Change in Certifying Accountant

   16.3             Letter of Price-Bednar, LLP, CPA, Regarding
                    Change in Certifying Accountant

   23.1             Consent of Charles M. Stivers, CPA

   23.2             Consent of David T. Thomson, CPA

   23.3             Consent of BDO Seidman, LLP

   23.4             Consent of Robson & Miller, LLP

   99.1             Beech Creek Lease Schedule

   99.2             Wildcat Lease Schedule

   99.3             Burning Springs Lease Schedule

   99.4             Fentress County Lease Schedule

   99.5             Swan Creek Lease Schedule

   99.6             Alabama Lease Schedule

   99.7             Coburn Engineering Report

          *         Summaries of all exhibits contained within this 
                    Registration Statement are modified in their entirety by 
                    reference to these Exhibits.

         **         These are form documents much of which are substantially 
                    handwritten and may be illegible. The best available copy 
                    thereof has been filed with the SEC and copies may be 
                    obtained from the principal executive offices of the 
                    Company at no charge.

                                      62




                                  SIGNATURES

                    In accordance with the requirements of the Securities Act of
1993, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing of Form 10-SB and authorized this
registration statements on its behalf by the undersigned, thereunto duly 
authorized, in the City of Knoxville, State of Tennessee on the 30 day of July,
1997.

                                             Tengasco, Inc.

                                             By: /s/ Michael E. Ratliff
                                                 -----------------------
                                                 Michael E. Ratliff
                                                  

                    In accordance with the requirements of the Securities Act of
1933, this registration statement has been signed by the following persons in
the capacities and on the dates stated.


    Signature                  Title                       Date


/s/ Michael E. Ratliff        Chief Executive         July 29, 1997
- -------------------------     Officer
    Michael E. Ratliff


/s/ Allen H. Sweeney          Chairman of the Board   July 29, 1997
- -------------------------     of Directors
    Allen H. Sweeney


/s/ Daniel G. Follmer         President and Chief     July 29, 1997
- -------------------------     Financial Officer
    Daniel G. Follmer


/s/ Joseph Earl Armstrong     Director                July 29, 1997
- -------------------------
    Joseph Earl Armstrong


/s/ James B. Kreamer          Director                July 29, 1997
- -------------------------
    James B. Kreamer


/s/ William A. Moffett        Director                July 29, 1997
- -------------------------
    William A. Moffett



                                      63





    Signature                  Title                       Date


/s/ Shigemi Morita            Director                July 29, 1997
- ----------------------
    Shigemi Morita


/s/ Robert M. Carter          Executive               July 29, 1997
- -----------------------       Vice-President
    Robert M. Carter


/s/ Sheila F. Sloan           Treasurer               July 29, 1997
- ----------------------- 
    Sheila F. Sloan


/s/ Elizabeth Wendelken       Secretary               July 29, 1997
- -----------------------
    Elizabeth Wendelken


                                     64

EX-3.1

                                  EXHIBIT 3.1







                                                                         11835

                            Articles of Incorporation
                                     OF THE

GOLD DEPOSIT MINING & MILLING COMPANY                  [LOGO] Mining Company

United States of America,
State of Utah,

County of    Cache
          -----------


     For the purpose of establishing and conducting the business of mining and
reduction of ores, the undersigned do hereby associate themselves together by
incorporating under and in pursuance of the Laws of the State of
Utah, and do declare and agree as follows, that is to say:

                                       I.

     That the said Corporation shall be called and known by the name of GOLD
DEPOSIT MINING & MILLING COMPANY and shall be and is formed and organized at
Logan, Cache County, State of Utah in which said City shall be located its
principal and general office for the transaction of its official, financial,
general and commercial business; and the period of its existence shall be fifty
years, unless sooner dissolved according to law.

                                       II.

     That the names of the parties in this agreement, who are the Corporators of
this Incorporation, and their places of residence respectively, in full, are as
follows, to wit:


  Robert  Murdock Sen.        Logan, Cache County, State of Utah
- -------------------------------------------------------------------------------
  Robert Murdock Jr.          Logan, Cache County, State of Utah
- -------------------------------------------------------------------------------
  Haskell Engineering Co.     Salt Lake City, State of Utah
- -------------------------------------------------------------------------------
  William Green               Salt Lake City, State of Utah
- -------------------------------------------------------------------------------
  E. Green                    Salt Lake City, State of Utah
- -------------------------------------------------------------------------------
  J. A. Crockett              Logan, Cache County, State of Utah
- -------------------------------------------------------------------------------
         
                                      III.

     That the business and pursuit of this Corporation, and the objects for
which it is established are, and shall continue to be, to carry on and conduct a

general Mining, Milling, Leaching, Concentrating, Ore reducing and Smelting
business.

     To examine, prospect and explore, and to work, develop, mine and extract
ores and minerals from lands, mines, works, options and claims.

     To erect mills, smelters and reduction works in any suitable place, and
also any buildings, tramways, electric power, telegraph or telephone lines,
water ditches, pipe lines or works necessary or convenient for the purposes of
the company. 

     To purchase, or otherwise acquire, ores, and mineral-bearing substances,
tailings and concentrates, and to smelt and reduce the same, as well as the ores
and products extracted or produced from the property of the Company. 

     To acquire any invention, or the right or license to use any invention,
capable of being used for any of the purposes of the Company. 



                                       2

     Generally, to purchase, take or lease or in exchange, hire, locate, or
otherwise acquire any real and personal property, and any rights or privileges
which the Company may think necessary or convenient for the purposes of its
business; and in particular, any lands, mines, works, options, claims,
buildings, mills, reduction works, water, water rights, ditches, pipe-lines,
tramways, electric power, telegraph and telephone lines, licenses,
easements and privileges. 

     To improve, develop, sell, convey, lease, mortgage, dispose of, turn to
account or otherwise deal with all or any part of the property or rights of the
Company. To do all such other things as are incidental or conducive to the
attainment of the above objects, or any of them.

                                       IV.

     The amount of the Capital Stock of said Corporation shall be One Hundred
Thousand ($100,000.00) Dollars, which shall be divided into One Million
(1,000,000.00) Shares, of the face or par value of Ten cents each.

                                       V.

         The amount of stock subscribed and taken by each of the Corporators
above named, parties to this agreement, is as follows, to wit:


  Robert Murdock Sen.                 315,000.00
- -------------------------------------------------------------------------------
  Robert Murdock Jr.                  163,000.00
- -------------------------------------------------------------------------------
  Haskell Engineering Co.             119,000.00
- -------------------------------------------------------------------------------

  William Green                         1,000.00
- -------------------------------------------------------------------------------
  E. Green                              1,000.00
- -------------------------------------------------------------------------------
  J. A. Crockett                        1,000.00
- -------------------------------------------------------------------------------
  Remaining in the treasury           400,000.00
- -------------------------------------------------------------------------------


                                       VI.

     That the officers of said Company shall be: First, a Board of Five
Directors. Second, a President; Third, a Vice-President; Fourth, a Treasurer;
Fifth, a Secretary.

- --------------------------------------------------------------------------------

     Said offices of Treasurer and Secretary may be held by the same person.
The President, Vice-President, and Treasurer, shall be Directors.

                                      VII.

     That the qualification of the officers of said Corporation shall be as
follows: To be elegible to the office of Director, President, Vice-President or
Treasurer, the person must be the owner, as shown by the books of the
Corporation, of at least One Thousand shares of the Capital Stock of said
Corporation. A person need not be a stockholder of said Corporation to be
eligible to the office of Secretary thereof.
      
     The term of office of said officers of said Corporation shall be one year
and until their successors shall be duly elected and qualified, unless sooner
resigned or removed, and any vacancy in the Board of Directors may be
filled by the remaining members thereof, and any vacancy in any of the other
offices may be filled by the Board of Directors until the next regular meeting
of the Stockholders, provided, that the following named persons, parties hereto,
shall be Directors of said Corporation from the date of incorporation hereof,
until their successors shall have been duly elected at the first regular
election of said Corporation, as hereinafter provided, and shall have duly
qualified, namely:

     Robert Murdock Sen., Robert Murdock Jr., Wm. Green, E. Green and J. A.
Crockett and that the said Robert Murdock Sen. shall be President; the said E.
Green, Vice-President; the said Robert Murdock Jr., Treasurer, and the said
Robert Murdock Jr., Secretary.

     From the date hereof until their successors shall have been duly elected at
the first regular (illegible) of officers of said Corporation, as hereinafter
provided, and shall have duly qualified.



                                       3
 

                                     VIII.

     The first meeting of the stockholders of said Corporation for the election
of officers, being the first annual meeting, shall be held as above provided, on
the Second day of January 1917, and it is hereby provided, that a failure to
hold said last named meeting, or any annual meeting of the stockholders of said
Corporation, at the day appointed, shall not forfeit or in any way interfere
with the corporate rights acquired under this agreement, but any such meeting
may be held at any subsequent time upon call and giving notice as provided by
law. Such notice must specify the purpose or purposes for which any special
meeting is called. No notice shall be required of stated or annual meetings.

                                       IX.

     That any or either of the officers of said Corporation may be removed by
the holders of a majority of the capital stock of said Corporation voting
therefor at a stockholders' meeting, duly called and held to consider the
question of such removal, and any or either of said officers may resign by
filing a written resignation in the general office of said Corporation.

                                       X.

     That three members of the entire Board of Directors, provided in Article VI
of this Agreement, shall constitute a quorum thereof, and be authorized to
transact the business of said Corporation, and exercise its corporate powers.

                                       XI.

     That the private property of the stockholders shall not be liable for the
debts or obligations of said Corporation.

                                      XII.

     That said Corporation shall, and hereby does, purchase, take, receive and
hold the following described mining property, with appurtenances, privileges and
franchises, situated in The Battle Mountain Mining District, Lander County,
State of Nevada, in full payment of and for the Six Hundred Thousand (600,000.)
shares of the Capital Stock of the Corporation, issued in pursuance to this
agreement, to wit: The Greenwitch, the Gold Flake, the Seal, the Hardy, the
Silver Dipper, the Carbonate Hill, the Gold Metal, the Triangle, the Republic,
lode mining claims, and undivided one half interest in, to and of the Buzzard
Lode Mining Claim, all situate in said Battle Mountain Mining District.




   STATE OF UTAH  )
  COUNTY OF CACHE ) ss.

     Robert Murdock Sen. and Robert Murdock Jr. and John A. Crockett being first
severaly duly sworn, each for himself says: That they and each of them are
parties to the foregoing Articles of Agreement for the incorporation of the Gold
Deposit Mining & Milling Company: That all of the said incorporators are
residents of the State of Utah: That it is bona fide their intention to commence

and carry on the business mentioned in said agreement: That affiants, and each
of them, verily believe that each and all parties to said agreement have paid
the full amount of the stock subscribed for by them, and each of them
respectively, in manner and form as therein set forth, and that the full par
value of said Capital Stock has been paid in manner and form as set forth in
said agreement, and that all the statements made in said agreement are true.

                                              /s/ Robert Murdock
                                              -----------------------------

                                              /s/ Robert Murdock Jr.
                                              -----------------------------

                                              /s/ John A. Crockett
                                              -----------------------------


     Subcribed and sworn to before me this 12th day of April, [illegible]


[SEAL]                                        /s/ [illegible]
                                              ------------------------------
                                                             Notary Public
My Commission expires  March 15th, 1920


   STATE OF UTAH  )
  COUNTY OF CACHE ) ss.

     On the 16th day of April A.D. 1916 personally appeared before me Robert
Murdock Sen. and Robert Murdock Jr., the signers of the above investment, who
duly acknowledged to me that they executed the same.

[SEAL]                                        /s/ [illegible]
                                              ------------------------------
                                                             Notary Public
My Commission expires  March 15th, 1920





STATE OF UTAH   )
COUNTY OF CACHE ) ss.

     I, the undersigned County Clerk, in and for the County of Cache, State of
Utah, do hereby certify that the foregoing is a full, true and correct copy of
the Articles of Incorporation of the Gold Deposit Mining and Milling Company and
the oath of affirmation of the Incorporators, and I further certify that the
said corporation has duly filed in my office the Articles of Incorporations,
together with the oath of affirmation of the incorporators and oath of office of
each officer, as required by Chapter 1 of Title 14, Complied Laws of Utah, 1907.

     In witness whereof I have hereunto set my hand and affixed my official seal

this 24 day of April A.D. 1916.


                                              /s/ [illegible]
                                              -------------------------------
                                                                 County Clerk


                                            By /s/ [illegible]
                                              -------------------------------
                                                                Deputy Clerk


[SEAL]

EX-3.2

                                  EXHIBIT 3.2







                                     BY-LAWS
                                       OF
                                 TENGASCO, INC.

                               ARTICLE I- OFFICES

         The principal office of the corporation in the State of Tennessee shall
be located in the Medical Arts Building, 603 Main Avenue, Suite 500, Knoxville,
Tennessee, County of Knox. The corporation may have such other offices, either
within or without the State of incorporation as the board of directors may
designate or as the business of the corporation may from time to time require.

                            ARTICLE II- STOCKHOLDERS

1. ANNUAL MEETING

     Unless the date is designated to the contrary by the Board of Directors or
its Executive Committee, the annual meeting of the stockholders shall be held on
the 13th day of March in each year, beginning with the year 1996 at the hour ten
o'clock A.M., for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday such meeting shall be held on the next
succeeding business day.

2. SPECIAL MEETINGS.

     Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president by a majority of
the directors or by the Chairman of the Board of Directors, and shall be called
by the president at the request of the holders of not less than 25 per cent of
all the outstanding shares of the corporation entitled to vote at the meeting.

3. PLACE OF MEETING.

     The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the State unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.



                                   by-laws 1









4. NOTICE OF MEETING.

     Written or printed notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than 30 nor more than 90 days before the
date of the meeting, either personally or by mail, by or at the direction of the
president, or the secretary, or the officer or persons calling the meeting, to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.

5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.

     For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case, 5 days. If the stock transfer books shall be
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least 2
days immediately preceding such meeting. In lieu of closing the stock transfer
books, the directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than 5 days
and, in case of a meeting of stockholders, not less than 5 days prior to the
date on which the particular action requiring such determination of stockholders
is to be taken. If the stock transfer books are not closed and no record date is
fixed for the determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the directors declaring such dividend is adopted, as the case
may be, shall be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof.

6. VOTING LISTS.

     The officer or agent having charge of the stock transfer books for shares
of the corporation shall make, at least 2 days before each meeting of
stockholders, a complete list of the stockholders and/or trustees of
stockholders voting trust entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of the number of
shares held by each, which list, for a period of 30 days prior to such meeting,
shall be kept on file at the principal office of the corporation and shall be
subject to inspection by any stockholder at any time during usual business
hours. Such list         


                                    by-laws 2










shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the whole time of
the meeting. The original stock transfer book shall be prima facie evidence as
to who are the stockholders entitled to examine such list or transfer books or
to vote at the meeting of stockholders.

7. QUORUM.

     At any meeting of stockholders fifty one per cent of the outstanding shares
of the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.

8. PROXIES.

     At all meetings of stockholders, a stockholder may vote by proxy executed
in writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the time
of the meeting.

9. VOTING.

     Each stockholder and/or trustee of stockholders voting trust entitled to
vote in accordance with the terms and provisions of the certificate of
incorporation and these by-laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholders or
Trustee. Upon the demand of any stockholder, the vote for directors and upon any
question before the meeting shall be by ballot. All elections for directors
shall be decided by plurality vote; all other questions shall be decided by
majority vote except as otherwise provided by the Certificate of Incorporation
or the laws of this State.

10. ORDER OF BUSINESS.

     The order of business at all meetings of the stockholders, shall be as
follows.

          1. Roll Call
          2. Proof of notice of meeting or waiver of notice. 
          3. Reading of minutes of preceding meeting.

          4. Reports of Officers.


                                    by-laws 3








          5. Reports of Committees.
          6. Election of Directors.
          7. Unfinished Business.
          8. New Business.

11. INFORMAL ACTION BY STOCKHOLDERS.

     Unless otherwise provided by law, any action required to be taken at a
meeting of the stockholders, or any other action which may be taken at a meeting
of the stockholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.

                        ARTICLE III - BOARD OF DIRECTORS

1. GENERAL POWERS.

     The business and affairs of the corporation shall be managed by its board
of directors. Subject to have provisions of Art. III, 13 herein, the directors
shall in all cases act as a board, and they may adopt such rules and regulations
for the conduct of their meetings and the management of the corporation, as they
may deem proper, not inconsistent with these by-laws and the laws of this State.
The board shall elect a Chairman from its members, who shall act as the
presiding officer at all board meetings.

2. NUMBER, TENURE AND QUALIFICATIONS.

     The number of directors of the corporation shall be 4. All directors shall
serve one year terms. Each director shall hold office until the next annual
meeting of stockholders and until his successor shall have been elected and
qualified.

3. REGULAR MEETINGS.

     A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time, place and
manner for the holding of additional regular meetings without other notice than
such resolution.

4. SPECIAL MEETINGS.


     Special meetings of the directors may be collectively called by or at the
collective request of the president, any two directors. The person or persons


                                   by-laws 4







authorized to call special meetings of the directors may fix the place for
holding any special meeting of the directors called by them.

5. NOTICE.

     Notice of any special meeting shall be given at least 30 days previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.

6. QUORUM.

     At any meeting of the directors 4 shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice. The directors may provide that quorum requirements may
be satisfied by directors present to be telephonically.

7. MANNER OF ACTING.

     The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.

8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.

     Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.

                                   by-laws 5







9. REMOVAL OF DIRECTORS.

     Any or all of the directors may be removed for cause by majority vote of
the board. Directors may be removed without cause by majority vote of the
stockholders.

10. RESIGNATION.

     A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
of such officer, and the acceptance of the resignation shall not be necessary to
make it effective.

11. COMPENSATION.

     No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.

12. PRESUMPTION OF ASSENT.

     A director of the corporation who is present at a meeting of the directors
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.

13. EXECUTIVE AND OTHER COMMITTEES.

     The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of three or more directors. Each
such committee shall serve at the pleasure of the board. The board may vest its
executive committee with all powers and authority the board deems appropriate,
consistent with State corporate Law. The Chairman of the Board shall serve as an
ex officio member of every committee of the board.


                                    by-laws 6






                              ARTICLE IV - OFFICERS

1. NUMBER.

     The officers of the corporation shall be a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors. Such
other officers and assistant officers as may be deemed necessary may be elected
or appointed by the directors.

2. ELECTION AND TERM OF OFFICE.

     The officers of the corporation to be elected by the directors
shall be elected annually at the first meeting of the directors held after each
annual meeting of the stockholders. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.

3. REMOVAL.

     Any officer or agent elected or appointed by the directors may be removed
by a majority vote of the directors without cause at any time, however such
removal shall not prejudice the employment contract rights with the corporation,
if any, of the person removed. All officers serve at the pleasure of the board.

4. VACANCIES.

     A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.

5. PRESIDENT.

     The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders. He may sign, with the
secretary or any other proper officer of the corporation thereunto authorized by
the directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the directors have authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the directors or by these by-laws to some other 


                                   by-laws 7




officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of president and such other duties as may be prescribed by the directors
from time to time.


6. VICE PRESIDENT.

     In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the president and
directors.

7. SECRETARY.

     The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
duties incident to the office of secretary and such other duties as from time
to time may be assigned to him by the president or by the directors.

8. TREASURER.

     If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
resource whatsoever, and deposit all such moneys in the name of the corporation
in such banks, trust companies or other depositories as shall be selected in
accordance with these by-laws and in general perform all of the duties incident
to the office of treasurer and such other duties as from time to time may be
assigned to him by the president or by the directors.

9. SALARIES.

     The salaries compensation of the officers shall be fixed from time to time
by the directors and no officer shall be prevented from receiving such salary or
compensation by reason of the fact that the officer also a director of the
corporation.

                                   by-laws 8






               ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS

1. CONTRACTS.

     The directors may authorize any officer or officers, agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to

specific instances.

2. LOANS.

     No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.

3. CHECKS, DRAFTS, ETC.

     All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.

4. DEPOSITS.

     All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the directors may select.

             ARTICLE VI- CERTIFICATES FOR SHARES AND THEIR TRANSFER

1. CERTIFICATES FOR SHARES.

     Certificates representing shares of the corporation shall be in such form
as shall be determined by the directors. Such certificates shall be signed by
the president and by the secretary or by such other officers authorized by law
and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the

                                    by-laws 9











former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.

2. TRANSFER OF SHARES.

     (a) Upon surrender to the corporation or the transfer agent of the

corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered on
the transfer book of the corporation which shall be kept at its principal
office.

     (b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.

                            ARTICLE VII - FISCAL YEAR

     The fiscal year of the corporation shall begin on the 30th day of December
in each year.

                             ARTICLE VIII- DIVIDENDS

     The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.

                               ARTICLE IX - SEAL

         The directors shall provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".

                          ARTICLE X - WAIVER OF NOTICE

     Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.

                                   by-laws 10




                            ARTICLE XI - AMENDMENTS

     These by-laws may be altered, amended or repealed and new by-laws may be
adopted by a vote of the stockholders representing a majority of all the shares
issued and outstanding, at any annual stockholders' meeting or any special
stockholders' meeting when the proposed amendment has been set out in the notice
of such meeting.

                                   by-laws 11

EX-3.3

                                   EXHIBIT 3.3







                          ARTICLES OF AMENDMENT TO THE             [SEAL]
                          ARTICLES OF INCORPORATION OF

Gold Deposit Mining & Milling Company

     Pursuant to the provisions of Section 16-10-57 of the Utah Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:


     FIRST: The name of the corporation is Gold Deposit Mining & Milling
Company.

     SECOND: The following amendment of the Articles of Incorporation was
adopted by the shareholders of the corporation on April 1, 1966, in the manner
prescribed by the Utah Business Corporation Act.

                                (Insert or attach Amendment)                
                                                                            
                          RESOLVED that Article I of the Articles of        
                          Incorporation of Gold Deposit Mining & Milling    
                          Company be and hereby is amended so as to read as
                          follows:                                          
[ILLEGIBLE]                                                                 
                                              I                             
                                                                            
                          "That the said corporation shall be called and   
                          known by the name of GOLD DEPOSIT MINING & MILLING
                          COMPANY, and the period of its existence shall be 
                          perpetual."                                       
                         




     THIRD: The number of shares of the corporation outstanding at the time of
such adoption was 983,015; and the number of shares entitled to vote thereon was
983,015.






                                  [ILLEGIBLE]

     FIFTH: The number of shares voted for such amendment was 701,145; and the
number of shares voted against such amendment was: None.

     SIXTH: The number of shares of stock [ILLEGIBLE] entitled to vote thereon
as a class voted for and against such amendment, respectively was: None

     [ILLEGIBLE]

     SEVENTH: the manner, if not set forth in such amendment, in which any
exchange, reclassification, or [ILLEGIBLE] provided for in the amendment shall 
be effected, is, [ILLEGIBLE] 

     No change

     EIGHTH: [ILLEGIBLE] in the amount of stated capital, and the amount
of [ILLEGIBLE], by such amendment, are as follows. [ILLEGIBLE] 

     No change

Dated April 9, 1966.

                                  Gold Deposit Mining & Milling Company (Note 3)
                                  /s/ [ILLEGIBLE]                      ) 
                                  its President                        )    
                                                                       )(Note 4)
                                  /s/ [ILLEGIBLE]                      )
                                  its Secretary and                    )
                                      Treasurer                        )

State of Utah         )
County of Salt Lake   ) ss

     I, [ILLEGIBLE], notary public, do hereby certify that on this 11th day of
April, 1966, personally appeared before me J.W. Andrews [ILLEGIBLE]

                                                  /s/ [ILLEGIBLE]





     and Treasurer of the corporation, and that the statements therein contained
are true.

     In witness whereof I have hereunto set my hand and seal this 11th day of
April, A.D. 1966.

     My commission expires May, 14, 1967.

                                            /s/ [ILLEGIBLE]
                                            Notary Public



     Notes: 1. If inapplicable, insert "None".

            2. If inapplicable, insert "No change".

            3. Exact corporate name of corporation adopting the Articles of
               Amendment.

            4. Signatures and titles of officers signing for the corporation.

EX-3.4

                                  EXHIBIT 3.4





                                  STATE OF UTAH

                                     [STAMP]


                   Office of Lt. Governor/Secretary of State

                            CERTIFICATE OF AMENDMENT

                                       OF

                      GOLD DEPOSIT MINING & MILLING COMPANY

     I, DAVID S. MONSON, Lt. Governor/Secretary of State of the State of Utah,
hereby certify that duplicate originals of Articles of Amendment to the Articles
of Incorporation of

                      GOLD DEPOSIT MINING & MILLING COMPANY

duly signed and verified pursuant to the provisions of the Utah Business
Corporation Act, have been received in my office and are found to conform to
law.

     ACCORDINGLY, by virtue of the authority vested in me by law, I hereby issue
this Certificate of Amendment to the Articles of Incorporation of

                      GOLD DEPOSIT MINING & MILLING COMPANY

and attach hereto a duplicate original of the Articles of Amendment.

File No. 11835

                                     IN TESTIMONY THEREOF, I have
                                        hereunto set my hand and affixed the
                                        Great Seal of the State of Utah at Salt
                                        Lake City, this l2th day of 
                                        July 1984 A.D.

                                                  /s/ David S. Monson
                                        ----------------------------------------
                                             LT. GOVERNOR/SECRETARY OF STATE






                              ARTICLES OF AMENDMENT
                       TO THE ARTICLES OF INCORPORATION OF
                      GOLD DEPOSIT MINING & MILLING COMPANY

     Pursuant to the provisions of Section 16-10-57 of the Utah Business

Corporation Act, the undersigned corporation hereby adopts the following
Articles of Amendment to its Articles of Incorporation.

     FIRST: The name of the corporation is Gold Deposit Mining & Milling
Company.

     SECOND: The following amendments to the Articles of Incorporation of Gold
Deposit Mining & Milling Company were duly adopted by the shareholders of the
corporation at meetings held October 3, 1983, and July 9, 1984, in the manner
prescribed by the Utah Business Corporation Act, to-wit:

                             ARTICLE III - PURPOSES

     a. To conduct business in all fields of high technology, including medical,
computer, and any other business or enterprise deemed to be beneficial to the
corporation.

     b. To acquire by purchase, exchange, gift, bequest, subscription or
otherwise, and to hold, own, mortgage, pledge, hypothecate, sell, assign,
transfer, exchange or otherwise dispose of or deal in or with its own corporate
securities or stock or other securities, including without limitations, any
shares of stock, bonds, debentures, notes, mortgages, or other obligations, and
any certificates, receipts or other







                                      -2-

instruments representing rights or interests therein or any property or assets
created or issued by any person, firm, association, or corporation, or any
government or subdivisions, agencies or instrumentalities thereof; to make
payment therefor its own securities or to use its unrestricted and unreserved
earned surplus for the purchase of its own shares, and to exercise as owner or
holder of any securities, any and all rights, powers and privileges in respect
thereof.

     c. To do each and every thing necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated, or which may at any time appear conducive to or
expedient for protection or benefit of this corporation, and to do said acts as
fully and to the same extent as natural persons might, or could do, in any part
of the world as principals, agents, partners, trustees or otherwise, either
alone or in conjunction with any other person, association or corporation.

     d. The foregoing clauses shall be construed both as purposes and powers and
shall not be held to limit or restrict in any manner the general powers of the
corporation, and the enjoyment and exercise thereof, as conferred by the laws of
the State of Utah; and it is the intention that the purposes and powers
specified in each of the paragraphs of this Article III shall be regarded as
independent purposes and powers. 


                         ARTICLE IV - CAPITAL STRUCTURE

     The aggregate number of shares which this corporation shall have authority
to issue is 50,000,000 shares of one mill ($0.001) par value.






                                      -3-

All stock of the corporation shall be of the same class, common, and shall have
the same rights and preferences. Fully-paid stock of this corporation shall not
be liable to any further call or assessment. The Board of Directors is
authorized to establish other stock classes than common, to convert treasury or
unissued shares to other classes, and to fix and determine the relative rights
with respect to shares in each class.

     Shareholders shall not have pre-emptive rights to acquire unissued shares
of stock of this corporation.

     THIRD: The number of shares of the corporation outstanding at the time of
the adoption of such amendments was 980,778, and the number entitled to vote
thereon was 980,778.

     FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:

          CLASS                         NUMBER OF SHARES
          -----                         ----------------
          Common                              980,778

     FIFTH: The number of shares voted for such amendments was 696,146, with
none opposing and none abstaining.

     SIXTH: These amendments do not provide for any exchange, reclassification
or cancellation of issued shares.

     SEVENTH: These amendments decrease the stated capital of the corporation
from $100,000 divided into 1,000,000 shares to $50,000 divided into 50,000,000.

     IN WITNESS WHEREOF, the undersigned President and Secretary, having been
thereunto duly authorized have executed the foregoing Articles






                                      -4-



of Amendment for the corporation under the penalties of perjury this 10th
day of July, 1984.

                              GOLD DEPOSIT MINING & MILLING COMPANY

                              By /s/ Richard E. deButts
                                 ----------------------------------
                                 Richard E. deButts, President

Attest:

/s/ Melissa Rodee
- ----------------------------
Melissa Rodee, Secretary

EX-3.5

                                  EXHIBIT 3.5










                              ARTICLES OF AMENDMENT 

                       T0 THE ARTICLES OF INCORPORATION OF

                      GOLD DEPOSIT MINING & MILLING COMPANY


     Pursuant to the provisions of Section 16-10-57 of the Utah Business
Corporation Act, the undersigned corporation hereby adopts the following
Articles of Amendment to its Articles of Incorporation.

     FIRST: The name of the corporation is Gold Deposit Mining & Milling
Company.

     SECOND: The following amendments to the Articles of Incorporation of Gold
Deposit Mining & Milling Company were duly adopted by the stockholders of the
corporation at a meeting held November 22, 1991, in the manner prescribed by the
Utah Business Corporation Act, to-wit:

                                ARTICLE I - NAME

     The name of this corporation is "Onasco Companies, Inc.

and

          To forward split the corporation's one mill ($0.001) par value common
     voting stock presently issued and outstanding on a basis of 2.015496 for
     one, retaining the par value at one mill per share, with appropriate
     adjustments being made in the additional paid in capital and stated capital
     accounts of the corporation.

     THIRD: The number of shares of the corporation outstanding at the time of
the adoption of such amendments was 2,480,778, and the number entitled to vote
thereon was 2,480,778.

     FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:

            CLASS                         NUMBER OF SHARES
            -----                         ----------------
            Common                            2,480,778

     FIFTH: The number of shares voted for such amendments was 1,339,146, with
none opposing and none abstaining.

     SIXTH: Except as provided in Paragraph Seventh below, these amendments do
not provide for any exchange, reclassification or cancellation of issued shares.


     SEVENTH: These amendments do effect a change in the stated capital of the
corporation. Pursuant to the resolution adopted by the stockholders of the
corporation at a meeting held November 22, 1991, the








2,480,778 one mill ($0.001) par value common voting shares issued and
outstanding were forward split on a basis of 2.015496 for one, retaining the par
value at one mill ($0.001) per share, with appropriate adjustments being made in
the additional paid in capital and stated capital accounts of the corporation,
and resulting in a total of 5,000,000 shares of one mill ($0.001) par value
common voting stock being then issued and outstanding.

     IN WITNESS WHEREOF, the undersigned President and Secretary, having been
thereunto duly authorized have executed the foregoing Articles of Amendment for
the corporation under the penalties of perjury this 16th day of December, 1991.




                                           GOLD DEPOSIT MINING & MILLING COMPANY

                                           By /s/ Jeannette Nikes
                                              -------------------

Attest:


/s/  [illegible]
- -------------------



                                       2

EX-3.6

                                   EXHIBIT 3.6








                              ARTICLES OF AMENDMENT
                                       OF
                            ARTICLES OF INCORPORATION
                                       OF
                             ONASCO COMPANIES, INC.

     Pursuant to the provisions of Section 16-10a-1006 of the Utah Business
Corporation Act, the undersigned corporation hereby adopts the following
Articles of Amendment to its Articles of Incorporation.

                                   ARTICLE ONE

     The name of the corporation is Onasco Companies, Inc.

                                   ARTICLE TWO

     The corporation's Articles of Incorporation are hereby amended by adding an
Article XVII and an Article XVIII to such Articles of Incorporation, the text of
which additional articles is set forth in full below:

                                  "ARTICLE XVII

     Effective as of 9:00 A.M. Central Time on September 15, 1992 (the
"Effective Time"), all of the outstanding common stock, par value $0.001 per
share, of the Corporation is hereby reclassified and combined so that, at the
Effective Time, each outstanding share of common stock shall become one
twentieth of a share of new common stock ("Reconstituted Common Stock").
Following the Effective Time, the holders of issued and outstanding shares of
common stock of the Corporation outstanding prior to the Effective Time shall
cease to be holders of such shares and shall be issued one share of
Reconstituted Common Stock for each 20 shares of common stock previously held.
Following the Effective Time, each share of common stock outstanding prior to
the Effective Time shall be deemed for all purposes to represent one twentieth
of a share of Reconstituted Common Stock, and each certificate representing
shares of common stock outstanding prior to the Effective Time shall be deemed
to represent a number of shares of Reconstituted Common Stock which is equal to
one twentieth of the number of shares of common stock previously represented by
such certificate. No fractional shares or scrip shall be issued upon such
reclassification and combination. In lieu of the issuance of fractional shares
or scrip, any shareholder that would receive less than a full share of
Reconstituted Common Stock as a result of such transaction shall be issued one
additional share of Reconstituted Common Stock. In addition, following the
Effective Time, the par value of shares of the Corporation's common stock shall
remain at $0.001 per share and the Corporation shall continue to have authority
to issue an aggregate of 50,000,000 shares in the manner specified in Article IV
hereof.





                                  ARTICLE XVIII


     Except as otherwise expressly provided by the Utah Business Corporation
Act, any action which may be taken at any annual or special meeting of the
shareholders of the Corporation may be taken without a meeting and without prior
notice, if one or more consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take the action
at a meeting at which all shares of the Corporation entitled to vote thereon
were present and voted."

                                  ARTICLE THREE

     Following the reclassification and combination described in ARTICLE XVII
above, the corporation will issue in the name of each holder of record of
outstanding shares of common stock of the corporation, certificates representing
the number of shares of Reconstituted Common Stock which such shareholder shall
be entitled to receive as a result of the reclassification and combination. The
corporation will deliver certificates representing such shares of Reconstituted
Common Stock to each shareholder upon the surrender to the corporation for
cancellation of the stock certificates representing such holder's shares that
were outstanding prior to such reclassification and combination.

                                  ARTICLE FOUR

     The foregoing amendments to the Articles of Incorporation were duly adopted
by the shareholders of the corporation on September 1, 1992 in accordance with
Section 16-10a-1003 of the Utah Business Corporation Act. The number of shares
of the corporation outstanding at the time of such adoption was 20,259,987
shares of Common Stock, all of which were entitled to vote on the amendments.

                                  ARTICLE FIVE

     The designation and number of outstanding shares of each class of the
corporation entitled to vote on the amendments as a class were as follows:

                 Class                             Number of Shares
                 -----                             ----------------
                 Common                               20,259,987


                                   ARTICLE SIX

     Holders of a total of 14,800,000 shares of Common Stock were present and
voted at the meeting. The number of shares voted for such amendments was
14,800,000 shares of Common Stock. No shares were voted against the amendments.


                                      -2-







     IN WITNESS WHEREOF, the undersigned President of the corporation, having
been duly authorized, has executed these Articles of Amendment this 10th day of
September, 1992.


                         Onasco Companies, Inc.

                         By:  /s/ Robert C. Bohannon Ph.D, President
                              ---------------------------------------
                              Robert C. Bohannon
                              President



                                      -3-

EX-3.7

                                   EXHIBIT 3.7












                                     CHARTER
                                       OF

                                 TENGASCO, INC.
                                 --------------


The undersigned person(s) under the Tennessee Business Corporation Act adopt(s)
the following charter for the above listed corporation:

1. The name of the corporation is  TENGASCO, INC. 
                                  ---------------

[NOTE: Pursuant to Tennessee Code Annotated Section 48-14-101(a)(1), each
corporation name must contain the word "corporation", "incorporated", or
"company" or the abbreviation "corp.", "inc." or "co."]

2. The number of shares of stock the corporation is authorized to issue is 

50 million shares with par value of $.001/share
- -----------------------------------------------

3. (a) The complete address of the corporation's initial registered office in
Tennessee is

Wesley M. Baker, 4928 Homberg Dr., Knoxville,  TN    37919
- --------------------------------------------------------------------------
Street Address                      City       State, Zip Code

County of  Knox 
          ------ 
[NOTE: A street address, a zip code and the county are required by Tennessee
Code Annotated Section 48-12-102(a)(3).]


(b) The name of the initial registered agent, to be located at the address
listed in 3 (a), is

Wesley M. Baker, Esq.
- --------------------------------------------------------------------------

4. The name and complete address of each incorporator is:


Wesley M. Baker, 4928 Homberg Dr., Suite B-3, Knoxville, TN  37919
- --------------------------------------------------------------------------
Name             Address                                     Zip Code


- --------------------------------------------------------------------------

Name             Address                                     Zip Code


- --------------------------------------------------------------------------
Name             Address                                     Zip Code

[NOTE: An address and zip code are both required by Tennessee Code Annotated
Section 48-12-102 (a)(4).]

5. The complete address of the corporation's principal office is:

4928 Homberg Dr., Suite B-3, Knoxville,  TN  37919
- -------------------------------------------------------------------------
Street Address               City        State/Country, Zip Code

[NOTE: An address and a zip code are both required by Tennessee Code Annotated
Section 48-12-102 (a)(5).]

6. The corporation is for profit.

7. Other provisions:
[NOTE: Insert here any provision(s) desired and permitted by law. Examples:
names and addresses of persons serv-[ILLEGIBLE]





[ILLEGIBLE]the corporation, provision [ILLEGIBLE]
duly, etc. See Tennessee Code Annotated Section 48-12-102(b).]

April 26, 1995                      /s/ Wesley M. Baker
- --------------                      --------------------------------------
Signature Date                      Incorporator's Signature


                                    Wesley M. Baker
                                    --------------------------------------
                                    Incorporator's Name (typed or printed)



[SEAL] State of Tennessee                                          BDA 1678
- --------------------------------------------------------------------------------

       Secretary of State
      Corporations Section                   DATE: 04/28/95
 James K. Polk Building, Suite 1800          REQUEST NUMBER: 3005-0107
   Nashville, Tennessee  37243-0306          TELEPHONE CONTACT: (615) 741-0537
                                             FILE DATE/TIME: 04/28/95  1024
                                             EFFECTIVE DATE/TIME: 04/28/95 1024
                                             CONTROL NUMBER: 0294055

TO:

WESLEY BAKER, ATTY AT LAW
4928 HOMBERG DR
SUITE B-3
KNOXVILLE, TN  37919

RE:
 TENGASCO, INC.
 CHARTER - FOR PROFIT


CONGRATULATIONS UPON THE INCORPORATION OF THE ABOVE ENTITY IN THE STATE OF
TENNESSEE, WHICH IS EFFECTIVE AS INDICATED.

A CORPORATION ANNUAL REPORT MUST BE FILED WITH THE SECRETARY OF STATE ON OR
BEFORE THE FIRST DAY OF THE FOURTH MONTH FOLLOWING THE CLOSE OF THE
CORPORATION'S FISCAL YEAR. ONCE THE FISCAL YEAR HAS BEEN ESTABLISHED, PLEASE
PROVIDE THIS OFFICE WITH THE WRITTEN NOTIFICATION. THIS OFFICE WILL MAIL THE
REPORT DURING THE LAST MONTH OF SAID FISCAL YEAR TO THE CORPORATION AT THE
ADDRESS OF ITS PRINCIPAL OFFICER OR TO A MAILING ADDRESS PROVIDED TO THIS OFFICE
IN WRITING. FAILURE TO FILE THIS REPORT OR TO MAINTAIN A REGISTERED AGENT AND
OFFICE WILL SUBJECT THE CORPORATION TO ADMINISTRATIVE DISSOLUTION.

WHEN CORRESPONDING WITH THIS OFFICE OR SUBMITTING DOCUMENTS FOR FILING, PLEASE
REFER TO THE CORPORATION CONTROL NUMBER GIVEN ABOVE. PLEASE BE ADVISED THAT THIS
DOCUMENT MUST ALSO BE FILED IN THE OFFICE OF THE REGISTER OF DEEDS IN THE COUNTY
WHEREIN A CORPORATION HAS ITS PRINCIPAL OFFICE IF SUCH PRINCIPAL OFFICE IS IN
TENNESSEE.




- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR: CHARTER - FOR PROFIT                                  ON DATE: 04/28/95
                                                           FEES
FROM:                                      RECEIVED:       $50.00        $50.00
BUBBY, INC.
4928 HOMBERG DR                    TOTAL PAYMENT RECEIVED:              $100.00
KNOXVILLE, TN  37919-0000                  RECEIPT NUMBER:          00001801452
                                           ACCOUNT NUMBER:             00215698

[SEAL] State of Tennessee                           /s/ Riley C. Darnell
                                                    --------------------
                                                    RILEY C. DARNELL
                                                    SECRETARY OF STATE

SS-4458

EX-3.8

                                   EXHIBIT 3.8








                                                 [STAMP]
                                                 FILED 95 MAY-4 AM 9:36
                                                 RILEY DARNELL
                                                 SECRETARY OF STATE
                                                 MAY-4 1995
                                                 CERTIFIED COPY
                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE



                               ARTICLES OF MERGER

                                       OF

                             ONASCO COMPANIES, INC.
                              (A Utah Corporation)

                                       AND
                            
                                 TENGASCO, INC.
                            (a Tennessee Corporation)

        RECEIVED
        MAY - 5 1995
UT DIV. OF CORP. & COMM. CODE

     Pursuant to the provisions of Section 48-21-102 of the Tennessee Business
Corporation Act and Section 16-10a-1105 of the Utah Revised Business Corporation
Act, these corporations do hereby adopt the following Articles of Merger.

     1. Annexed hereto and made a part hereof is the Plan of Merger for merging
Onasco Companies, Inc., a Utah corporation ("Onasco"), with and into Tengasco,
Inc., a Tennessee corporation ("Tengasco"). This Plan of Merger has been adopted
by the respective Boards of Directors of Onasco and Tengasco, as required by
applicable laws, rules and regulations.

     2. The merger of Onasco with and into Tengasco is permitted by the laws of
the States of Utah and Tennessee and has been authorized in compliance with
their respective laws, rules and regulations. 

     3. The Plan of Merger was submitted to the stockholders of Onasco at a
special meeting held April 28, 1995, pursuant to the provisions of Section
16-10a-1104(3) of the Utah Revised Business Corporation Act, at which the
required majority of Onasco's stockholders adopted, ratified and approved the
Plan of Merger, the manner of approval thereof by Onasco's stockholders was as
follows:

          (i)  The designation, number of outstanding shares and the number of
               votes entitled to be cast by each class entitled to vote on the

               Plan of Merger are as follows:

                                                                  Number
                                                                  Entitled
     Designation              Outstanding Shares                   to Vote
     -----------              ------------------                  ---------
       Common                     1,037,650                       1,037,650






                                                 [STAMP]
                                                 FILED 95 MAY-4 AM 9:36 
                                                 RILEY DARNELL          
                                                 SECRETARY OF STATE     
                                                 MAY-4 1995             
                                                 CERTIFIED COPY         
                                                 /S/RILEY DARNELL       
                                                 SECRETARY OF STATE     
                                                                        
                                                 


                                                 
          (ii) The total number of votes cast for and against the Plan of Merger
               by each class entitled to vote on the Plan is as follows:
               
     Designation                   Voted For                     Voted Against
     -----------                   ---------                     -------------
       Common                       801,383                          None
                 
          (iii) The number of votes cast for the Plan of Merger was sufficient
                for the approval thereof by the class.

     4. Tengasco was formed by Onasco for the purpose of changing the domicile
of Onasco to the State of Tennessee, and no shares are presently outstanding,
and accordingly, no vote of the stockholders of Tengasco is required; however,
the members of the Board of Directors of Tengasco unanimously consented to and
adopted, ratified and approved the Plan of Merger in accordance with the
Tennessee Business Corporation Act and its Bylaws.

     5. No amendments to the Articles of Incorporation of Tengasco are effected
by the Plan of Merger.

     6. The Plan of Merger effects a one for two reverse split of the
outstanding common stock of Onasco.

     7. The Plan of Merger shall become effective on the date that these
Articles of Merger are filed with the Secretary of State of the State of
Tennessee and the Department of Commerce of the State of Utah.

     8. The address of the principal executive office of the Surviving

Corporation shall be 4928 Homberg Drive, Suite 3, Knoxville, Tennessee 37919.

                                             ONASCO COMPANIES, INC. 
                                             a Utah corporation

 Date:  5-2-95                               /s/  Jeff D. Jenson
                                             -------------------------------
                                             Jeffrey D. Jenson, President


 Date:  5-2-95                               /s/  Kathleen L. Morrison
                                             -------------------------------
                                             Kathleen L. Morrison, Secretary







                                                 [STAMP]
                                                 RECEIVED 95 MAY-4 AM 9:36
                                                 RILEY DARNELL
                                                 SECRETARY OF STATE
                                                 MAY-4 1995
                                                 CERTIFIED COPY
                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE
[SEAL]  SHERYL ROSS
        Notary Public
        STATE OF UTAH
        My Comm. Expires JAN 06,1996
        3785 SO 300 E SLC UT 84115


STATE OF UTAH       )
                    )    ss
COUNTY OF SALT LAKE )


     On May 2nd, 1995, personally appeared before me, a Notary Public in and for
the State and County aforesaid, Jeffrey D. Jenson, President, and Kathleen L.
Morrison, Secretary of Tengasco, Inc., personally known to me to be the
persons whose names are subscribed to the above instrument in the said
capacities, who acknowledged that they executed the said instrument.



[SEAL]  SHERYL ROSS                          /s/ Sheryl Ross
        Notary Public                        -------------------------------
        STATE OF UTAH                        NOTARY PUBLIC
        My Comm. Expires JAN 06,1996
        3785 SO 300 E SLC UT 84115           









                                                 [STAMP]
                                                 RECEIVED 95 MAY-4 AM 9:36
                                                 RILEY DARNELL
                                                 SECRETARY OF STATE
                                                 MAY-4 1995
                                                 CERTIFIED COPY
                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE



                                PLAN OF MERGER

                                       OF

                             ONASCO COMPANIES, INC.
                            (a Utah Corporation)


                                      INTO

                                 TENGASCO, INC.
                            (a Tennessee Corporation)



     THIS PLAN OF MERGER entered into this 2nd day of May, 1995, by and between
ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), and TENGASCO, INC., a
Tennessee corporation ("Tengasco").

     WHEREAS, Onasco is a corporation organized and existing under the laws of
the State of Utah with its principal office in Salt Lake County, Utah; and

     WHEREAS, Onasco desires to change its domicile to the State of Tennessee;
and

     WHEREAS, Onasco has caused Tengasco to be formed under the laws of the
State of Tennessee solely to effect such change of domicile;

     NOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, the Plan of Merger ("Plan") and the terms and
conditions thereof and the mode of carrying the same into effect, together with
any provisions required or permitted to be set forth therein, are hereby
determined and agreed upon for submission to the stockholders of Onasco and
Tengasco as required by the laws of the States of Utah and Tennessee as follows:


                                       1.
                        Merger and Surviving Corporation

     Onasco will merge into Tengasco, and Tengasco will be the "Surviving
Corporation."


                                       2.
                         Terms and Conditions of Merger


     2.1 Each share of common stock of Onasco (the "Shares") shall first be
reverse split on the basis of one for two (1 for 2) and, upon the effective date
of the Plan, be converted into one share of common stock of Tengasco. On the
effective date of the Plan,







                                                 [STAMP]
                                                 RECEIVED 95 MAY-4 AM 9:36
                                                 RILEY DARNELL
                                                 SECRETARY OF STATE

                                                 MAY-4 1995
                                                 CERTIFIED COPY
                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE



such shares so converted constitute all of the then issued and outstanding
shares of common stock of the Surviving Corporation.
                                                             
     2.2 The separate existence of Onasco shall cease.

     2.3 The Surviving Corporation shall thereupon and thereafter possess all
the rights, privileges, powers and franchises as well of a public as of a
private nature, and be subject to all of the restrictions, disabilities and
duties of Onasco; and all and singular, the rights, privileges, powers and
franchises of Onasco, and all property, real, personal and mixed, and all debts
due to Onasco on whatever account, as well for stock subscriptions as all other
things in action or belonging to Onasco shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of Onasco, and the title to any real
estate vested by deed or otherwise in Onasco shall not revert or be in any way
impaired by reason of the Plan; but all rights of creditors and all liens upon
any property of Onasco shall be preserved unimpaired, and all debts, liabilities
and duties of Onasco shall thenceforth attach to the Surviving Corporation and
may be enforced against it to the same extent as if said debts, liabilities and
duties had been incurred or contracted by it. Specifically, but not by way of
limitation, the Surviving Corporation shall be responsible and liable to
dissenting stockholders of Onasco; and any action or proceeding whether civil,
criminal or administrative, pending by or against Onasco, shall be prosecuted as
if the Plan had not taken place, or the Surviving Corporation may be substituted
in such action or proceeding.

     2.4 All corporate acts, plans, policies, contracts, approvals and
authorizations of Onasco and its stockholders, Board of Directors, committees
elected or appointed by the Board of Directors, officers and agents, which were
valid and effective immediately prior to the effective time of the Plan, shall
be taken for all purposes as the acts, plans, policies, contracts, approvals and
authorizations of the Surviving Corporation and shall be as effective and
binding thereon as the same were with respect to Onasco. The employees of Onasco
shall become the employees of the Surviving Corporation and continue to be
entitled to the same rights and benefits which they enjoyed as employees of
Onasco.

     2.5 The assets, liabilities, reserves and accounts of Onasco shall be
recorded on the books of the Surviving Corporation at the amounts at which they,
respectively, shall then be carried on the books of Onasco, subject to such
adjustments or eliminations of intercompany items as may be appropriate in
giving effect to the Plan.

     2.6 The Articles of Incorporation of Tengasco shall be the Articles of
Incorporation of the Surviving Corporation; and the Bylaws of Tengasco shall
become the Bylaws of the Surviving Corporation.


     2.7 All of the present directors and executive officers of Onasco shall be
designated directors and executive officers of the Surviving Corporation to
serve in the same capacities until the next annual meetings of the stockholders
and directors and until their respective successors are elected and qualified,
or their prior resignation or termination.







                                                 [STAMP]
                                                 RECEIVED 95 MAY-4 AM 9:36
                                                 RILEY DARNELL
                                                 SECRETARY OF STATE
                                                 MAY-4 1995
                                                 CERTIFIED COPY
                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE


     2.8 The principal office of the Surviving Corporation shall be 4928 Homberg
Drive, Suite 3, Knoxville, Tennessee 37919. The Surviving Corporation shall also
maintain a registered agent and registered office in Tennessee, Wesley Baker,
Esq., 4928 Homberg Drive, Suite B-3, Knoxville, Tennessee 37919.

     2.9 The Plan must be adopted by persons owning a majority of the shares of
Onasco and Tengasco. Stockholders of Onasco shall be given such written notice
as may be required by the laws of the State of Utah.

     2.10 Stockholders of both corporations shall be afforded all rights and
privileges and be subject to all obligations contained within the Utah Revised
Business Corporation Act and the Tennessee Business Corporation Act regarding
dissenters' rights, and the Surviving Corporation shall be obligated to notify
the stockholders as provided therein.

     2.11 The effective date of the Plan shall be the date when the Articles of
Merger are filed and accepted by the Secretary of State of the State of
Tennessee and at such time as all applicable provisions of the Utah Revised
Business Corporation Act have been met.

     IN WITNESS WHEREOF, the parties hereto have executed this Plan the day and
year first above written.

                                             ONASCO COMPANIES, INC.,
                                             a Utah Corporation


                                             By /s/ Jeff D. Jenson
                                             ----------------------------
                                             Jeffrey D. Jenson, President


Attest:


/s/ Kathleen L. Morrison
- -------------------------------
Kathleen L. Morrison, Secretary
                                             TENGASCO, a Tennessee Corporation

                                             
                                             By /s/Jeff D. Jenson
                                             ----------------------------
                                             Jeffrey D. Jenson, President

Attest:

/s/ Kathleen L. Morrison
- -------------------------------
Kathleen L. Morrison, Secretary







                                                 [STAMP]
                                                 RECEIVED 95 MAY-4 AM 9:36
                                                 RILEY DARNELL
                                                 SECRETARY OF STATE
                                                 MAY-4 1995
                                                 CERTIFIED COPY
                                                 /S/RILEY DARNELL
                                                 SECRETARY OF STATE


STATE OF UTAH       )
                    )    ss
COUNTY OF SALT LAKE )



     On the 2nd day of May, 1995, personally appeared before me Jeffrey D.
Jenson and Kathleen L. Morrison, who duly acknowledged to me that they are
authorized to and did sign the foregoing Plan for and on behalf of Onasco
Companies, Inc.


[SEAL]   SHERYL ROSS                             /s/ Sheryl Ross         
         Notary Public                           ------------------------
         STATE OF UTAH                           NOTARY PUBLIC           
         My Comm. Expires JAN 06,1996
         3785 SO 300 E SLC UT 84115



STATE OF UTAH       )
                    )    ss
COUNTY OF SALT LAKE )



     On the 2nd day of May, 1995, personally appeared before me Jeffrey D.
Jenson and Kathleen L. Morrison, who duly acknowledged to me that they are
authorized to and did sign the foregoing Plan for and on behalf of Tengasco,
Inc.


 [SEAL]   SHERYL ROSS                             /s/ Sheryl Ross
          Notary Public                           ------------------------
          STATE OF UTAH                           NOTARY PUBLIC
          My Comm. Expires JAN 06,1996
          3785 SO 300 E SLC UT 84115

EX-5.1

                                                                   July 30, 1997

Tengasco, Inc.
603 Main Avenue - Suite 500
Knoxville, Tennessee 37902


                           Re: Tengasco, Inc.

Gentlemen:

         We have acted as counsel to Tengasco, Inc., a Tennessee corporation
(the "Company"), in connection with a registration statement on Form 10-SB (the
"Registration Statement"), to be filed with the Securities and Exchange
Commission for the purpose of registering all of the outstanding and issued
common stock, $.001 par value per share (the "Common Stock") of the Company
under the Securities Act of 1933, as amended (the "Act").

         As counsel for the Company, we have examined and are familiar with the
Certificate of Incorporation and By-Laws of the Company, and all amendments
thereto. We are also familiar with the form of the Company's stock certificate,
as well as all corporate proceedings taken by the Company in connection with the
authorization of the issuance of its Common Stock. Throughout such examination
we have assumed the genuineness of signatures and accuracy and conformity to
original documents of all copies of documents supplied to us. As to questions of
fact material to the opinion expressed herein, we have, when relevant facts were
not independently determinable, relied upon information furnished to us by
officers and directors of the Company or their duly authorized agents or
employees.

         Based upon the foregoing, it is our opinion that all of the Company's
outstanding and issued shares of Common Stock have been duly executed
and delivered and the consideration therefor duly paid, and such shares are
validly issued, fully paid and nonassessable.



         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.


                                        Very truly yours,


                                        Robson & Miller, LLP

EX-10.1(A)

                                 EXHIBIT 10.1(a)








                               PURCHASE AGREEMENT


     THIS PURCHASE AGREEMENT ("Agreement") is made this 2nd day of May, 1995,
among ONASCO COMPANIES, INC., a Utah corporation ("Onasco" or "Buyer"); and
INDUSTRIAL RESOURCES, CORPORATION, a Kentucky corporation ("IRC" or "Seller").

                                   WITNESSETH:

                                    RECITALS

     WHEREAS, the respective Boards of Directors of Onasco and IRC and the
stockholders of IRC have adopted resolutions pursuant to which Onasco shall buy
and IRC shall sell the gas leases, equipment and vehicles which are more
particularly described in Exhibit "A" hereof (hereinafter the "Assets"), which
is incorporated herein by reference; and

     WHEREAS, Onasco held a special meeting of its stockholders on April 28,
1995, at which the stockholders approved a reverse split of the $0.001 par value
common stock of Onasco on the basis of two shares for one, such reverse split to
be effective as of the Closing of this Agreement, as outlined in the minutes of
such meeting, a copy of which is attached hereto as Exhibit "B" and incorporated
herein by reference; and

     WHEREAS, the consideration for the Assets shall be 4 million post-split
"unregistered" and "restricted" shares of $0.001 par value common stock of
Onasco;

     NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, it is agreed:

                                    Section 1

                         Purchase and Sale of the Assets

     1.1 Purchase and Sale. Onasco hereby agrees to purchase and IRC hereby
agrees to sell the Assets owned by IRC as of March 17, 1995, together with any
accessions thereto and all items received by IRC in exchange for any of the
Assets after March 17, 1995.

     1.2 Consideration for the Assets. The consideration paid for the Assets
shall consist solely of 4 million post-split "unregistered" and "restricted"
shares of $0.001 par value common stock of Onasco.

     1.3 Delivery of Shares. Upon the execution and delivery by IRC of an
assignment or assignments and other instruments required or necessary to
transfer the Assets to Onasco, Onasco shall deliver one stock certificate to IRC
representing 4 million post-split








"unregistered" and "restricted" shares of common stock of Onasco as full payment
for the Assets.

                                    Section 2

                                     Closing

     The closing (the "Closing") contemplated hereby shall be held at the
offices of Leonard W. Burningham, 455 East 500 South, #205, Salt Lake City,
Utah 84111, within five days of the date hereof.

                                    Section 3

                    Representations and Warranties of Onasco

     Onasco represents and warrants to, and covenants with, IRC as follows:

     3.1 Corporate Authority and Due Authorization. Onasco is a corporation duly
organized and in good standing under the laws of the State of Utah and has full
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. Execution of this Agreement and performance by Onasco
hereunder have been duly authorized by all requisite corporate action on the
part of Onasco; this Agreement constitutes a valid and binding obligation of
Onasco; and performance hereunder will not violate any provision of the Articles
of Incorporation, Bylaws, agreements, mortgages or other commitments of Onasco.

     3.2 Condition Subsequent. As a condition subsequent to the performance of
this Agreement, Onasco shall prepare and cause to be filed with the Securities
and Exchange Commission a Registration Statement on Form 10-SB within 90 days of
the date hereof.

                                    Section 4

                      Representations and Warranties of IRC

     IRC represents and warrants to, and covenants with, Onasco as follows:

     4.1 Ownership. IRC owns the Assets, free and clear of any liens or
encumbrances of any type or nature whatsoever, except as stated in the schedule
which is attached as the final page of Exhibit "A" hereof.

     4.2 Condition of the Assets. At the time of Closing, the Assets shall be in
good and marketable condition, suitable for the uses for which they were
intended and, reasonable wear and tear excepted, shall be free of any material
defect.


                                        2







     4.3 Corporate Authority and Due Authorization. IRC is a corporation duly
organized and in good standing under the laws of the State of Kentucky and has
full corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. Execution of this Agreement and performance by IRC
hereunder has been duly authorized by all requisite corporate action on the part
of IRC, including the execution of unanimous consents of its Board of Directors
and its sole stockholder, which are attached hereto as Exhibits "C" and "D",
respectively, and this Agreement constitutes a valid and binding obligation of
IRC and performance hereunder will not violate any provision of the Articles of
Incorporation, Bylaws, agreements, mortgages or other commitments of IRC.

     4.4 No Inventory. None of the Assets constitute inventory of IRC and the
principal business of IRC is not the sale of merchandise from stock.

     4.5 Shares Acquired with Investment Intent. IRC represents and agrees as
follows:

          (a) That the shares being acquired in consideration of the Assets are
     received for investment purposes and not with a view toward further
     distribution;

          (b) That it has full and complete understanding of the phrase "for
     investment purposes and not with a view toward further distribution;"

          (c) That it understands the meaning of "unregistered shares" and knows
     that they are not freely traceable;

          (d) That any stock certificate issued by Onasco in connection with the
     shares being received shall be imprinted with a legend restricting the
     sale, assignment, hypothecation or other disposition unless it can be made
     in accordance with applicable laws, rules and regulations;

          (e) That the stock transfer records of Onasco shall reflect that IRC
     has requested Onasco not to effect any transfer of any stock certificate
     representing any of the shares being acquired unless it shall first have
     obtained an opinion of legal counsel to the effect that the shares may be
     sold in accordance with applicable securities laws, rules and regulations,
     and it understands that any opinion must be from legal counsel satisfactory
     to Onasco and, regardless of any opinion, it understands that the exemption
     covered by any opinion must in fact be applicable to the shares;

          (f) That it shall not sell, offer to sell, transfer, assign,
     hypothecate or make any other disposition of any interest in the shares
     being acquired except as may be pursuant to any applicable securities laws,
     rules and regulations.


                                        3







     4.6 Further Assurances of IRC. IRC execute such assignment or assignments
and will perform such other acts as will enable Onasco to take free and clear
title to the Assets.

                                    Section 5

                                   Termination

     Prior to Closing, this Agreement may be terminated (1) by mutual consent of
Onasco and IRC; and (2) by either the directors of Onasco or IRC if there has
been a material misrepresentation or material breach of any warranty or covenant
by the other party; provided, however, that all representations and warranties
shall survive the termination hereof.

                                    Section 6

                               General Provisions

     6.1 Further Assurances. At any time and from time to time, after the
execution hereof, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to carry out the
intent and purposes of this Agreement.

     6.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class registered or certified mail, return receipt requested, as
follows:

     If to Onasco:                 1787 East Fort Union Blvd., #106
                                   Salt Lake City, Utah 84121

                                   and

                                   Leonard W. Burningham, Esq.
                                   455 East 500 South, #200
                                   Salt Lake City, Utah 84111

     If to IRC:                    Route 6, Box 248A
                                   Manchester, Kentucky 40962

                                   and

                                   Wesley Baker, Esq.
                                   P.O. Box 22178
                                   Knoxville, Tennessee 37933-0178


                                        4







     6.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.

     6.4 Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

     6.5 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Tennessee, except to the
extent preempted by federal law, in which event (and to that extent only),
federal law shall govern.

     6.6 Assignment. No party may assign any rights, duties or obligations under
this Agreement, and in the event of any such assignment, such assignment shall
be deemed null and void.

     6.7 Waiver. Any failure on the part of any party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.

     6.8 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     6.9 Default. In the event of default hereunder, the non-defaulting party
shall be entitled to recover reasonable attorney's fees and costs in enforcing
the terms and provisions hereof.

     IN WITNESS WHEREOF, the parties have executed this Agreement effective the
day and year first above written.

                                        ONASCO COMPANIES, INC.

                                        By  [ILLEGIBLE]
                                            --------------------------
                                        Its President
                                            --------------------------
Attest: 

[ILLEGIBLE]
- ----------------------------

Its  Secretary
     -----------------------



                                        5






                               PURCHASE AGREEMENT

                           COUNTERPART SIGNATURE PAGE

     THIS COUNTERPART SIGNATURE PAGE for that certain Purchase Agreement among
ONASCO COMPANIES, INC., a Utah corporation, and INDUSTRIAL RESOURCES,
CORPORATION, a Kentucky corporation, is executed as of the date set forth
hereinbelow.


                                   INDUSTRIAL RESOURCES, CORPORATION

Date: 5 - 3 - 95                   By   [ILLEGIBLE]
                                        ----------------------------

                                   Its  President
                                        ----------------------------


Attest:


[ILLEGIBLE]
- ------------------------------

Its  Sec & Treasurer
     -------------------------


                                        6







                                   EXHIBIT "A"

                                     ASSETS









                               INVENTORY OF ASSETS

COOPER TC 38-38 DRILLING RIG - Cost $87,291.26, Bought March, 1993

     Double drum well service unit, S/N 00339, braden winch, powered by GM 6-71
diesel engine, Allison transmission, Skytop 84' 155,000# capacity derick,
hydraulically raised and telescoped, 3-sheave crow block assembly, tubing board,
control console, guy lines, stairs, catwalks, handrails, toolboxes, fuel tank, 2
Fire extinguishers. All above are mounted and unitized on a four axle "back-in"
carrier, 2 front mounted hydraulic jacks with jack stands, 2 rear mounted
hydraulic jacks with jack stands, 10.00 x 20 tires front and rear, approx. 600'
of 7/8"th's inch tubing line, approx. 6,000' of 518" swab line.

     One: McKissick 2-sheave split block.

          Foster 58.96 tubing tongs for 2-3/8", 2-7/8", and 4-1/2"
          (Reconditioned)

          Cavins type "B" tubing slips (air)

          2-3/8" BJ tubing slips (Reconditioned)

          Rod tools

          Rod Hook

          Base Beam & new floor

     Two: 5/8" Elevators

- --------------------------------------------------------------------------------
PIPE THREADING MACHINE - approx. value $2,000

- --------------------------------------------------------------------------------
DITCH WITCH - approx. value $2000

- --------------------------------------------------------------------------------
PARTS TRAILER - approx. value $2000

- --------------------------------------------------------------------------------
SMALL PARTS BUILDING - approx. value $1000

- --------------------------------------------------------------------------------
PIPE TRAILER - approx. value $500.

- --------------------------------------------------------------------------------
COPY MACHINES -1 Panasonic, 1 Xerox, 1 Monroe. Approx. Value $6,000

- --------------------------------------------------------------------------------
4 INCH FRAC VALUE - approx. value $600

- --------------------------------------------------------------------------------
MFG MOCK METER- approx. value $700


- --------------------------------------------------------------------------------








SET OF NEW POWER TONG TEETH - approx. value $500

- --------------------------------------------------------------------------------
GAS GATHERING SYSTEM -

- --------------------------------------------------------------------------------
SURFACE GAMMA RATEMETER -Approx. value $5000, 1991
Made by Ludlum Measurements, Model 2200-16, Serial Number #79086

- --------------------------------------------------------------------------------
1500 GALLON VACUUM PUMP AND TANK - approx. value $1,000

- --------------------------------------------------------------------------------
3000 FT. 4 1/2 CASING - @ $2.50/ft. = $7,500

3000 FT. 2 3/8" TUBING - @ $1.05/ft. = $3,150

3000 FT. 1" SUCKER RODS - @ $.40/ft. = $1,200

- --------------------------------------------------------------------------------
NORRISEAL DEHYDRATOR - approx. value $13,000, Serial #2230450A, Model #
25M60-SLDF-AB, 1001-A Norriseal control

- --------------------------------------------------------------------------------

DEHYDRATION UNIT - Purchase price $7,500 on August 14, 1992, approx. value
$12,500. Serial # PESI 421, complete with 25' tall tower; nameplate data: NWP
1200 PSI, 100-F, SN 67-7615, Year 1985, T.P. 1800, W.O. 4386

- --------------------------------------------------------------------------------
DEHYDRATION UNIT w/TOWER - Approx. value $10,000, Serial #SB 12-6H, tower #7-74
8111-001

- --------------------------------------------------------------------------------
                                   COMPRESSORS

AJAX DPC 160 GAS COMPRESSOR - Purchased 1995 from TABCO for $37,500, with a
GLYCOL RE-BOILER & TOWER for $5,000. Total purchase price of $42,500. Payments
to be made monthly in the amount of $5,312.50, starting February 5, 1995.
Approx. Value $60,000, ID #'s-K-6001-C 5000, A-2002-G, Model # 507, Serial
#36957, A-2801-F.

INGERSOLL RAND COMPRESSOR - approx. Value $30,000, ID #'s-Serial # 13936, 95024A
566567, 46-B7782 87042 F, 47177118 490, 97032 6284, Model# NKRB-1-5, B-8791


INGERSOLL RAND (PARTS COMPRESSOR) - approx. value $13,000, ID#'s - Serial 91890,
2 B-18-4, 25416-361

CHICAGO PNEUMATIC COMPRESSOR - approx. value $62,500 FE-2, 8 1/4" x 4 1/4" x 5"
stroke (ID.#86053), with Waukasau H-2475 engine (ID.#52181), and fan type air
exchanger (ID.#867), all mounted on one oil field skid







CHICAGO PNEUMATIC COMPRESSOR - Purchased on February 13, 1992 for $25,100,
approx. value $62,500. 1972 Model YCE Gas Compressor (ID. #279936), with Model
6G510 Natural Gas Engine, radiators, coolers etc...

MISC. PARTS USED FOR ALL COMPRESSORS AS JOB REQUIREMENTS DICTATE: VALUE IS
INTEGRAL IN COMPRESSOR VALUES
1 compressor muffler 
4 fan shroud
4 Radiators 
Comp 94701 Ingersoll-Rand 94663 105782
2 gray pipes to comp

                                   BURNT HOUSE

JENSEN PUMP JACK - approx. value $4,000, ID#'s c-401564, Serial # 9209004 
OIL & GAS SEPARATOR - approx. value $500, Serial # 4050-1 
ROCKWELL METER - approx. value $1,500, ID# 87416 
COMPRESSOR - approx. value  $2,200, ID#15053 350 
2 (two) 210 TANKS - approx. value $4,000, ID#'s 9402-8633, 0510033

- --------------------------------------------------------------------------------
                                   CORNETT #1

110 TANK - approx. value $1,300, ID # 43702

- --------------------------------------------------------------------------------
                                   CORNETT #2

LUFKIN PUMP JACK - approx. value $3,500, ID#'s 4380, 18KK-35

- --------------------------------------------------------------------------------
                                ROBINSON-ALVERAS

210 TANK - approx value $2,000, ID# 0510040

- --------------------------------------------------------------------------------
                                      KEITH

2 (TWO) 210 TANKS - approx. value $4,000, ID#'s (9401-8632), 9400 (8632) O510032


PUMP JACK - approx. value $3,500, ID# 5798

WATER TANK - approx. value $1,500, ID #2

- --------------------------------------------------------------------------------
                                   BEECH CREEK







2 (TWO) 110 TANKS - approx. value $2,600, ID#'s

- --------------------------------------------------------------------------------
                                    VEHICLES

1993 BLAZER - purchased 1-7-93, VIN # 1GNEK18K9PJ337726, 23 payments left @
$615.79 = $14,163.17, purchase price $23,273.90 plus down-payment.

1992 FORD BRONCO - purchased 8-14-92, VIN# 1FMEU15NXNLB02170, purchase price
$29,050.49

1991 CHEVROLET PICK-UP - purchased new 7(?)9-91, VIN# 2GECK19K8M1222564,
purchase price $19,906.63

1991 CHEVROLET PICK-UP 4X4 - purchased June 24, 1991, purchase price $18,029.68.
VIN# 1GCEK14ZXME160040.

INTERNATIONAL TRACTOR - ID# TDA2274CG, 1982, approx, value $7,500

INTERNATIONAL TRACTOR - F2000D, ID # D112313H, 1966, approx. value $5,0OO

LOWBOY TRAILER - ID# B12466, 1979, approx. $5,000

GOOSENECK 5TH WHEEL TRAILER - #5027, approx. value $3,500

CATERPILLAR D-5 DOZER- 1D#82H712, approx. value $30,000

- --------------------------------------------------------------------------------
                                 WELLS & LEASES

BURNING SPRINGS WELLS - Alveras #1, #2; Robinson-Alveras #1, #2; Cornett #1,#2; 
                   Keith #1, #2, #2A, #2B, #4, #5; Gregory #2; Gib Hale #1, #2;
                   Approx. value $

BEECH CREEK LEASES - Signed acreage: 8,063.599 Acres. Verbal commitment acreage:
                   2,114.14. Total of signed and verbal: 10,177.739 Acres.
                   Approx. value $

WILDCAT LEASES - Signed acreage: 2,971.5 Acres. Verbal commitment acreage: 455 
                   Acres. Total verbal and signed acres: 3,426.5 Acres. Approx.
                   value $


- --------------------------------------------------------------------------------
STOCK - One million shares of United Petroleum Corporation stock valued at $1.00
          per share.








 EQUIPMENT                PURCHASE PRICE        PAYMENTS MADE         APPROX. V

 COOPER RIG               $87,291.26            $87,291.26            $87,291.26
 PIPE THREADER                                                         $2,000.00
 DITCH WITCH                                                           $5,500
 TRAILER                                                               $2,000
 PARTS TRAILER                                                         $2,000
 SMALL PARTS BUILDING                                                  $1,000
 COPY MACHINES                                                         $6,000
 FRAC VALVE                                                              $600.00
 MOCK METER                                                              $700.00
 TONG TEETH                                                              $500.00
 GATHERING SYS.                                                          $
 GAMMA RATEMETER                                                       $5,000.00
 1500 GAL VAC. PUMP                                                    $1,000.00
 3000 FT. 4 1/2" CASINO                                                $7,500.00
 3000 FT. 2 3/8" TUBING                                                $3,150.00
 3000 FT. 1" SUC. RDS.                                                 $1,200.00
 DEHYDRATOR                                                           $13,000.00
 DEHYDRATOR                $7,500.00             $7,500.00            $12,500.00
 DEHYDRATOR                                                           $10,000.00
 AJAX COMP.               $42,500.00             $5,312.50             $5,312.50
 INGERSOLL COMP.                                                      $30,000.00
 INGERSOLL COMP.                                                      $13,000.00
 CHICAGO COMP.                                                        $62,500.00
 CHICAGO COMP.            $25,100.00            $25,100.00            $62,500.00
 JENSEN PUMPJACK                                                       $4,000.00
 O & G SEPARATOR                                                         $500.00
 ROCKWELL METER                                                        $1,500.00
 LEASE COMPRESSOR                                                      $2,200.00
 TWO 210 TANKS                                                         $4,000.00
 110 TANK                                                              $1,300.00
 LUFKIN PUMP JACK                                                      $3,500.00
 210 TANK                                                              $2,000.00
 IWO 210 TANKS                                                         $4,000.00
 PUMP JACK                                                             $3,500.00
 WATER TANK                                                            $1,500.00
 TWO 110 TANKS                                                         $2,600.00
 1993 BLAZER              $23,273.90 +D.P.        $9,110.73            $9,110.73
 1992 BRONCO              $29,050.49             $20,436.60           $20,436.60
 1991 CHEVY 4x4           $18,029.68             $l8,029.68           $18,029.68
 1991 CHEV. PICKUP        $19,906.63             $17,509.13           $17,509.13

 INTERNAT. TRACTOR                                                     $5,000.00
 INTERNAT. TRACTOR                                                     $7,500.00
 LOWBOY TRAILER                                                        $5,000.00
 GOOSENECK TRAILER                                                     $3,500.00
 D-5 BULLDOZER                                                        $30,000.00
 BURNING SPRINGS WELLS                                                    $
 BEECH CREEK LEASES                                                       $
 WILDCAT LEASES                                                           $
 UPC STOCK                                                         $1,000,000








                                   EXHIBIT "B"

                MINUTES OF A SPECIAL MEETING OF THE STOCKHOLDERS

                                       OF

                              ONASCO COMPANIES, Inc.







                                    MINUTES OF A

                               SPECIAL MEETING OF

                              THE SHAREHOLDERS OF

                             ONASCO COMPANIES, INC.

     A Special Meeting of the shareholders of Onasco Companies, Inc., a Utah
Corporation, was held at the following time, date and place pursuant to a
written notice having been mailed to all of the shareholders of record on April
18, 1995:
     Time: 10:00 a.m
     Date: April 28, 1995
     Place: 1787 East Fort Union Blvd. #106, Salt Lake City, UT 84121
     The following individuals, constituting a quorum of the Board of directors,
were present at the meeting:
     Jeff D. Jenson
     Travis T. Jenson

     Jeff D. Jenson, chaired the meeting, Travis T. Jenson, the Corporation's
Vice President, served as Secretary of the meeting.


     The Secretary presented a list of shareholders as prepared and certified by
the Corporation's transfer agent, American Registrar & Transfer Company, Inc.,
dated as of the record date April 18, 1995, to the Chairman and stated that as
of the record date there were 1,037,650 shares of common stock of the
Corporation issued, outstanding and entitled to vote. The Secretary informed the
Chairman that following his review of proxies and verifying the share holdings
of those present at the meeting he had determined that a total of 801,383 shares
were present, representing 77.23% of the outstanding shares of the Corporation.

     Having received the information from the Secretary, the Chairman announced
that the holders of stock in excess of the amount necessary to constitute a
quorum were present in person or represented by proxy and the meeting could
proceed to the matters at hand. The proxies presented were ordered to be filed
with the Secretary.

     The Secretary then presented an affidavit, showing that the notice of the
meeting had been duly mailed to each shareholder at the last known address, ten
(10) days prior to the meeting.

     The Chairman then reviewed the agenda, and upon motions duly made and
seconded the following resolutions were unanimously adopted:

     WHEREAS, subject to the execution of the Purchase Agreement between Onasco
Companies, Inc. and Industrial Resources, Corporation, persuant ton which







Onasco will purchase real property and oil & gas leases presently owned by
Industrial Resources, Inc. for 4,000,000 shares of "unregistered" and
"restricted" common stock in Onasco, and 480,000 shares of stock issued under
Rule 701 will be issued to consultants involved in the transaction;

     BE IT RESOLVED, that the present issued and outstanding stock of Onasco
Companies, Inc., a Utah Corporation, be subject to a reverse split at the ratio
of 1 new share for every 2 shares presently issued and outstanding, with such
reverse split to be effective as of the date of filing of Articles of Merger
with the State of Tennesse;

     FURTHER RESOLVED, that the reversal hereinabove stated shall not alter the
authorized capital of the corporation of 50,000,000 common shares of common
stock with a par value of one mil ($.001);

     FURTHER RESOLVED, that the Company change its name to Tengasco, Inc., and
change its domicile from the State of Utah to the State of Tennessee, with such
resolutions to be effective as of the dte of filing the Articles of Merger with
the State of Tennesse;

     FURTHER RESOLVED, that the Board of Directors is hereby authorized,
empowered and directed to make proper application to the Secretary of State of
the State of Utah and the State of Tennessee, for the change of domicile and any

amendments to the articles in the respects hereinabove mentioned, and to
execute, present, and file the applications, petitions, and other documents
required by the laws of the State of Utah and the State of Tennessee to effect
the aforesaid change of domicile and amendments.

     FURTHER RESOLVED, that the Company retain the Services of Leonard W.
Burningham, Esq., to assist in the stock purchase, change of domicile, filing a
registration statement on Form 10 within 90 days of execution of the
aforementioned purchase agreement, and any other matters deemed necessary to
complete the said transaction;

     FURTHER RESOLVED, that the present Board of Directors serve until the stock
purchase agreement is executed and then resign in conjunction with the following
new board members and officers being elected:

DIRECTORS
Raymond E. Johnson (Ray)      415 North State St.           (360) 734-0091
                              Bellingham, WA 98225

Jack E. Earnerst              5945 Shady River Road         (713) 781-9700
                              Houston, TX 77057

Edgar G. Baugh (Jack)         76 Arrowhead, Way             (203) 655-0624
                              Darien CT 06820







Walter C. Arzonetti           11 Avenue de la Mer           (904) 445-1022
                              Palm Coast FL 32137

Charels N. Manhofff           1119 Rocky Point Ct.          (505) 292-3210
                              Albuquerque NM 87123

Joe B. Mattei                 72 Sugerberry Circle          (713) 266-0700
                              Houston, TX 77024

William A. Mofffett           1073 Encantado Drive          (505) 983-9212
                              Santa Fe, NM 87501

OFFICERS
- --------

George E. Walter, Jr.         3907 Northfield Ct.
President/CEO                 Midland, TX 79707

James C. Walter               1216 Calvary Ct.              (606) 877-1830
Vice President                London KY 40471
Secretary/Treasurer

     The Secretary was then instructed to insert in the minute book copies of

the Notice of Special Meeting, proxies, and the Secretary affidavit of mailing.
With no further business matters at hand, a motion was duly made and seconded to
adjourn the meeting without further ado.


[ILLEGIBLE]                                       [ILLEGIBLE]
- ---------------------                             --------------------
Chairman                                          Secretary








                                   EXHIBIT "C"

                   UNANIMOUS CONSENT OF THE BOARD OF DIRECTORS

                                       OF

                        INDUSTRIAL RESOURCES, CORPORATION








                      UNANIMOUS OF TO BOARD OF DIRECTORS OF

                        INDUSTRIAL RESOURCES, CORPORATION

     The undersigned, being all of the duly elected and incumbent directors of
Industrial Resources, Corporation, a Kentucky corporation (the "Corporation"),
acting pursuant to Section 271B.8-210 of the Kentucky Business Corporation Act,
do hereby consent to and adopt the following resolution, effective the date
hereof:

     WHEREAS, the Corporation has been engaged in negotiations to convey certain
gas leases, equipment and vehicles listed in Exhibit "A" attached to the
Purchase Agreement, which is incorporated herein by reference (the "Assets") to
Onasco Companies, Inc., a Utah corporation ("Onasco"), in consideration of 4
million "unregistered" and "restricted" post-split shares of the $0.001 par
value common stock of Onasco (the "Purchase Transaction"); and

     WHEREAS, the parties to the Purchase Transaction wish to document its terms
by means of the Purchase Agreement; and

     WHEREAS, the Board of Directors deems it to be in the best interests of the
Corporation to proceed with the Purchase Transaction and to take such actions as
will facilitate it;


     NOW, THEREFORE, be it RESOLVED, that the President and the Secretary of the
Corporation are hereby authorized to execute the Purchase Agreement and to take
such further actions on behalf of the Corporation as are necessary for the
performance thereof.

Date: 5 - 3 - 95                             /s/ James W. Ratliff
      --------------                         ----------------------------------
                                             James W. Ratliff


Date: 5 - 3 - 95                             /s/ Linda Beth Ratliff
      --------------                         ----------------------------------
                                             Linda Beth Ratliff


Date: 5 - 3 - 95                             /s/ Russell A. Ratliff
      --------------                         ----------------------------------
                                             Russell A. Ratliff







                                   EXHIBIT "D"

                         CONSENT OF THE SOLE STOCKHOLDER

                                       OF

                        INDUSTRIAL RESOURCES, CORPORATION








                       CONSENT OF THE SOLE STOCKHOLDER OF

                        INDUSTRIAL RESOURCES, CORPORATION

     The undersigned, being the holder all of the issued and outstanding shares
of common stock of Industrial Resources, Corporation, a Kentucky corporation
(the "Corporation"), acting pursuant to Section 271B.7-040 of the Kentucky
Business Corporation Act, does hereby consent to and adopt the following
resolution, effective the date hereof:

     WHEREAS, the Corporation has been engaged in negotiations to convey certain
gas leases, equipment and vehicles listed in Exhibit "A" attached to the
Purchase Agreement, which is incorporated herein by reference (the "Assets") to

Onasco Companies, Inc., a Utah corporation ("Onasco"), in consideration of 4
million "unregistered" and "restricted" post-split shares of the $0.001 par
value common stock of Onasco (the "Purchase Transaction"); and

     WHEREAS, the parties to the Purchase Transaction wish to document its terms
by means of the Purchase Agreement; and

     WHEREAS, the Board of Directors and the undersigned stockholder deem it to
be in the best interests of the Corporation to proceed with the Purchase
Transaction and to take such actions as will facilitate it;

     NOW, THEREFORE, be it RESOLVED, that the undersigned sole stockholder of
the Corporation hereby consents to the execution by the Corporation of the
Purchase Agreement, the sale of the Assets and the performance by the executive
officers of such other actions as are necessary to carry out its terms or such
sale.

Date: 5 - 3 - 95                             /s/ James W. Ratliff
      --------------                         ----------------------------------
                                             James W. Ratliff







                                   EXHIBIT "E"

                      RESOLUTIONS OF THE BOARD OF DIRECTORS

                                       OF

                             ONASCO COMPANIES, INC.







                    RESOLUTIONS OF THE BOARD OF DIRECTORS OF

                             ONASCO COMPANIES, INC.

     The undersigned, being all of the duly elected and incumbent directors of
Onasco Companies, Inc., a Utah corporation (the "Corporation"), acting pursuant
to Section 16-10a-821 of the Utah Revised Business Corporation Act, do hereby
consent to and adopt the following resolutions, effective the date hereof:

     WHEREAS, the Corporation has been engaged in negotiations to acquire
certain assets (the "Assets") currently owned by Industrial Resources,
Corporation, a Kentucky corporation ("IRC"), in consideration of 4 million
"unregistered" and "restricted" post-split shares of the $0.001 par value common

stock of the Corporation (the "Purchase Transaction"); and

     WHEREAS, the parties to the Purchase Transaction wish to document its terms
by means of a Purchase Agreement, a copy of which has been presented to a
meeting of the Board of Directors and which is made a part hereof; and

     WHEREAS, the Board of Directors deems it to be in the best interests of the
Corporation to proceed with the Purchase Transaction and to take such actions as
will facilitate it; and

     WHEREAS, the Board of Directors further deems it to be in the best
interests of the Corporation to change its domicile from the State of Utah to
the State of Tennessee and to appoint a new Board of Directors to manage the
affairs of the Corporation in light of its changed direction; and

     WHEREAS, the Board of Directors has caused Tengasco, Inc., a Tennessee
corporation ("Tengasco"), to be organized in order to facilitate the change of
domicile of the Corporation; and

     WHEREAS, on April 11, 1995, the Board of Directors resolved that, in the
event that a corporate reorganization is concluded between the Corporation and
IRC, the new directors of the Corporation and Duane S. Jenson shall each be
granted options to purchase 100,000 "unregistered" and "restricted" shares of
common stock of the Corporation at the price of $0.25 per share;

     N0W, THEREFORE, be it RESOLVED, that the Board of Directors hereby
authorizes the President and the Secretary of the Corporation to execute the
Purchase Agreement and hereby adopts the Purchase Agreement as a binding
obligation of the Corporation; and

     FURTHER, RESOLVED, that the Board of Directors hereby authorizes the
issuance of 4 million "unregistered" and "restricted" post-split shares of the
$0.001 par value







common stock of the Corporation under the Purchase Agreement to IRC, with such
shares to be fully paid and non-assessable; and

     FURTHER, RESOLVED, that the Corporation adopt a Plan of Merger and such
Articles of Merger as are required by the Utah Revised Business Corporation Act
and/or the Tennessee Business Corporation Act to provide for the merger of the
Corporation into Tengasco in order to effect a change of domicile of the
Corporation to the State of Tennessee; and

     FURTHER, RESOLVED, that the exercise price of the options granted pursuant
to the resolution of the Board of Directors on April 11, 1995, shall be modified
to be $0.275 per share, which amount is equal to 110% of the bid price for the
Corporation's common stock on the date of the grant, that the shares to be
purchased thereby shall be post-split shares and that the Corporation engage

counsel to prepare a stock option plan with regard to these options; and

     FURTHER, RESOLVED, that the Corporation adopt written consultant
compensation agreements to issue an aggregate of 480,000 post-split shares of
common stock of the Corporation to Jeffrey D. Jenson, Michael E. Ratliff and
Leonard W. Burningham, Esq., in consideration of services rendered and to be
rendered to the Corporation in "non-capital raising transactions," with the
appropriate restrictions as provided under Rule 701 of the Securities and
Exchange Commission. Such shares shall be fully paid and non-assessable upon the
performance of said services; and

     FURTHER, RESOLVED, that the present directors of the Corporation shall
submit their resignations in seriatim and that the following designees of IRC
shall be appointed to serve as directors in their place, effective as of the
closing of the Purchase Agreement, and subject to the receipt by the Corporation
of a Consent signed by each such person to serve in such capacity: Edgar G.
Baugh; William A. Moffett; Joe Mattei; Jack Earnest; Ray E. Johnson; Charles N.
Manhoff; and Walter Arzonetti; and

     FURTHER, RESOLVED, that the present executive officers of the Corporation
shall submit their resignations in seriatim and that the following designees of
IRC shall be appointed to serve as executive officers in their place, effective
as of the closing of the Purchase Agreement, and subject to the receipt by the
Corporation of a Consent signed by each such person to serve in such capacity:
George E. Walter, Jr. (President/CEO); and James C. Walter (Vice President and
Secretary/Treasurer); and

     FURTHER, RESOLVED, that the executive officers of the Corporation are
hereby authorized to retain counsel to prepare and file with the Securities and
Exchange Commission a Registration Statement on Form 10-SB within 90 days of the
execution of the Purchase Agreement; and


                                        2






     FURTHER, RESOLVED, that the executive officers of the Corporation are
hereby authorized to engage an accountant to prepare the consolidated financial
statements, taking into account the acquisition of the Assets, that will be
filed concurrently with the Corporation's Form 10-SB; and

     FURTHER, RESOLVED, that regardless of the fact that a substantial portion
of the value of the Assets being acquired is represented by securities, the
Corporation shall not be deemed to be an "investment company" as that term is
defined under the Investment Company Act of 1940, as amended, as the Corporation
has no intention of engaging in such business now or in the near future.

Date: 5-2-95                                 /s/ Jeffrey D. Jenson
      --------------                         ----------------------------------
                                             Jeffrey D. Jenson


Date: 5-2-95                                 /s/ Travis T. Jenson
      --------------                         ----------------------------------
                                             Travis T. Jenson

Date: 5-2-95                                 /s/ Kathleen L. Morrison
      --------------                         ----------------------------------
                                             Kathleen L. Morrison


                                        3






                                   EXHIBIT "F"

              RESIGNATIONS OF THE DIRECTORS AND EXECUTIVE OFFICERS

                                       OF

                             ONASCO COMPANIES, INC.







                        RESIGNATION OF JEFFREY D. JENSON

     Due to the completion of the Purchase Agreement between Onasco Companies,
Inc., a Utah corporation (the "Company"), and Industrial Resources, Corporation,
a Kentucky corporation ("IRC"), the change of domicile of the Company and the
change of direction that it will be taking, I, Jeffrey D. Jenson, hereby resign
my position as a director and executive officer of the Company, effective
immediately.

DATED: 5-2-95                                /s/ Jeffrey D. Jenson
      --------------                         ----------------------------------
                                             Jeffrey D. Jenson








                       RESIGNATION OF KATHLEEN L. MORRISON

     Due to the completion of the Purchase Agreement between Onasco Companies,

Inc., a Utah corporation (the "Company"), and Industrial Resources, Corporation,
a Kentucky corporation ("IRC"), the change of domicile of the Company and the
change of direction that it will be taking, I, Kathleen L. Morrison, hereby
resign my position as a director and executive officer of the Company,
effective immediately.

DATED: 5-2-95                                /s/ Kathleen L. Morrison
      --------------                         ----------------------------------
                                             Kathleen L. Morrison              









                         RESIGNATION OF TRAVIS T. JENSON

     Due to the completion of the Purchase Agreement between Onasco Companies,
Inc., a Utah corporation (the "Company"), and Industrial Resources, Corporation,
a Kentucky corporation ("IRC"), the change of domicile of the Company and the
change of direction that it will be taking, I, Travis T. Jenson, hereby resign
my position as a director and executive officer of the Company, effective
immediately.

DATED: 5-2-95                                /s/ Travis T. Jenson
      --------------                         ----------------------------------
                                             Travis T. Jenson







                                   EXHIBIT "G"

                          CERTIFICATE OF GOOD STANDING

                                       OF

                             ONASCO COMPANIES, INC.








04/26/95        --- STATE OF UTAH - DEPARTMENT OF COMMERCE ---         09:49:45
                    --- CERTIFICATION OF GOOD STANDING ---


THE UTAH DIVISION OF CORPORATIONS AND COMMERCIAL CODE HEREBY CERTIFIES THAT

                             ONASCO COMPANIES, INC.

IS A UTAH CORPORATION AND IS QUALIFIED TO TRANSACT BUSINESS IN THE STATE OF
UTAH. A CERTIFICATE OF INCORPORATION WAS ISSUED FROM THIS OFFICE ON 04-24-1916
AND SAID CORPORATION IS IN GOOD STANDING, AS APPEARS OF RECORD IN THE OFFICES OF
THE DIVISION.


                                                       DATED THIS 26TH DAY
FILE #  011835                                          OF APRIL, 1995

- ----------------------------------
THIS CERTIFICATION IS NOT VALID
UNLESS PRINTED ON PAPER DISPLAYING
THE STATE SEAL IN BLUE, THE               REMOTE ACCESS CERTIFICATION # 054540
DIVISION SEAL IN GOLD, AND THE
DIVISION DIRECTOR'S SIGNATURE.
- ----------------------------------
- --------------------------------------------------------------------------------

                                 CTRL "B" = EXIT _
Menu: [Ctrl R-Shift]                 19200 8N1                  VT100     Online





[STAMP]
DIVISION OF CORPORATIONS                     /s/ Korla T. Woods
AND COMMERCIAL CODE                          ----------------------------------
                                             Korla T. Woods
                                             Director, Division of
                                             Corporations and Commercial Code

EX-10.1(B)

                                EXHIBIT 10.1 (b)
















                            INDUSTRIAL RESOURCE, CORP.

                                  Rt. 6, Box 248A
                            Manchester, Kentucky 40962
                     ofc (606)598-7701 -- FAX (606)598-7798

Mr. Jeff Jenson                                                  March 5, 1996

1787 E. Fort Union Blvd.
Suite 106
Salt Lake City, UT 84121

Re: Amendment to that certain "Purchase Agreement" dated May 2, 1995 between
Onasco Companies, Inc. and Industrial Resource, Corp.

Dear Mr. Jenson,

      Pursuant to our telephone conversation we hereby agree to amend the
subject Agreement as follows;

1. Equipment listed in Exhibit "A" attached hereto shall be excluded from that
Agreement.

2. Additionally Industrial Resource Corp. agrees to sell the assets to the
Corporation at there appraised value or $450,000.00 whichever is lower. The
consideration for this sale shall be a note payable for $450,000.00 with
interest at 8% simple annually.


Agreed to by;


/s/ Jeff Jenson
- ----------------------------
Jeff Jenson


/s/ James Ratliff
- ----------------------------
James Ratliff
for Industrial Resource, Corp.









           [LOGO]                  Miller Services, lnc.
                         ---------------------------------------------
                         OIL/GAS DRILLING  o  OPERATING AND PRODUCTION
                         ---------------------------------------------
                         POST OFFICE B0X 130 o  HUNTSVILLE, TN 37756
                                    PHONE (615) 663-9457
                                     FAX (615) 663-9461




February 22, 1996

Mr. Jeff DeMussik
TENGASCO, INC.
603 Main Ave., Ste. 500
Knoxville, Tn. 37902

Dear Jeff:

Pursuant to your request that I do an appraisal on the following equipment:

COOPER TC 38-38 SERVICE RIG

     Double drum well service unit, S/N 00339, Braden winch, powered by GM 6-71
diesel engine, Allison transmission, Skytop 84' 155, 000# capacity derrick,
hydraulically raised and telescoped, 3-sheave crown block assembly, tubing
board, control console, guy lines, stairs, catwalks, handrails, toolboxes, fuel
tank, 2 fire extinguishers. All above are mounted and unitized on a four axle
"back-in" carrier, 2 jack stands, 10.00 x 20 tires front and rear, approx. 600'
Of 7/8"th's inch tubing line, approx. 6,000' of 5/8" swab line.

     One: McKissick 2-sheave split block

          Foster 58.96 tubing tongs for 2 3/8", 2 7/8", and 4 1/2"
          (Reconditioned)

          Cavins type "B" tubing slips (air)

          2 3/8" BJ tubing slips (Reconditioned)

          Rod tools

          Rod Hook

          Base Beam & new floor

     Two: 5/8" Elevators

                                   $ 89,300.00







1 - 4 INCH FRAC VALVE 6000# W.P.
                                   $2,300.00

1 - NORRISEAL DEHYDRATOR Serial #2230450A, Model #25M60-SLDF-AB, 1001-a
Norriseal control
                                   $17,000.00

1 - DEHYDRATION UNIT Serial #PESI 421, complete with 25' tall tower; nameplate
data: NWP 1200 PSI, 100-F, SN 67-7615, Year 1985, T.P. 1800, W.O. 4386
                                   $16,250.00

1 - AJAX DPC 160 GAS COMPRESSOR w/GLYCOL RE-BOILER & TOWER ID#s K-6001-C 5000,
A-2002-G, Model #507, Serial #36957, A-2801-F
                                   $ 84,000.00

1 - INGERSOLL RAND COMPRESSOR ID #s-Serial #13936, 95024A 566567, 46-B7782 87042
F, 47177118 490, 97032 6284, Model # NXRB-1-5, B-8791
                                   $ 41,000.00

1 - INGERSOLL RAND (PARTS COMPRESSOR) Serial #91890, 2 B-184, 
25416-361   
                                   $ 9,000.00

CHICAGO PNEUMATIC COMPRESSOR - FE-2, 8 1/4" X 4 1/4" X 5" STROKE (ID#86053),
with Waukasau H-2475 engine (ID#52181), and fan type air exchanger (ID#867), all
mounted on one oil field skid
                                   $ 71,000.00

CHICAGO PNEUMATIC COMPRESSOR - Model YCE Gas Compressor (ID #279936), with Model
6G510 Natural Gas Engine, radiators, coolers, etc.
                                   $ 67,200.00

INTERNATIONAL TRACTOR - 1D# TDA2274CG, 1982
                                   $  7,500.00

INTERNATIONAL TRACTOR - F2000D, ID #112313H, 1966   w/winch  
                                   $  5,000,00
 
LOWBOY TRAILER - ID# B12466, 1979 35 Ton 
                                   $  7,200.00

GOOSENECK 5TH WHEEL TRAILER - #5027
                                   $  3,500.00




CATERPILLAR D-5 DOZER - 10 ft. Blade, Tilt & winch

                                   $ 25,000.00


As you know, I am familiar with the history of the above drilling equipment.
Maintenance of this equipment has been very good. I consider this equipment to
be in very good condition.

                                              Sincerely,

                                              /s/ Deloy Miller
                                              ----------------
                                              Deloy Miller
                                              President

EX-10.1(C)

                                EXHIBIT 10.1 (c)











                              GENERAL BILL OF SALE


     In consideration of four hundred fifty thousand dollars ($450,000.00), paid
to me this day by TENGASCO, INC., as buyer, whose address is 4928 HOMBERG DR.
#B-3, KNOXVILLE, Tennessee 37919, I, INDUSTRIAL RESOURCE CORP., whose address is
RT. 6 BOX 248A RT. 6, MANCHESTER, Kentucky 40962, hereby grant, transfer, sell
and deliver to buyer the following property: OILFIELD EQUIPMENT PER "EXHIBIT A"
ATTACHED HERETO.

     I agree that I will warrant and defend the buyer, the buyer's personal
representatives, successors and assigns against any claims made by any person
against this proper

     This property is sold "as is" and "where is," and no warranties express or
implied are made as to the condition of this property.

6/1/95                                             [illegible]
- -------                                            --------------------------
Date                                               INDUSTRIAL RESOURCE CORP.









                                PROMISSORY NOTE

     FOR VALUE RECEIVED, the undersigned, TENGASCO, INC., as maker, promises to
pay to the order of INDUSTRIAL RESOURCE CORP., or any subsequent holder of this
Note, the sum of four hundred fifty thousand dollars ($450,000.00) with interest
from the date hereof at the rate of 8.0% per annum, calculated monthly, the
principal and interest to be paid as set forth below.

     Payment of Principal and Interest. Payment of principal and interest is to
be made to the holder of this Note on or by December 31st, 1997.

     No Prepayment Penalty. The entire principal balance of this Note can be
prepaid at any time without penalty.

     Default - Waiver - Acceleration. In the event of default on this Note,
Maker, TENGASCO, INC., waives demand, presentment of payment, protest, notice of
protest, dishonor and any defense by reason of any extension of time or other
indulgence granted by the holder of this Note, and agrees that, if any payment
on this Note is not made when due, the holder shall have the right to accelerate
and make the entire unpaid balance of principal and interest immediately due and
payable. Default is defined as:


a. Failure to make any payment of principal or




                                                                          Page 2

interest when due under the terms of this Note;

     b. The violation of any other term, condition or promise of this Note; or

     c. A filing by or against Maker, TENGASCO, INC., of any Bankruptcy
proceeding, or any filing of relief of debtors in any court or under any
statute.

     Costs. If the holder of this Note incurs any costs in the collection or
enforcement of this Note, including costs of filing suit and reasonable attorney
fees, Maker agrees to pay such costs.

     Construction. If more than one party is named as the Maker of this Note,
the obligations incurred by each party are joint and several.

     This Note shall be interpreted in accordance with the laws of Tennessee. No
provision of this Note shall be affected by the invalidity of any other
provision or provisions contained herein.


/s/ [illegible]                            June 1, 1995
- ---------------                            -------------
TENGASCO, INC.                             Date

  
- ----------------                           -------------
Witness                                    Date

EX-10.2(A)

                                EXHIBIT 10.2(a)





                             COMPENSATION AGREEMENT

     THIS AGREEMENT made and entered into this 2nd day of May, 1995, by and
between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), of 1787 East Ft.
Union Blvd., #106, Salt Lake City, Utah 84121, and M. E. Ratliff (the
"Consultant").

                                  WITNESSETH:

     WHEREAS, the Consultant has provided substantial services for the benefit
of Onasco in connection with its contemplated acquisition of certain assets from
Industrial Resources, Corporation, a Kentucky corporation ("IRC"); and

     WHEREAS, Onasco desires to compensate the Consultant for his efforts on
behalf of Onasco estimated to be of a value of $21,500, which shall include all
expenses incurred by the Consultant or paid by him for and on behalf of Onasco
which were in any way related to the acquisition of these assets;

     NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and other good
and valuable consideration, and the covenants and conditions contained herein,
the parties hereto hereby agree as follows, to-wit:

     1. This Compensation Agreement shall contain the entire agreement between
the parties and may not be altered or amended except in writing signed by Onasco
and the Consultant.

     2. Both Onasco and the Consultant intend that this Compensation Agreement
shall be construed as the "Compensation Agreement" contemplated by Rule 701 of
the Securities and Exchange Commission.

     3. Onasco shall, upon execution hereof issue to the Consultant 215,000
"unregistered" and "restricted" post-split shares of common stock of Onasco for
$21,500 compensation of the Consultant and for all services, expenses and
payments made for and on behalf of Onasco to date, regarding the acquisition of
assets from IRC.

     4. By execution hereof and acceptance of the shares set forth above, the
Consultant releases Onasco and holds Onasco harmless and agrees to indemnify
Onasco from any and all claims, demands, expenses and liabilities for any such
services, costs or expenses incurred for or on behalf of Onasco prior to the
date hereof, related to the acquisition of assets from IRC.

     5. This Compensation Agreement shall be construed in accordance with the
laws of the State of Utah.












     IN WITNESS WHEREOF, the parties have set their hands and seals the date set
forth above.

                                               ONASCO COMPANIES, INC.


                                               By /s/ Jeff D. Jenson
                                               ----------------------
                                               Jeffrey D. Jenson
                                               President


                                               /s/ M. E. Ratliff
                                               -----------------
                                               M. E. Ratliff

                                       2

EX-10.2(B)

                                EXHIBIT 10.2(b)








                             COMPENSATION AGREEMENT



     THIS AGREEMENT made and entered into this 2nd day of May, 1995, by and
between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), of 1787 East Ft.
Union Blvd., #106, Salt Lake City, Utah 84121, and Jeffrey D. Jenson, the
President and a Director of Onasco (the "Director and President").

                                  WITNESSETH:

     WHEREAS, the Director and President has provided substantial services to
Onasco in connection with its contemplated acquisition of certain assets from
Industrial Resources, Corporation, a Kentucky corporation ("IRC"); and

     WHEREAS, Onasco desires to compensate the Director and President for his
efforts on behalf of Onasco estimated to be of a value of $21,500, which shall
include all expenses incurred by the Director and President or paid by him for
and on behalf of Onasco which were in any way related to the acquisition of
these assets;

     NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and other good
and valuable consideration, and the covenants and conditions contained herein,
the parties hereto hereby agree as follows, to-wit:

     1. This Compensation Agreement shall contain the entire agreement between
the parties and may not be altered or amended except in writing signed by Onasco
and the Director and President.

     2. Both Onasco and the Director and President intend that this Compensation
Agreement shall be construed as the "Compensation Agreement" contemplated by
Rule 701 of the Securities and Exchange Commission.

     3. Onasco shall, upon execution hereof issue to the Director and President
240,000 "unregistered" and "restricted" post-split shares of common stock of
Onasco for $21,500 compensation of the Director and President and for all
services, expenses and payments made for and on behalf of Onasco to date,
regarding the acquisition of assets from IRC.

     4. By execution hereof and acceptance of the shares set forth above, the
Director and President releases Onasco and holds Onasco harmless and agrees to
indemnify Onasco from any and all claims, demands, expenses and liabilities for
any such services, costs or expenses incurred for or on behalf of Onasco prior
to the date hereof, related to the acquisition of assets from IRC.

     5. This Compensation Agreement shall be construed in accordance with the
laws of the State of Utah.








     IN WITNESS WHEREOF, the parties have set their hands and seals the date set
forth above.

ONASCO COMPANIES, INC.

By /s/ Kathleen L. Morrison
   -------------------------
   Kathleen L. Morrison
   Secretary


   /s/ Jeffrey D. Jenson
   --------------------------
   Jeffrey D. Jenson



                                       2

EX-10.2(C)

                                 EXHIBIT 10.2(c)







                             COMPENSATION AGREEMENT

     THIS AGREEMENT made and entered into this 2nd day of May, 1995, by and
between ONASCO COMPANIES, INC., a Utah corporation ("Onasco"), of 1787 East Ft.
Union Blvd., #106, Salt Lake City, Utah 84121, and Leonard W. Burningham, Esq.
(the "Consultant").

                                  WITNESSETH:

     WHEREAS, the Consultant has provided legal services to Onasco in connection
with its contemplated acquisition of certain assets from Industrial Resources,
Corporation, a Kentucky corporation ("IRC"), and has agreed to provide legal
services to assist Onasco in preparing and filing a Registration Statement on
Form 10-SB of the Securities and Exchange Commission; and

     WHEREAS, Onasco desires to compensate the Consultant for his efforts on
behalf of Onasco to date, which have not been paid by Onasco in cash, estimated
to be of a value of $2,500, and for additional services to be rendered by the
Consultant of a value of $2,500, in connection with the preparation of the
Registration Statement on Form 10-SB, not including expenses, and all as
outlined in the letters of the Consultant dated April 19 and April 27, 1995,
copies of which are attached hereto (the "Letters"), and are incorporated herein
by reference;

     NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and other good
and valuable consideration, and the covenants and conditions contained herein,
the parties hereto hereby agree as follows, to-wit:

     1. This Compensation Agreement shall contain the entire agreement between
the parties and may not be altered or amended except in writing signed by Onasco
and the Consultant.

     2. Both Onasco and the Consultant intend that this Compensation Agreement
shall be construed as the "Compensation Agreement" contemplated by Rule 701 of
the Securities and Exchange Commission.

     3. Onasco shall, upon execution hereof issue to the Consultant 50,000
"unregistered" and "restricted" post-split shares of common stock of Onasco for
$5,000 compensation of the Consultant as outlined in the Letters.

     4. By execution hereof and acceptance of the shares set forth above, the
Consultant releases Onasco and holds Onasco harmless and agrees to indemnify
Onasco from any and all claims, demands, expenses and liabilities for any such
services, costs or expenses incurred for or on behalf of Onasco prior to the
date hereof, and for services to be rendered, all only to the extent outlined in
the Letters.






     5. This Compensation Agreement shall be construed in accordance with the
laws of the State of Utah.

     IN WITNESS WHEREOF, the parties have set their hands and seals the date set
forth above.

                                        ONASCO COMPANIES, INC.

                                        By /s/ Jeffrey D. Jenson
                                           ----------------------------------
                                           Jeffrey D. Jenson
                                           President


                                           /s/ Leonard W. Burningham, Esq.
                                           ----------------------------------
                                           Leonard W. Burningham, Esq.





                            LEAONARD W. BURNINGHAM
                                     LAWYER
                          HERMES BUILDING o SUITE 205 
                              455 EAST FIFTH SOUTH
                        SALT LAKE CITY, UTAH 84111-3323
                               TELEPHONE (801) 363-7411
                               FAX: (801) 355-7126

April 19, 1995

Industrial Resource Corporation
FACSIMILE NO. (615) 450-9375

Attention:        The Board of Directors
                  Mike Ratliff, Consultant

Re:               Proposed acquisition of assets of Industrial Resource
                  Corporation, a Tennessee corporation ("Industrial"), by Onasco
                  Companies, Inc., a Utah corporation ("Onasco")

Dear Ladies and Gentlemen:

     Recently, you forwarded me a retainer in the amount of $5,000 for legal
fees to be rendered in connection with the above referenced matter. Please be
advised that I represent Onasco in connection with this proposed transaction,
regardless of the fact that you have paid these fees; one of the conditions of
Onasco to this proposed transaction was that you pay my fees, which will amount
to $10,000, plus approximately $1,500 in costs, which should cover new stock
certificates, filing fees and transfer fees.

     I am enclosing herewith a copy of the Notice of Special Meeting of
Stockholders of Onasco set for April 28, 1995; preliminary drafts of the

Purchase Agreement have been forwarded to you, and, subject to review by the
respective Boards of Directors of Industrial and Onasco, the Purchase Agreement
can be concluded prior to April 28.

     On Closing, you will be required to pay the additional $6,500.

     You are urged to have your own counsel review all documentation prepared
and submitted to you for your review.

     It is my understanding that once the Purchase Agreement is concluded and
your nominees are designated to serve on the Board of Directors of Onasco, then
to be known as "Tengasco," you wish me to prepare a Confidential Limited
Offering Memorandum pursuant to which you may offer "unregistered" and
"restricted" securities of Tengasco, and a Form 10-SB Registration Statement for
filing with the Securities and Exchange Commission.





Page 2
April 19, 1995

     Fees for each of these projects can run up to $15,000, for an aggregate
total of $30,000.

     I am willing to prepare both of these documents for the sum of $22,500,
which will include all broker agreements, investor questionnaires, subscription
agreements, escrow agreements and other related instruments, minutes or consents
required for the Memorandum, with the exception of compliance with applicable
Blue Sky laws, rules and regulations, which will be billed at a rate of $350 per
state in which these securities are to be offered, and if no exemption is
available in any such state, at a rate of $l75 per hour if you require
registration, plus the actual filing fee required by any such state; and all
documents, minutes or consents required or necessary to complete and file the
Form 10-SB Registration Statement, through all Securities and Exchange
Commission comments.

     I will require one-half of this amount to be paid in advance, together with
$2,500 for direct costs and expenses I may incur for deposit in my trust
account.

     The sooner I receive this retainer and deposit, the sooner I can begin.


                                        Yours very sincerely,

                                        /s/ Leonard W. Burningham
                                        -----------------------------------
                                        Leonard W. Burningham

LWB/sr
cc: Jeff Jenson






                            LEAONARD W. BURNINGHAM
                                     LAWYER
                          HERMES BUILDING o SUITE 205 
                              455 EAST FIFTH SOUTH
                        SALT LAKE CITY, UTAH 84111-3323
                               TELEPHONE (801) 363-7411
                               FAX: (801) 355-7126


April 27, 1995

Industrial Resources, Corporation
FACSIMILE NO. (615) 450-9375

 Attention:    The Board of Directors
               Mike Ratliff, Consultant

 Re:           Proposed acquisition of assets of Industrial Resources,
               Corporation, a Kentucky corporation ("Industrial"), by Onasco
               Companies, Inc., a Utah corporation ("Onasco"), and fee
               arrangements for services to be rendered as outlined in my letter
               under date of April 19, 1995

Dear Ladies and Gentlemen:

     The following is my understanding of the fee arrangements to which you and
Onasco are agreeable, regarding my services related to the acquisition of
assets, the preparation of a limited offering memorandum (the "Memorandum") and
the preparation of a registration statement of Form 10-SB of the Securities and
Exchange Commission (the "Registration Statement."

     First, I have been paid the sum of $5,000 in cash for services related to
the acquisition, and I will receive 25,000 post-split shares of common stock of
Onasco under a written compensation agreement and in conformance with Rule 701
of the Securities and Exchange Commission, following the one for two reverse
split that is contemplated to be completed at a stockholders' meeting set for
April 28, 1995.

     I will receive $6,500 today, $5,000 of which will be for services related
to the Memorandum and all related documents and agreements as outlined in my
letter of the 19th, with the exception that all "blue sky" fees and costs
outlined in my letter will also be paid as such services are rendered. The
$1,500 shall be for unallocated costs related to the acquisition, including
federal express, filing fees for the Articles of Amendment the Certificate of
Merger to change the domicile of Onasco to Tennessee, printing of new stock
certificates and transfer fees related to the acquisition, but excluding mailing
costs of any stockholders' letter.






Page 2
April 27, 1995

     Additionally, I will receive 25,000 post-split shares under Rule 701 for
the preparation of the Registration Statement, with you to pay all filing fees
and my related direct out-of-pocket costs, including copies, federal express and
the like.

     I will prepare the necessary written compensation plan for your review and
acceptance. This letter is being addressed to you because your designees will be
assuming control of Onasco following the completion of the acquisition, and a
copy thereof is being forwarded to Onasco.

     If you have any questions, please contact me.


                              Yours very sincerely,

                              /s/ Leonard W. Burningham
                              -----------------------------------
                              Leonard W. Burningham

Accepted:

Industrial Resources, Corporation

By ______________________________


Onasco Companies, Inc.

By ______________________________

EX-10.3

                                  EXHIBIT 10.3






                        GAS PURCHASE AND SALES AGREEMENT

                               Table of Contents

 Section         Title                                                     Page

   1             Definitions                                                 1
   2             Construction of Facilities                                  2
   3             Quantity                                                    3
   4             Point of Delivery                                           3
   5             Delivery Pressure                                           3
   6             Price                                                       3
   7             Term                                                        5
   8             Title, Possession And Control                               5
   9             Taxes                                                       6
   10            Quality                                                     6
   11            Standards for Measurement and Tests                         7
   12            Billings and Payments                                       9
   13            Warranty of Title to Gas                                   10
   14            Force Majeure                                              10
   15            Defaults and Remedies                                      13
   16            Miscellaneous                                              14
                 Signature Page                                             15









GAS PURCHASE AND SALES AGREEMENT

THIS AGREEMENT made, entered into and effective this ___ day of
________________________, 1996, by and between The Natural Gas Utility
District of Hawkins County, TN., hereinafter referred to as "Buyer", and
TENGASCO, hereinafter referred to as "Seller".

                                  WITNESSETH:

     WHEREAS, Seller has a supply of natural gas available for sale to be
produced from various wells located in Hancock County, Tennessee; and

     WHEREAS, Buyer owns and operates a natural gas distribution system, located
in Hawkins County, Tennessee; and

     WHEREAS, Seller desires to sell and deliver to Buyer and Buyer desires to
purchase and receive from Seller natural gas in the quantities and under the
terms and conditions hereinafter set forth; and


     WHEREAS, Seller desires to transport gas in excess of Buyer's requirements
as set forth herein and Buyer agrees to transport such excess gas under the
terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual benefits and covenants
contained herein, Buyer and Seller have agreed as follows:

                                1.0 DEFINITIONS

     Unless expressly stated otherwise, the following terms, when used in this
Agreement, shall mean:

1.1 The terms "gas" and "natural gas" shall mean and include casinghead gas
produced with crude oil, natural gas from gas wells, and residue gas resulting
from processing casinghead gas, gas well gas, or both.


                                       1






1.2 A day shall begin at 8:00 a.m. in the time zone at the point of delivery on
each calendar day and end at 8:00 a.m. on the following calendar day; a month or
year shall begin at 8:00 a.m. on the first calendar day of such period of time
and end at 8:00 a.m. on the first calendar day following such period.

1.3 The term "cubic foot" shall mean the volume of gas which occupies one cubic
foot when such gas is at a temperature of 60 degrees Fahrenheit and at a
pressure of 14.73 pounds per square inch absolute.

1.4 The term "Mcf" shall mean one thousand (1,000) cubic feet.

1.5 The term "Btu" shall mean the quantity of heat that must be added to one
pound avoirdupois of pure water to raise its temperature from 58.5 degrees
Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of fourteen and
seventy-three hundredths pounds per square inch absolute (14.73 psia).

1.6 The term "MMBtu" shall mean one million (1,000,000) Btu's.

1.7 The term "Seller's Facilities" shall mean any and all facilities required to
be constructed and installed by Seller, at its sole cost and expense, to enable
Seller to deliver gas to Buyer at the Point of Delivery specified in Section 4
hereof, in the quantities provided for in Section 3 hereof and meeting the
quality specifications provided for in Section 10 hereof.

1.8 The term "Buyer's Facilities" shall mean any and all facilities required to
be constructed and installed by Buyer, at its sole cost and expense, to enable
Buyer to commence the receipt of gas from Seller at the Point of Delivery
specified in Section 4 hereof.

                         2.0 CONSTRUCTION OF FACILITIES


2.1 Upon the execution of this Agreement, Seller and Buyer agree to proceed in
good faith and with due diligence in the construction of Seller's and Buyer's
facilities, respectively, and upon completion of such facilities the parties
shall commence the delivery and receipt of gas as soon as practical thereafter.
In no event shall Buyer be obligated to pay for any gas hereunder prior to the
time Seller's and Buyer's facilities have been constructed and made available to
deliver and receive gas.

                                       2






                                  3.0 QUANTITY

3.1 Daily Quantity - On each day during the term of this agreement, Buyer shall
have the right to purchase and receive Seller's available production up to a
total quantity of 4,000 MCF/D. Seller shall be obligated to sell and deliver to
Buyer from its production wells in Hancock County, Tennessee, its available
production up to a total quantity of 4,000 MCF/D.

3.2 Buyer shall have first option to purchase and receive Seller's production in
excess of 4,000 MCF/D. In the event Buyer chooses not to purchase such excess
quantities, or does not take it's total quantity of 4,000 MCF/D, Buyer agrees to
receive such quantities and transport such gas across its distribution system to
the extent possible with existing facilities on behalf of Seller or third party
purchaser to mutually agreeable points of delivery and at an initial
transportation rate of $0.20 per MMBtu. In no event shall gas be sold by Seller
or transported and delivered by Buyer or Seller to any customer or potential
customer of Buyer within Buyer's service area without the written consent of
Buyer. Seller shall be responsible for all facilities including compression, if
necessary, to deliver gas into the ETNG pipelines or other third party
facilities. In no event shall Buyer be required to install additional facilities
for transporting gas for Seller. In the event facilities on Buyer's system are
required for transporting Seller's excess gas, Buyer may, at it's option,
construct necessary facilities and Seller hereby agrees to reimburse Buyer for
the cost of such facilities.

                             4.0 POINT OF DELIVERY

4.1 Seller shall make deliveries of gas hereunder to Buyer at the point of
delivery. The point of delivery for all gas delivered under this Agreement shall
be at the interconnection of Seller's and Buyer's facilities located at a
mutually agreeable point on Buyer's Distribution System in Hawkins County,
Tennessee.

                             5.0 DELIVERY PRESSURE

5.1 Seller shall make deliveries of gas hereunder to Buyer at the pressure
required by Buyer from time to time to enable the gas to enter Buyer's
facilities at Buyers normal distribution pressure.


                                   6.0 PRICE

6.1 The initial price per MMBtu to be paid by Buyer to Seller for all gas
purchased and sold hereunder for the first 12 months following the commencement
of deliveries hereunder shall be

                                       3






priced at the first of the month index price as published in "Inside FERC Gas
Market Report" under "prices of spot gas delivered to pipelines" for deliveries
into Tennessee Gas Pipeline, On Shore La., zone 1 plus $0.20 per MMBtu. In the
event that the "Inside FERC" index is no longer published, the parties shall
mutually agree to utilize some other index which is representative of gulf coast
gas supplies.

6.2 One hundred Eighty (180) days prior to the expiration of the first 12 months
following initial deliveries hereunder, Seller and Buyer shall have the right to
request that the initial price set forth above in Section 6.1 be redetermined as
provided in Section 6.3 and 6.4 below.

6.3 In the event Seller or Buyer exercises its right provided in Section 6.2
above to request a redetermination of the initial contract price for gas
delivered to Buyer hereunder, such request shall be made in writing and Seller
and Buyer agree to negotiate in good faith to arrive at a mutually agreeable
price based on current market conditions and Seller's ability to maintain a
constant level of production.

     In the event Seller or Buyer allows its right to request a price
redetermination hereunder to lapse by failing to make timely written request as
provided herein, Seller or Buyer shall thereafter next be entitled to request a
price redetermination 270 days following initial deliveries.

6.4 In the event that Seller and Buyer cannot agree on a redetermined price for
gas deliverable hereunder, Seller may solicit bona fide offers from third party
purchasers for Seller's available gas supplies. Seller shall submit in writing
to Buyer a notice setting out in reasonable detail the terms of any offer for
such gas from third party purchases which is acceptable to Seller. Buyer shall
have thirty (30) days after the date of Seller's Notice in which to elect in
writing to continue purchasing such gas from Seller in accordance with the
terms of the bona fide offer from third party purchases set out in Se11er's
Notice, or to release such gas from commitment hereunder. In the event Buyer
elects to release the gas, the obligations of the parties hereunder with respect
to the sale and purchase of such gas shall continue for an interim period until
the third party purchaser is able to accept deliveries of the released gas but
in no event to exceed ninety (90) days, after which the obligations of the
parties hereunder shall, except as otherwise provided herein, cease as to such

                                       4






released gas. During such interim period, the price applicable to deliveries of
gas by Seller to Buyer shall be the price determined according to Section 6.1
hereof, or such re-determined price in force and effect according to Section 6.2
and 6.3 hereof. Also, Buyer agrees to transport such released gas to the extent
possible with existing facilities on behalf of Seller or such third party
purchaser to mutually agreeable points of delivery and at a mutually agreeable
transportation charge. In no event shall such released gas be sold by Seller and
delivered by Buyer or Seller to any customer or potential customer of Buyer
within Buyers service area without the written consent of Buyer. Seller shall be
responsible for all facilities including compression, if necessary, to deliver
gas into the ETNG pipeline or other third party facilities. In no event shall
buyer be required to install additional facilities for transporting gas for
Seller.

6.5 The initial transportation rate set forth in Section 3.2 herein shall be
subject to re negotiation and adjustment contemporaneously with the price re
determinations in this Section 6.

                                    7.0 TERM

7.1 This agreement shall be in force and effect from the date first herein above
written and continue for a term of 3 years following initial deliveries by
Seller, unless terminated earlier as provided elsewhere herein, and on a
year-to-year basis thereafter until terminated by either party driving 180 day
prior notice to the other party to cancel this Agreement.

                       8.0 TITLE, POSSESSION AND CONTROL

8.1 As between the parties hereto, Seller shall be deemed to be in control and
possession of the gas deliverable hereunder and responsible for any injuries,
claims, liabilities or damages caused thereby prior to delivery to Buyer at the
point of delivery. Buyer shall be deemed to be in exclusive control and
possession thereof after receipt of gas meeting the quality specification set
forth in Section 10 hereof, at the point of delivery and responsible for any
injuries, claims, liabilities or damages caused by Buyer's possession and
control. The party in control and possession of the gas meeting the quality
specification set forth in Section 10 hereof, shall indemnify the other party
with respect to any injuries, claims, liabilities, or damages occurring

                                       5







while the gas is in it's control and possession. Title to the gas sold hereunder
shall pass from Seller to Buyer at the point of delivery.


                                   9.0 TAXES

9.1 Buyer shall not be responsible for any federal, state or local taxes on
production, gathering, severance or other taxes levied on gas volumes delivered
by Seller. Seller hereby agrees to indemnify Buyer for any and all losses,
damages, or claims, including attorney fees, for Seller's failure to report and
pay for any and all federal and state production, gathering, severance or
similar taxes levied on gas volumes delivered by Seller.

                                  10.0 QUALITY

Seller agrees that the gas delivered hereunder at the point of delivery
specified in Section 4.1 will, upon delivery: 

10.1 Have a total heating value of not less than one thousand (1,000) Btu's per
cubic foot;

10.2 Be commercially free from dust, hydrocarbon liquids, water and any other
substance that might become separated from the gas in Buyer's facilities, and
Seller shall furnish, install and maintain and operate such drips, separators,
heaters and other mechanical devices as may be necessary to effect compliance
with such requirements;

10.3 Not contain more than twenty (20) grains of total sulfur, nor more than 1/4
of one grain of hydrogen sulfide per one hundred (100) cubic feet;

10.4 Not contain more than ten (10) parts per million by volume of oxygen, and
Seller shall make every reasonable effort to keep the gas totally free of
oxygen.

10.5 Not contain more than four percent (4%) by volume of a combined total of
carbon dioxide and nitrogen components; provided, however, that the total carbon
dioxide content shall not exceed three percent (3%) by volume.

10.6 Have a temperature of not more than one hundred (100) degrees Fahrenheit.

10.7 All gas shall have been dehydrated by Seller for removal of entrained water
present therein in a vapor state, and in no event contain more than seven (7)
pounds of entrained water per million cubic feet, at a pressure base of fourteen
and seventy three (14.73) pounds per square inch and a

                                       6



temperature of sixty (60) degrees Fahrenheit as determined by dew-point
apparatus approved by the Bureau of Mines or such other apparatus as may be
mutually agreed upon.

10.8 As to gas which fails to meet the quality specifications set forth above,
Buyer, in addition to any legal remedies it may have, shall have the right to
refuse delivery of such gas.


                    11.0 STANDARDS FOR MEASUREMENT AND TESTS

11.1 A purchase/sales meter shall be installed, maintained and operated by
Seller at the point of delivery to measure all gas sold and/or delivered for
transportation or displacement under this agreement. The volume shall be
measured by orifice meters with linear charts, twenty-four (24) hour rotation,
or other mutually agreeable measuring devices installed and operated, and
computations made as prescribed in Gas Measurement Committee Report No. 3 of the
American Gas Association, as such report may be amended or revised from time to
time.

11.2 The unit of volume for purposes of measurement shall be one (1) cubic foot
of gas at a temperature base of sixty degrees (60) Fahrenheit and at a pressure
base of fourteen and seventy-three hundredths (14.73) pounds per square inch
absolute.

11.3 Temperature shall be determined by a recording thermometer, when
applicable, with twenty-four (24) hour chart rotation continuously used and
installed so as to record properly the temperature of the gas flowing through
the meter. The arithmetical average of the hourly temperatures recorded during
each day shall be used to calculate volumes hereunder.

11.4 Specific gravity shall be determined with accuracy to the nearest
one-thousandth (0.001) by taking samples of the gas at the point of measurement
at such times as may be designated by the parties hereto, but not more often
than once each month and having the specific gravity determined by the use of
the Acme Senior Gravity Balance, or any other instrument mutually agreed upon.

11.5 The total heating value of the gas shall be determined by joint tests made
by taking samples of gas at the point of delivery but not more than once each
month. Such samples to have the Btu content per cubic foot determined by: (1)
chromatographic analysis; or, (2) by calculation of gross heating value by
compositional analysis. Buyer and Seller may mutually agree to utilize other

                                       7



acceptable industry methods for determination of heating value. The Btu content
shall be determined for a cubic foot of gas at a temperature of sixty degrees
(60) Fahrenheit and a pressure of fourteen and seventy-three hundredths (14.73)
pounds per square inch absolute on a dry basis.

11.6 Tests to determine sulfur, hydrogen sulfide, oxygen, carbon dioxide,
nitrogen and water content shall be made by approved standard methods in general
use by the gas industry. Such tests shall be made at the request of either
party. The cost of such test are to be paid by the requesting party.

11.7 The accuracy of the measuring and testing equipment shall be verified at
least once each year and at other times upon request of Buyer or Seller. Tests
for quality of the gas may be made at the time of testing equipment or at other
times, but not more often than once each month. Notice of the time and nature of
each test shall be given to the other party sufficiently in advance to permit
convenient arrangement for a representative to be present. Tests and adjustments

shall be made in the presence of and observed by representatives of both Buyer
and Seller. All tests shall be made by Buyer at Buyer's expense, except that
Seller shall bear the expense of tests made at its request.

11.8 If at any time any of the measuring or testing equipment is found to be out
of service or registering inaccurately in any percentage, it shall be adjusted
at once to read accurately, within the limits prescribed by the manufacturer. If
such equipment is out of service, or inaccurate by an amount exceeding two
percent (2%) at a reading corresponding to the average rate of flow for the
period since the last preceding test, the previous readings of such equipment
shall be disregarded for any period definitely known or agreed upon, or if not
so known or agreed upon, for a period of fifteen (15 days) or one-half of the
elapsed time since the last test, whichever is shorter. The volume of gas
delivered during such period shall be estimated (i) by using the data recorded
by an check-measuring equipment, if installed and accurately registering, or, if
not installed or registering accurately, (ii) by correcting the error if the
percentage of error is ascertainable by calibration, test or mathematical
calculation, or, if neither such method is feasible, (iii) by estimating the
quantity or quality delivered, based upon deliveries under similar conditions
during a period when the

                                       8



equipment was registering accurately. No correction shall be made for recorded
inaccuracies of two percent (2%) or less.

11.9 Buyer and Seller shall have the right to inspect equipment installed or
furnished by the other, and the charts and other measurement or testing data of
the other, at all times during business hours, but the calibration and
adjustment of such equipment shall be done only by the party that installs or
furnishes such equipment unless otherwise agreed upon. Each party shall preserve
all original test data, charts and other similar records in such party's
possession for a period of at least two (2) years.

                           12.0 BILLINGS AND PAYMENTS

12.1 On or before the 15th working day of each month after deliveries of gas are
commenced, Seller shall render to Buyer an invoice for the preceding month
showing the total volume and the gross heating value of gas delivered at the
point of delivery hereunder.

12.2 Buyer will pay Seller on or before the 25th day of each month, or as to
statements rendered after the 15th day of each month, within ten (10) days after
receipt of such statements, for gas delivered during the preceding month. If the
correct amount is not paid when due and such payment is not successfully
disputed by Buyer, interest on any unpaid amount shall accrue at the rate of
nine percent (9%) per annum. If such failure to pay continues for sixty (60)
days, Seller, in addition to all other remedies, may thereafter suspend
deliveries of gas hereunder and if such default continues for thirty (30)
additional days, Seller may thereafter, in addition to any other rights Seller
may have suspend or terminate this contract. Provided, however, if Buyer in good
faith shall dispute the amount of any such invoice or part thereof and shall pay

to Seller such amounts as it concedes to be correct and shall undertake and
guarantee to make payment to Seller of the amount ultimately found due upon such
invoice after a final determination which may be reached either by agreement or
judgment of the courts, as may be the case, then Seller shall not be entitled to
suspend or terminate this contract.

12.3 Each party shall have the right to inspect and examine at all reasonable
times the records and charts of the other party pertaining to the purchase and
sale of gas hereunder. If any overcharge or

                                       9





undercharge in any amount whatsoever shall be determined within 12 months from
the date of the invoice and the invoice therefor has been paid, Seller shall
refund the amount of any overcharge or Buyer shall pay the amount of any
undercharge within thirty (30) days after the final determination thereof.

                          13.0 WARRANTY OF TITLE TO GAS

13.1 Seller warrants title to all gas delivered or to be delivered hereunder,
that Seller has the right to sell the same, and that such gas is free from liens
and adverse claims of every kind. Seller will pay, or cause to be paid, all
royalties, taxes and other sums due on production, gathering, severance or
handling of the gas delivered by Seller to Buyer. Seller will indemnify and save
Buyer harmless against all loss, damage and expense of every character on
account of adverse claims to the gas delivered by it or of royalties, taxes,
payments or other charges thereon applicable before or upon delivery to Buyer.
If Seller's title is questioned or involved in any action, Buyer may thereafter
refuse without penalty to accept further deliveries from Seller and/or Buyer may
withhold payment (without interest) of sums due hereunder up to the amount of
the claim until title is free from such question or such action is finally
determined, or until such time as Seller furnishes bond conditioned to save
Buyer harmless with sureties satisfactory to Buyer.

                               14.0 FORCE MAJEURE

14.1 If either Buyer or Seller is rendered unable, wholly or in part, by force
majeure to perform its obligations under this Agreement, other than the
obligation to make payments then due for gas previously delivered, it is agreed
that performance of the respective obligations of the parties hereto to deliver
and receive gas, so far as they are affected by such force majeure, shall be
suspended from the inception of any such inability until it is corrected but for
no longer period. The party claiming such inability shall give notice thereof to
the other party as soon as practicable after the occurrence of the force
majeure. If such notice is first given by telephone or facsimile communication,
it shall be confirmed promptly in writing giving full particulars. The party


                                       10









claiming such inability shall promptly correct such inability to the extent it
may be corrected through the exercise of reasonable diligence.

14.2 Neither party shall be liable to the other for any losses or damages,
regardless of the nature thereof and howsoever occurring, whether such losses or
damages be direct or indirect, immediate or remote, by reason of, caused by,
arising out of, or in any way attributable to the suspension of performance of
any obligation of either party to the extent that such suspension occurs because
a party is rendered unable, wholly or in part, by force majeure to perform its
obligations.

14.3 The term "force majeure" as used herein shall mean, cover and include the
following:

(a) Acts of God or Acts of Providence including, without limitation, epidemics,
landslides, hurricanes, floods, washouts, lightning, earthquakes, storm
warnings, extreme heat or extreme cold; any other adverse weather conditions and
threats of any of the foregoing, and whether preceded by, concurrent with, or
followed by acts or omissions of any human agency, whether foreseeable or not,
which may directly or indirectly contribute to or result in either party's
inability to perform its obligations.

(b) Acts of Government including, without limitation, laws, orders, rules,
decrees, judgments, judicial actions, regulations, acts of arrests or restraint,
and threats of any of the foregoing, by any government (de jure or de facto), or
any agency, subdivision or instrumentality thereof, having, claiming or
asserting authority or jurisdiction over the severance, production, gathering,
transportation, handling, sale or delivery of the subject matter of this
Agreement, when any such Act of Government directly or indirectly contributes to
or results in either party's inability to perform its obligations.

(c) Acts of Civil Disorder including, without limitation, acts of sabotage, acts
of the public enemy, acts of war (declared or undeclared), blockades,
insurrections, riots, mass protests or demonstrations and threats of any of the
foregoing, and police action in connection with or in reaction to any such Acts
of Civil Disorder, when any such Act of Civil Disorder directly or indirectly
contributes to or results in either party's inability to perform its
obligations.


                                       11







(d) Acts of Industrial Disorder including, without limitation, strikes,
lockouts, picketing and threats of any of the foregoing, when any such Acts of
Industrial Disorder directly or indirectly contributes to or results in either
party's inability to perform its obligations; provided, however, that the
settlement of any labor dispute to prevent or end any such Acts of Industrial
Disorder shall be within the sole discretion of the party to this Agreement
involved in such labor dispute, and the above requirement that any inability
shall be corrected with reasonable diligence shall not apply to labor disputes.

(e) Failure of Facilities including, without limitation, freezing of wells or
lines of pipe, failures resulting from fires, washouts, mechanical breakdowns
of, malfunctions of or necessities for making repairs or alterations to
machinery, lines of pipe, pumps, compressors, valves, gauges or any of the
equipment therein or thereon, and cratering, blowout, or failure of any well or
wells to produce, when any such Failure of Facilities directly or indirectly
contributes to or results in either party's inability to perform its
obligations.

(f) Inability to obtain or acquire at reasonable cost grants, servitudes,
rights-of-way, permits, licenses, or any other authorizations from third parties
or agencies (private or governmental) or inability to obtain or acquire at
reasonable cost necessary materials and supplies, to construct, maintain and
operate any facilities required for the performance of any obligations under
this Agreement, when any such inability directly or indirectly contributes to or
results in either party's inability to perform its obligations.

(g) Any occurrence, condition, situation, or threat thereof, not covered by
Subparagraphs (a) through (f) above, which renders either party unable to
perform its obligations, provided such occurrence, condition, situation, or
threat thereof is not under or within the control of the party claiming such
inability, provided such party could not have prevented such occurrence,
condition, situation, or threat thereof by the exercise of reasonable diligence.


                                       12






                           15.0 DEFAULTS AND REMEDIES

15.1 If a triggering event (as defined in Section 15.2 below) occurs at any time
during the term of this agreement, then the non-defaulting party may terminate
this agreement in accordance with the following:

(i) The non-defaulting party shall notify the other party in writing stating
specifically the cause for terminating the agreement and declaring the intention
of the non-defaulting party to terminate this agreement.

(ii) The other party shall have thirty (30) days after receipt of such notice in
which to remedy or remove the cause or causes stated in the notice for
termination. If within said thirty (30) day period the other party does so

remove or remedy said cause or causes and fully indemnifies the nondefaulting
party for any and all consequences of such breach, then such notice shall be
withdrawn and this agreement shall continue in full force and effect

(iii) If the other party does not so remedy and remove the cause or causes or
does not indemnify the non-defaulting party within said thirty (30) day period,
then this agreement shall terminate without waiver by the non-defaulting party
of any other remedy it may have under this agreement or otherwise.

15.2 A "triggering event" shall occur when:

(i) The failure by Seller or Buyer to make, when due, any payment required under
this agreement if such failure is not remedied within five (5) business days
after written notice of such failure is given to the other party.

(ii) Either Seller or Buyer fails to perform a material covenant or obligation
under this agreement or breeches any material provision of this agreement.

(iii) Any material representation or warranty made by Seller or Buyer in
accordance with this agreement proves to be false or misleading in any material
respect.

(iv) Seller or Buyer shall (1) make an assignment or any general arrangement for
the benefit of creditors: (2) file a petition or otherwise commence, authorize
or acquiesce in the commencement of a proceeding or cause the initiation of a
proceeding under any bankruptcy or similar law for the


                                       13





protection of creditors, or have such petition filed against it and such
proceeding remains undismissed for sixty (60) days: (3) otherwise become
bankrupt or insolvent (however evidenced), or (4) be unable to pay it's debts
when due;

(v) Seller's unexcused failure to deliver Buyer's requested quantity for a
cumulative period of 30 or more days in a twelve (12) month period.

                               16.0 MISCELLANEOUS

16.1 No waiver by Buyer or Seller of any default of the other under this
Agreement shall operate as a waiver of any future default, whether of a like or
different character.

16.2 Every notice, request, statement or invoice provided for in this Agreement
shall be in writing directed to the party to whom given, made or delivered at
such party's address as follows:

     Buyer: The Natural Gas Utility District of Hawkins County, TN.
             202 Park Blvd.

             PO Box 667
             Rogersville, Tennessee 37857
             Phone (615) 272-8841
             Fax (615) 272-4645

     Seller: Tengasco
             Medical Arts Building
             603 Main Avenue
             Suite 500
             Knoxville, Tennessee 37902
             Phone (423) 523-1124
             Fax (423) 523-9894

or at such other address as such party shall from time to time designate as the
address for such purpose by letter addressed to the other party or parties.

16.3 The parties agree that the place of execution of this Agreement is Hawkins
County, Tennessee. Buyer and Seller agree that this Agreement shall be construed
according to the law of the State of Tennessee.

16.4 This Agreement shall bind and inure to the respective successors and
assigns of the parties hereto, but no assignment shall relieve any party's
obligations hereunder without written consent of the other party.

                                       14




16.5 The parties hereto understand and agree that the total price to be paid for
gas delivered hereunder is the price set forth in section 6.0 hereof inclusive
of all taxes, royalties, payments or any other charges thereof applicable before
or upon delivery to Buyer

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate originals as of the day and year first herein above written.

     Buyer: The Natural Gas Utility District of Hawkins County, TN.

          By: /s/ Tommy W. Young
              -------------------------
          Title: General Manager
              -------------------------
          Date: 9/26/96
              -------------------------

     Seller: TENGASCO

          By:  /s/ Ted P. Scaller
              -------------------------
          Title: Pres/CEO
              -------------------------
          Date: 10/1/96
              -------------------------


Signature page to Gas Purchase and Sales Agreement dated 9/26/96 , 1996, between
The Natural Gas Utility District of Hawkins County, TN. Buyer, and TENGASCO
Seller, relating to the purchase and sale of gas from various wells in Hancock
County, Tennessee.



                                       15

EX-10.4

                                 EXHIBIT 10.4







                        GAS PURCHASE AND SALES AGREEMENT

                                     BETWEEN

                    POWELL VALLEY ELECTRIC COOPERATIVE, INC.
                                      BUYER

                                       AND

                                 TENGASCO, INC.
                                     SELLER

                PRODUCTION FROM VARIOUS WELLS IN HANCOCK CO., TN







                        GAS PURCHASE AND SALES AGREEMENT
                                Table of Contents
Section         Title                                                       Page
- -------         -----                                                       ----
 1      Definitions...........................................................1
 2      Construction of Facilities............................................3
 3      Quantity..............................................................3
 4      Point of Delivery.....................................................3
 5      Delivery Pressure.....................................................4
 6      Price.................................................................4
 7      Term..................................................................4
 8      Title, Possession and Control.........................................4
 9      Taxes.................................................................5
 10     Quality...............................................................5
 11     Standards for Measurement and Tests...................................7
 12     Billings and Payments................................................10
 13     Warranty of Title to Gas.............................................11
 14     Force Majeure........................................................12
 15     Miscellaneous........................................................15
        Signature Page.......................................................17





                        GAS PURCHASE AND SALES AGREEMENT

     THIS AGREEMENT, made, entered into and effective this 21st day of November,
1996, by and between Powell Valley Electric Cooperative, Inc., hereinafter
referred to as "Buyer" and Tengasco, Inc., hereinafter referred to as "Seller."

                                  WITNESSETH:

     WHEREAS, Seller has a supply of natural gas available for sale to be
produced from various wells located in Hancock County, Tennessee, and

     WHEREAS, Buyer may install a natural gas distribution system located in
Buyer's service area, and

     WHEREAS, Seller desires to sell and deliver to Buyer and Buyer may purchase
and receive from Seller natural gas in the quantities and under the terms and
conditions hereafter set forth.

     NOW, THEREFORE, in consideration of the mutual benefits and covenants
contained herein, Buyer and Seller have agreed as follows:

                                1.0 DEFINITIONS

     Unless expressly stated otherwise, the following terms, when used in this
Agreement, shall mean:

     1.1 The terms "gas" and "natural gas" shall mean and include casinghead gas
produced with crude oil, natural gas from gas wells, and residue gas from
processing casinghead gas, gas well gas or


                                       1



both.

     1.2 A day shall begin at 8:00 a.m. in the time zone at the point of
delivery on each calendar day and end at 8:00 a.m. on the following calendar
day; a month or year shall begin at 8:00 a.m. on the first calendar day of such
period of time and end at 8:00 a.m. on the first calendar day following such
period.

     1.3 The term "cubic foot" shall mean the volume of gas which occupies one
cubic foot when such gas is at a temperature of 60 degrees Fahrenheit and at a
pressure of 14.73 pounds per square inch absolute.

     1.4 The term "Mcf" shall mean one thousand (1,000) cubic feet.

     1.5 The term "Btu" shall mean the quantity of heat that must be added to
one pound avoirdupois of pure water to raise its temperature from 58.5 degrees

Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of fourteen and
seventy-three hundredths pounds per square inch absolute (14.73 psia).

     1.6 The term "MMBtu" shall mean one million (1,000,000) Btus.

     1.7 The term "Seller's Facilities" shall mean any and all facilities
required to be constructed and installed by Seller, at its sole cost and
expense, to enable Seller to deliver gas to Buyer at the Point of Delivery
specified in Section 4 hereof, in the quantities provided for in Section 3
hereof and meeting the quality specifications provided for in Section 10 hereof.

     1.8 The term "Buyer's Facilities" shall mean any and all facilities
required to be constructed and installed by Buyer, at


                                       2



its sole cost and expense, to enable Buyer to commence the receipt of gas from
Seller at the Point of Delivery specified in Section 4 hereof.

                         2.0 CONSTRUCTION OF FACILITIES

     2.1 Upon written request by the Buyer, Seller and Buyer agree to proceed in
good faith and with due diligence in the construction of Seller's and Buyer's
facilities, respectively, and upon completion of such facilities the parties
shall commence the delivery and receipt of gas as soon as practical thereafter.
In no event shall Buyer be obligated to pay for any gas hereunder prior to the
time Seller's and Buyer's facilities have been constructed and made available to
deliver and receive gas.

                                  3.0 QUANTITY

     3.1 Daily Quantity - Daily quantities shall be mutually determined by the
Buyer and Seller at some future date prior to the Buy purchasing gas hereunder.
Seller shall be obligated to sell and deliver to Buyer from its production wells
in Hancock County, Tennessee, or from any other source interconnected to the
Seller's facilities.

     3.2 In no event shall gas be sold from any source by Seller or transported
and delivered by Buyer or Seller to any customer of Buyer within Buyer's service
area without the written consent of Buyer, within twenty years from the initial
date of this Agreement.

                             4.0 POINT OF DELIVERY

     4.1 Seller shall make deliveries of gas hereunder to Buyer at the point of
delivery. The point of delivery for all gas


                                       3




delivered under this Agreement shall be at the interconnection of Seller's and
Buyer's facilities located at a mutually agreeable point on Buyer's Distribution
System in Hancock County, Tennessee.

                             5.0 DELIVERY PRESSURE

     5.1 Seller shall make deliveries of gas hereunder to Buyer at the pressure
required by Buyer from time to time to enable the gas to enter Buyer's
facilities at Buyer's normal distribution pressure.

                                   6.0 PRICE

     6.1 The initial price per MMBtu to be paid by Buyer to Seller for all gas
purchased and sold hereunder shall be mutually determined by the Buyer and
Seller at some future date prior to the Buyer purchasing gas hereunder, but in
no case shall the price exceed "the inside FERC price plus 20 cents."

                                    7.0 TERM

     7.1 This agreement shall be in force and effect from the date first above
written and shall continue for a term of twenty years and on a year-to-year
basis thereafter until terminated by either party giving 180 day prior notice to
the other party to cancel this Agreement.

                        8.0 TITLE POSSESSION AND CONTROL

     8.1 As between the parties hereto, Seller shall be deemed to be in control
and possession of the gas deliverable hereunder and responsible for any
injuries, claims, liabilities or damages caused thereby prior to delivery to
Buyer at the point of delivery. Buyer shall be deemed to be in exclusive control
and possession thereof


                                       4



after receipt of gas meeting the quality specification set forth in Section 10
hereof, at the point of delivery and responsible for any injuries, claims,
liabilities or damages caused by Buyer's possession and control. The party in
control and possession of the gas meeting the quality specification set forth in
Section 10 hereof shall indemnify the other party with respect to any injuries,
claims, liabilities or damages occurring while the gas is in the former's
control and possession. Title to the gas sold hereunder shall pass from Seller
to Buyer at the point of delivery.

                                   9.0 TAXES

     9.1 Buyer shall not be responsible for any federal, state or local taxes on
production, gathering, severance or other taxes levied on gas volumes delivered
by Seller. Seller hereby agrees to indemnify Buyer for any and all losses,
damages, or claims, including attorney fees, for Seller's failure to report and
pay for any and all federal and state production, gathering, severance or

similar taxes levied on gas volumes delivered by Seller.

                                  10.0 QUALITY

     Seller agrees that the gas delivered hereunder at the point of delivery
specified in Section 4.1 will, upon delivery:

     10.1 Have a total heating value of not less than one thousand (1,000) Btus
per cubic foot;

     10.2 Be commercially free from dust, hydrocarbon liquids, water and any
other substance that might become separated from the gas in Buyer's facilities,
and Seller shall furnish, install and maintain and operate such drips,
separators, heaters and other


                                       5



mechanical devices as may be necessary to effect compliance with such
requirements;

     10.3 Not contain more than twenty (20) grains of total sulfur, nor more
than one-fourth (1/4) of one (1) grain of hydrogen sulfide per one hundred (100)
cubic feet;

     10.4 Not contain more than five (5) parts per million (PPM) by volume of
oxygen, and Seller shall make every reasonable effort to keep the gas totally
free of oxygen;

     10.5 Not contain more than four percent (4%) by volume of a combined total
of carbon dioxide and nitrogen components; provided, however, that the total
carbon dioxide content shall not exceed three percent (3%) by volume;

     10.6 Have a temperature of not more than one hundred degrees (100 degrees)
Fahrenheit;

     10.7 All gas shall have been dehydrated by Seller for removal of entrained
water present therein in a vapor state, and in no event contain more than seven
(7) pounds of entrained water per million cubic feet, at a pressure base of
fourteen and seventy-three hundredths pounds (14.73) per square inch and a
temperature of sixty degrees (60 degrees) Fahrenheit as determined by dew-point
apparatus approved by the Bureau of Mines or such other apparatus as may be
mutually agreed upon.

     10.8 As to gas which fails to meet the quality specifications set forth
above, Buyer, in addition to any legal remedies it may have, shall have the
right to refuse delivery of such gas.


                                       6




                    11.0 STANDARDS FOR MEASUREMENT AND TESTS

     11.1 A purchase/sales meter shall be installed, maintained and operated by
Seller at the point of delivery to measure all gas sold and/or delivered for
transportation or displacement under this agreement. The volume shall be
measured by orifice meters with linear charts, twenty-four (24) hour rotation,
or mutually agreeable measuring devices installed and operated, and computations
made as prescribed in Gas Measurement Committee Report No. 3 of the American Gas
Association, as such report may be amended or revised from time to time.

     11.2 The unit of volume for purposes of measurement shall be one (1) cubic
foot of gas at a temperature base of sixty degrees (60 degrees) Fahrenheit and
at a pressure base of fourteen and seventy-three hundredths (14.73) pounds per
square inch absolute.

     11.3 Temperature shall be determined by a recording thermometer, when
applicable, with twenty-four (24) hour chart rotation continuously used and
installed so as to record properly the temperature of the gas flowing through
the meter. The arithmetical average of the hourly temperatures recorded during
each day shall be used to calculate volumes hereunder.

     11.4 Specific gravity shall be determined with accuracy to the nearest
one-thousandth (0.001) by taking samples of the gas at the point of measurement
at such times as may be designated by the parties hereto, but not more often
than once each month and having the specific gravity determined by the use of
the Acme Senior Gravity Balance, or any other instrument mutually agreed upon.


                                       7



     11.5 The total heating value of the gas shall be determined by joint tests
made by taking samples of gas at the point of delivery but not more than once
each month. Such samples to have the Btu content per cubic foot determined by:
(1) chromatographic analysis; or (2) by calculation of gross heating value by
compositional analysis. Buyer and Seller may mutually agree to utilize other
acceptable industry methods for determination of heating value. The Btu content
shall be determined for a cubic foot of gas at a temperature of sixty degrees
(60 degrees) Fahrenheit and a pressure of fourteen and seventy-three (14.73)
pounds per square inch absolute on a dry basis.

     11.6 Tests to determine sulfur, hydrogen sulfide, oxygen, carbon dioxide,
nitrogen and water content shall be made by approved standard methods in general
use by the gas industry. Such tests shall be made at the request of either
party. The cost of such tests are to be paid by the requesting party.

     11.7 The accuracy of the measuring and testing equipment shall be verified
at least once each year and at other times upon request of Buyer or Seller.
Tests for quality of the gas may be made at the time of testing equipment or at
other times, but not more often than once each month. Notice of the time and
nature of each test shall be given to the other party sufficiently in advance to
permit convenient arrangement for a representative to be present. Tests and

adjustments shall be made in the presence of and observed by representatives of
both Buyer and Seller. All tests shall be made by Buyer at Buyer's expense,
except that Seller shall bear the


                                       8



expense of tests made at its request.

     11.8 If at any time of the measuring or testing equipment is found to be
out of service or registering inaccurately in any percentage, it shall be
adjusted at once to read accurately, within the limits prescribed by the
manufacturer. If such equipment is out of service, or inaccurate by an amount
exceeding two percent (2%) at a reading corresponding to the average rate of
flow for the period since the last preceding test, the previous readings of such
equipment shall be disregarded for any period definitely known or agreed upon,
or if not so known or agreed upon, for a period of fifteen (15) days or one-half
of the elapsed time since the last test, whichever is shorter. The volume of gas
delivered during such period shall be estimated (i) by using the data recorded
by any check-measuring equipment, if installed and accurately registering, of,
if not installed or registering accurately, (ii) by correcting the error if the
percentage of error is ascertainable by calibration, test or mathematical
calculation, or, if neither such method is feasible, (iii) by estimating the
quantity or quality delivered, based upon deliveries under similar conditions
during a period when the equipment was registering accurately. No correction
shall be made for recorded inaccuracies of two percent (2%) or less.

     11.9 Buyer and Seller shall have the right to inspect equipment installed
or furnished by the other, and the charts and other measurement or testing data
of the other, at all times during business hours, but the calibration and
adjustment of such


                                       9



equipment shall be done only by the party that installs or furnishes such
equipment unless otherwise agreed upon. Each party shall preserve all original
test data, charts and other similar records in such party's possession for a
period of at least two (2) years.

                           12.0 BILLINGS AND PAYMENTS

     12.1 On or before the 15th working day of each month after deliveries of
gas are commenced, Seller shall render to Buyer an invoice for the preceding
month showing the total volume and the gross heating value of gas delivered at
the point of delivery hereunder.

     12.2 Buyer will pay Seller on or before the 25th day of each month, or as
to statements rendered after the 15th day of each month, within thirty (30) days
after receipt of such statements, for gas delivered during the preceding month.

If the correct amount is not paid when due and such payment is not successfully
disputed by Buyer, interest on any unpaid amount shall accrue at the rate of
nine percent (9%) per annum. If such failure to pay continues for sixty (60)
days, Seller, in addition to all other remedies, may thereafter suspend
deliveries of gas hereunder and if such default continues for thirty (30)
additional days, Seller may thereafter, in addition to any other rights Seller
may have, suspend or terminate this contract. Provided, however, if Buyer in
good faith shall dispute the amount of any such invoice or part thereof and
shall pay to Seller such amounts as it concedes to be correct and shall
undertake and guarantee to make payment to Seller


                                       10



of the amount ultimately found due upon such invoice after a final determination
which may be reached either by agreement or judgement of the courts, as may be
the case, then Seller shall not be entitled to suspend or terminate this
contract.

     12.3 Each party shall have the right to inspect and examine at all
reasonable times the records and charts of the other party pertaining to the
purchases and sale of gas hereunder. If any overcharge or undercharge in any
amount whatsoever shall be determined within 12 months from the date of the
invoice and the invoice therefor has been paid, Seller shall refund the amount
of any overcharge or Buyer shall pay the amount of any undercharge within thirty
(30) days after the final determination thereof.

                          13.0 WARRANTY OF TITLE TO GAS

     13.1 Seller warrants title to all gas delivered or to be delivered
hereunder, that Seller has the right to sell the same, and that such gas is free
from liens and adverse claims of every kind. Seller will pay, or cause to be
paid, all royalties, taxes and other sums due on production, gathering,
severance or handling of the gas delivered by Seller to Buyer. Seller will
indemnify and save Buyer harmless against all loans, damage and expense of every
character on account of adverse claims to the gas delivered by it or of
royalties, taxes, payments or other charges thereon applicable before or upon
delivery to Buyer. If Seller's title is questioned or involved in any action,
Buyer may thereafter refuse without penalty to accept further deliveries from
Seller and/or Buyer may withhold payment (without interest) of sums due
hereunder


                                       11



up to the amount of the claim until title is free from such question or such
action is finally determined, or until such time as Seller furnishes bond
conditioned to save Buyer harmless with sureties satisfactory to Buyer.

                               14.0 FORCE MAJEURE


     14.1 If either Buyer or Seller is rendered unable, wholly or in part, by
force majeure to perform its obligations under this Agreement, other than the
obligation to make payments then due for gas previously delivered, it is agreed
that performance of the respective obligations of the parties hereto to deliver
and receive gas, so far as they are affected by such force majeure, shall be
suspended from the inception of any such inability until it is corrected but for
no longer period. The party claiming such inability shall give notice thereof to
the other party as soon as practicable after the occurrence of the force
majeure. If such notice is first given by telephone or facsimile communication,
it shall be confirmed promptly in writing giving full particulars. The party
claiming such inability shall promptly correct such inability to the extent it
may be corrected through the exercise of reasonable diligence.

     14.2 Neither party shall be liable to the other for any losses or damages,
regardless of the nature thereof and howsoever occurring, whether such losses or
damages be direct or indirect, immediate or remote, by reason of, caused by,
arising out of, or in any way attributable to the suspension of performance of
any obligation of either party to the extent that such suspension


                                       12



occurs because a party is rendered unable, wholly or in part, by force majeure
to perform its obligations.

     14.3 The term "force majeure" as used herein shall mean, cover and include
the following:

     (a) Acts of God or Acts of Providence including, without limitation,
epidemics, landslides, hurricanes, floods, washouts, lightning, earthquakes,
storm warnings, extreme heat or cold, any other adverse weather conditions and
threats of any of the foregoing, and whether preceded by, concurrent with, or
followed by acts of omissions of any human agency, whether foreseeable or not,
which may directly or indirectly contribute to or result in either party's
inability to perform its obligations.

     (b) Acts of Government including, without limitation, laws, orders, rules,
decrees, judgements, judicial actions, regulations, acts of arrests or
restraint, and threats of any of the foregoing by any government (de jure or
defacto), or any agency subdivision or instrumentality thereof, having, claiming
or asserting authority or jurisdiction over the severance, production,
gathering, transportation, handling, sale or delivery of the subject matter of
this Agreement, when any such Act of Government directly or indirectly
contributes to or results in either party's inability to perform its
obligations.

     (c) Acts of Civil Disorder including, without limitation, acts of sabotage,
acts of the public enemy, acts of war (declared or undeclared), blockades,
insurrections, riots, mass protests or demonstrations and threats of any of the
foregoing, and police



                                       13



action in connection with or in reaction to any such Acts of Civil Disorder,
when any such Act of Civil Disorder directly or indirectly contributes to or
results in either party's inability to perform its obligations.

     (d) Acts of Industrial Disorder including, without limitation, strikes,
lockouts, picketing and threats of any of the foregoing, when any such Acts of
Industrial Disorder directly or indirectly contributes to or results in either
party's inability to perform its obligations; provided, however, that the
settlement of any labor dispute to prevent or end any such Acts of Industrial
Disorder shall be within the sole discretion of the party to this Agreement
involved in such labor disputes, and the above requirement that any liability
shall be corrected with reasonable diligence shall not apply to labor disputes.

     (e) Failure of Facilities including, without limitation, freezing of wells
or lines of pipe, failure resulting from fires, washouts, mechanical breakdowns
of, malfunctions of or necessities for making repairs or alterations to
machinery, lines of pipe, pumps, compressors, valves, gauges or any of the
equipment therein or thereon, and cratering, blowout, or failure to any well or
wells to produce, when any such Failure of Facilities directly or indirectly
contributes to or results in either party's inability to perform its
obligations.

     (f) Inability to obtain or acquire at reasonable cost grants, servitudes,
rights-of-way, permits, licenses, or any other authorization from third parties
or agencies (private or


                                       14



governmental) or inability to obtain or acquire at reasonable cost necessary
materials and supplies, to construct, maintain and operate any facilities
required for the performance of any obligations under this Agreement, when any
such inability directly or indirectly contributes to or results in either
party's inability to perform its obligations.

     (g) Any occurrence, condition, situation, or threat thereof, not covered by
Subparagraphs (a) through (f) above, which renders either party unable to
perform its obligations, provided such occurrence, condition, situation or
threat thereof is not under or within the control of the party claiming such
inability, provided such party could not have prevented such occurrence,
condition, situation or threat thereof by the exercise of reasonable diligence.

                               15.0 MISCELLANEOUS

     15.1 No waiver by Buyer or Seller of any default of the other under this
Agreement shall operate as a waiver of any future default, whether of a like or
different character.


     15.2 Every notice, request, statement or invoice provided for in this
Agreement shall be in writing directed to the party to whom given, made or
delivered at such party's address as follows:

          Buyer:    Powell Valley Electric Cooperative, Inc.
                    325 Straight Creek Road
                    P.O. Box 1528
                    New Tazewell, TN 37825
                    Telephone: (423) 626-5204
                    Fax: (423) 626-0711


                                       15



          Seller:   Tengasco, Inc.
                    Suite 500, Medical Arts Building
                    603 Main Avenue
                    Knoxville, TN 37902
                    Telephone: (423) 523-1124
                    Fax: (423) 523-9894

or at such other address as such party shall from time to time designate as the
address for such purpose by letter addressed to the other party or parties.

     15.3 The parties agree that the place of execution of this Agreement is
Hancock County, Tennessee. Buyer and Seller agree that this Agreement shall be
construed according to the law of the State of Tennessee.

     15.4 This Agreement shall bind and inure to the respective successors and
assigns of the parties hereto, but no assignment shall relieve any party's
obligations hereunder without written consent of the other party.

     15.5 The parties hereto understand and agree that the total price to be
paid for gas delivered hereunder is the price set forth in Section 6.0 hereof
inclusive of all taxes, royalties, payments or any other charges thereof
applicable before or upon delivery to Buyer.


                                       16



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate as of the day and year first above written.

                              POWELL VALLEY ELECTRIC COOPERATIVE, INC., Buyer
                              By:  [illegible]
                              Title: [illegible]
                              Date:  11/18/96



                              TENGASCO, INC., Seller
                              By:  /s/ Ted P. Scallon
                              Title: President/C.E.O.
                              Date:  11/15

Signature page to Gas Purchase and Sales Agreement dated November 18th, 1996,
between Powell Valley Electric Cooperative, Inc., Buyer, and Tengasco, Inc.,
Seller, relating to the purchase and sale of gas from various wells in Hancock
County, Tennessee.


                                       17



                              CONSULTING AGREEMENT

     THIS AGREEMENT, made and entered into the 30th day of October, 1996, by and
between Powell Valley Electric Cooperative, Inc. and ________________________
("Consultants"), and Tengasco, Inc. ("Tengasco").

     WHEREAS, Consultants agree to provide certain services pertaining to the
acquisition of pipeline rights-of-way to Tengasco under the following terms and
conditions:

     1. Services. Tengasco hereby retains the Consultants to provide pipeline
acquisition services as requested from Tengasco from time to time in Tengasco's
sole discretion. The services to be performed under this Agreement shall
commence upon execution of this Agreement. Title work may also be performed.

     2. Fees. As full and complete compensation for all services provided
hereunder during the term of this Agreement, Tengasco shall pay Powell Valley
Electric Cooperative, Inc. for all billable hours worked (except title work) at
a rate of $35.00 per man hour. Title work shall be at the rate of $75.00 per man
hour. Consultants will record all billable hours on a daily basis. Consultants
will invoice Tengasco for all services performed by Consultants during the term
of this Agreement. Tengasco will pay such invoice within thirty (30) days of
receipt of said invoice. Tengasco agrees to reimburse Consultants for reasonable
expenses including mileage at $0.30 per mile and other miscellaneous expenses
related to pipeline right-of-way acquisition. Tengasco agrees that Consultants
may employ additional landsmen if necessary to obtain certain rights-of-way.
Consultants agree to compensate only additional landsmen and





invoice Tengasco for same at a rate not to exceed that agreed upon above.

     3. Term. The provisions of this Agreement shall be effective as of the date
hereof and shall continue in full force and effect until terminated by either
party without cause on five (5) days notice to the other. Provided, however, the
provisions of Paragraph 4 herein shall survive termination of this Agreement
consistent with the terms set out in said paragraph.


     4. Confidential Information Agreement. Consultants hereby acknowledge and
agree to be bound by the terms of that certain Confidential Information
Agreement executed between the parties on even date herewith.

     5. No other representations, written or oral, have been made by any party
to this Agreement. This Agreement shall be amendable only in writing. All work
done by Consultants for Tengasco shall be deemed pursuant to this Agreement
unless otherwise agreed upon between the parties in writing.

     6. Indemnity. To the fullest extent permitted by law, any provision hereof
to the contrary notwithstanding, Consultants shall not be liable or responsible
for any accident, loss, injury or damage, happening or accruing during the term
of this Agreement, and Tengasco shall and does hereby fully indemnify, protect,
defend, and hold harmless Consultants from and against all liens, claims of
liens, demands, liabilities, causes of action, judgments, costs, claims,
damages, suits, losses and expenses, including attorney fees of any nature kind,
or description (collectively "Liabilities"), of the Consultants arising out of,
caused by, or resulting from the performance of services provided by
Consultants.

     7. Should any part of this Agreement be unenforceable or ever deemed
invalid, null


                                        2



or void all remaining provisions of this Agreement shall continue in full force
and effect.

     8. This Agreement shall be governed by the laws of the State of Tennessee.

     Executed the day and year above written.

                                   TENGASCO, INC.

                                   By:  /s/ Ted P. Scallon
                                   Title: President/C.E.O.

                                   POWELL VALLEY ELECTRIC COOPERATIVE, INC.
                                   Consultants

                                   By:  [illegible]
                                   Title: President



                                        3

EX-10.5

                                  EXHIBIT 10.5







                           ENERGY MARKETING AGREEMENT

     THIS AGREEMENT, made and entered into this 27th day of May, 1997, by and
between Enserch Energy Services, Inc. ("Enserch"), and Tengasco ("Tengasco").

     WHEREAS; Enserch is an energy marketer with considerable experience in the
marketing of natural gas and other energy products to industrial and commercial
end-users; and

     WHEREAS; Enserch wishes to increase its retail and wholesale market share a
joint effort with Tengasco; and

     WHEREAS; Enserch has developed proprietary services and pricing programs
for its existing and potential customers and wishes to maintain same as
confidential between itself and its customers, and

     WHEREAS; Tengasco is an energy producer and marketer and has many well-
established long-term relationships with potential customers for natural gas and
other energy products in the State of Tennessee, and

     WHEREAS, Tengasco is interested in aligning itself with Enserch in order to
develop customer leads and/or referrals to help promote Enserch's and Tengasco's
natural gas marketing efforts, under a mutually beneficial arrangement,

     NOW, THEREFORE, for good and valuable consideration, the parties hereby
agree as follows:

                                 1. Definitions

     The term "Best Efforts" means the use of reasonable effort and due
diligence, but does not require the expenditure of unreasonable amount of money
or time.

     The term "Market Area" shall mean the State of Tennessee.

     The term "Products" shall mean natural gas, electricity, fuel oil and other
energy commodities that may be sold from time to time by either Enserch or
Tengasco.

     The term "Referred Customer(s)" shall mean those retail and wholesale Sales
Customers referred to Enserch by Tengasco wishing to enter into an agreement to
purchase Products from Enserch.

     The term "Sales Contact" shall mean (a) any contract for the sale of
Products in the Market Area between Enserch and a Sales Customer, or between
Tengasco and a Sales Customer, and (b) any contract for the sale of Products by
either party outside the Market Area if, and only if, the parties hereto
unanimously agree in writing to designate such contract as a Sales Contract for
purposes of this agreement.



                                       1






     The term "Sales Customer" shall mean (a) a customer under a Sales Contract
who is an industrial and/or commercial end-user of Products and purchases
Products for its own use and does not re-sell same ("retail customer"), and (b)
a customer under a Sales Contract purchasing Products for the purposes of resale
("wholesale customer").

                                     2. Term

     This agreement shall be effective on the date first hereinabove written and
shall continue in force and effect for a primary term ending May 31, 2002. This
Agreement shall continue in effect thereafter for successive periods of one (1)
year each unless terminated by either party at the end of the primary term or at
the end of any one (1) year period thereafter by giving at least sixty (60) days
prior written notice to the other party.

                                    3. Scope

     During the term of this Agreement, either party may enter into Sales
Contracts in the Market Area without the participation of the other party.
Further, Tengasco may refer potential Sales Customers to Enserch, and Enserch
shall use its best efforts to market natural gas owned and/or controlled by
Enserch to Referred Customer(s) within the Market Area. Neither party shall have
the authority to bind the other to any agreement, and shall have no liability
associated with any Sales Contract executed by the other party.

                4. Referral Services of New Accounts by Tengasco.

     If and when Tengasco finds a Sales Customer that it desires to refer to
Enserch, Tengasco shall notify Enserch by telephone and follow-up fax
transmittal ("Notice of Potential Referred Customer" - form of notice attached
hereto as Exhibit "A"). The Notice of Potential Referred Customer shall specify
(1) The name, address, phone and fax numbers of the Sales Customer, (2) the name
and title of the customer contact, (3) the LDC(s) serving the customer, (4) the
volumes of Products required by the Sales Customer on a monthly basis, (5) the
term and pricing methodology sought by the Sales Customer, and (6) any other
material terms, and conditions for the sale (including without limitation
whether Products will required on a firm or interruptible basis). Enserch shall,
immediately upon notification of a potential Referred Customer by Tengasco,
inform Tengasco of any bona fide pre-existing relationship present between
Enserch and the potential Referred Customer pursuant to paragraph 8, below.

     Absent the existence of such a bona fide pre-existing relationship,
Tengasco shall (1) notify potential Referred Customer of Enserch's and
Tengasco's relationship and of Enserch's interest in contracting with customer
for its Products needs and (2) schedule an introductory meeting between Referred
Customer, Tengasco and Enserch.


                                       2




                5. Marketing of Natural Gas to Referred Customers

     Following acceptance by Enserch of a referral by Tengasco of a potential
Sales Customer, and prior to said introductory meeting, Enserch and Tengasco
shall meet, at a time and location agreeable to the parties, to perform the
following tasks:

     o    plan a sales strategy for the Referred Customer,

     o    establish parameters or limits on the terms of any Sales Contract and

     o    ascertain and agree on a recommended supply; services and pricing
          program for any new Referred Customer.

     Enserch shall be empowered to enter into its own separate Sales Contract
with the Referred Customer. Enserch will provide Tengasco with periodic progress
reports with respect to the negotiation of any Sales Contract with a Referred
Customer. If required, Enserch will negotiate directly with the Referred
Customer's Local Distribution Company, its agents and/or representatives, on
behalf of the Referred Customer with regard to the natural gas sales contract.

     Enserch reserves the right, at its sole discretion, to accept or reject any
potential Referred Customer, and is accordingly not obligated to sell any
minimum quantity of gas under this Agreement. In addition, should the financial
responsibility of any Referred Customer under a Sales Contract with Enserch
become impaired or unsatisfactory to Enserch, in Enserch's reasonable judgment,
Enserch shall have the right, in its sole discretion, to suspend deliveries
and/or terminate any Sales Contract following written notice to the Sales
Customer and Tengasco. Enserch shall provide as much notice as practicable to
the Sales Customer and Tengasco in order that the Sales Customer and Tengasco
may acquire a substitute supply arrangement.

                       6. Compensation and Administration

     6.1 Revenue Distribution. The party hereto which is named as a seller under
a Sales Contract shall pay to the other party hereto an amount equal to fifty
percent (50%) of the Transfer Price Margin, as hereinafter defined, resulting
from sales of Products under all Sales Contracts entered into by such selling
party, or fifty percent (50%) of the Adjusted Gross Profits, as hereinafter
defined, resulting from the sale of Products under Sales Contracts for which a
Transfer Price Margin is not determined in the ordinary course of business. No
payments shall be due from one party to the other hereunder with respect to the
sale of any Products for which payment has not been received by the seller
thereof

     6.2 Definitions.

     6.2.1 "Transfer Price Margin" shall be determined by Enserch, and shall

     mean, for any Sales Contract, the positive difference between (a) the sales
     price of the applicable Product established pursuant to the Sales Contract,
     deducting my direct costs (e.g. taxes,


                                       3




     hedging costs and transportation) relating to making the sale which are not
     included in the offer price hereinafter described, and (b) the offer price
     for such Product determined by Enserch's risk management group through
     established procedures. Documentation reflecting the Transfer Price Margin
     shall be furnished to Tengasco not later than five (5) business days after
     the effective date of a transaction, or in the case of Sales Contracts
     entered into by Tengasco, not later then five (5) business days after the
     date Tengasco furnishes a detailed report of such Sales Contract to
     Enserch.

     6.2.2. "Adjusted Gross Profits" shall mean the amount or amounts determined
     by subtracting (a) the purchase price, if any, of the Products designated
     to any sale which is subject to the terms hereof, plus all additional
     direct costs (but not indirect costs, such as overhead) of marketing such
     Products, including, without limitation, transportation costs associated
     with movement of such Products to the delivery points and all taxes which
     the seller is required to bear in relation to such sale (except income
     taxes), from (b) the sales price the seller actually receives for such
     Products.

6.3 Net Present Value Payments. Either party may request for any executed Sales
Contract of the other party that it be paid the net present value ("NPV") of its
payments hereunder in lieu of the payments set forth above. Such request must
be made in writing. Upon receipt of such request, the parties hereto shall
attempt in good faith to agree within thirty (30) days thereafter upon the
volumes, prices, discount rate and other variable factors affecting the NPV. In
the event the parties reach such agreement, the NPV shall be paid to the party
entitled to payment within thirty (30) days thereafter. In the event the parties
fail to agree upon all the terms and conditions necessary to calculate the NPV
within thirty (30) days after receipt of the notice as set forth above, then the
payments due under the contract shall be made periodically as set forth above.
In the event there is a payment made for any Sales Contract on the basis of the
NPV, and thereafter there is a material adverse change in the volumes or price
of gas sold under such Sales Contract, the NPV shall be adjusted to reflect the
new price or volumes, as applicable, and the party that received the NPV payment
shall promptly refund to the other party the difference between the amount
received and the recalculated NPV, without interest.

6.4 Reports. Following execution of a Sales Contract, Enserch or Tengasco, as
applicable, will provide the other with detailed contract information and
account activity reports with respect to such Sales Contract. The costs of
negotiating, entering into and administering and performing under any and all
Sales Contracts shall be borne solely by the party selling Products thereunder,
and neither party shall be responsible for any losses on a sale that the other

party may incur.

     Each party shall be responsible for administering any and all Sales
Contracts it enters into, including without limitation, daily balancing,
billing, and general customer service.

                            7. Billings and Payments

     By the fifteenth (15th) day of the calendar month following each calendar
quarter in which natural gas was delivered under Sales Contracts, i.e., on or
before the 15th day of April,



                                       4









July, October and January, the selling party shall provide the other hereunder
with a written statement showing the total quantities of gas sold, the Transfer
Price Margin associated with such sales and the amount due and owing the other
party with respect to such sales.

     Each shall pay to the other the stated total amount due by check, by the
twenty-fifth (25th) day of the calendar month in which the statement was
rendered, provided that if the twenty-fifth (25th) day is not a business day,
payment will be due on the next business day following that date.
Notwithstanding the above, for any billing period when money is owed by each
party to the other hereunder, the party owing the greater amount of money shall
be entitled, at its election, to effect payment by offsetting the amount due to
it by the other party against amounts due to the other party, and paying the
difference to the other party.

     Compensation will be paid to by the parties on each Sales Contract so long
as this Agreement is in force and effect and so long thereafter as said Sales
Customer has remained under a Sales Contract with Enserch or Tengasco on a
continuous and uninterrupted basis from inception of such Sales Contract.

     Both parties shall have the right at any reasonable time, but no more often
than once in any twelve(12) month period, after giving reasonable notice, to
examine the books and records of the other party to the extent necessary to
verify the accuracy of any statement, charge or payment made. If any such
examination reveals, or if either party discovers, any error or inaccuracy in
its own or the other party's statements, payments, calculations or
determinations, then adjustments and corrections shall be made as promptly as
practicable thereafter, provided however, that no adjustment or correction shall
be made on or with respect to any error or inaccuracy which is discovered more
than one (1) year after such statement, charge, computation or payment was made.


                             8. Exclusive Agreement

     The parties hereto acknowledge that this is an exclusive services agreement
and that neither party may engage in similar arrangements with other parties
within the Market Area. Notwithstanding anything herein to the contrary, any
contracts entered into by either party prior to the date hereof for the sale of
Products in the Market Area shall not be subject to the provisions hereof, and
no compensation shall be due by either party to the other hereunder with respect
thereto. Further, in the event Enserch has an established Products sales
relationship with a customer with whom Tengasco does not have an existing Sales
Contract, and who has offices outside the Market Area, and that customer has
facilities within the Market Area, then Enserch may sell Products directly to
such customer's offices in the Market Area, and Tengasco shall not be entitled
to any compensation with respect to such contract.

                                   9. Notices

     All notices sent under the Agreement must be sent by fax, with follow-up
written copy by mail. Notices should be sent to the follow designees below:


                                       5








       For Enserch:         Enserch Energy Services, Inc.
                            1301 Fannin, Suite 2300
                            Houston, Texas 77002
                            Attention: ________________________
                            Ph.:   (713) 651-7888
                            Fax:   (713) 659-7505

       For Tengasco:

                            Ph.:

                            Fax:

                              10. Change in Control

     In the event of a Change in Control of Tengasco, as defined in Exhibit "B",
attached hereto and made a part hereof, or in the event of a sale of all or
substantially all of Tengasco's assets, Tengasco shall, at the election of
Enserch, either (a) cause the acquiring or continuing entity of Tengasco to
assume all the obligations of this contract or (b) purchase Enserch's rights
under this contract for an amount equal to four (4) times the NPV of all Sales
Contracts entered into by Tengasco and Enserch hereunder. In the event Enserch
elects to have Tengasco purchase Enserch's rights under this contract, this

contract shall terminate, and each party hereto shall retain its rights to any
Sales Contracts under which it is a seller. Further, in the event of a sale of
all or substantially all of Tengasco's assets to an unrelated third party,
Tengasco shall notify Enserch of any bona fide offer to purchase such assets and
Enserch shall have the right of first refusal, to be exercised within thirty
(30) days after receipt of Tengasco's notice, to purchase such assets under the
same terms and conditions as are contained in such offer.

     For purposes of this Section 10 only, in the event the parties are unable
to agree upon the NPV, the matter shall be settled by a major independent public
accounting firm selected by mutual agreement of the parties. In the event the
parties cannot agree upon the selection of a major independent public accounting
firm, such firm shall be selected by Enserch from a list of four major
independent accounting firms which have not represented either Enserch, Tengasco
or their affiliates within the five year period preceding such selection. The
decision of such accounting firm shall be final and binding, and the costs
incurred in connection with retaining such accounting firm shall be shared
equally by Tengasco and Enserch.

                                11. Miscellaneous

     11.1 This document, including the Attachments constitutes the entire
Agreement between the parties with respect to the subject matter thereof.


                                       6




     11.2 A waiver by either party of any one or more defaults by the other in
the performance of any provisions of this Agreement shall not operate as a
waiver of any future default or defaults, whether a like or of a different
character.

     11.3 No modification, amendment, or change herein shall be enforceable
unless reduced to writing and executed by both parties.

     11.4 The rights and obligations under this Agreement shall inure to and be
binding upon the permitted successors and assigns of the parties hereto. No
assignment of this Agreement or any of the rights or obligations hereunder shall
be made by either party unless the other party has consented in writing thereto,
which consent shall not be unreasonably withheld.

     11.5 Tengasco is not authorized to act as agent for Enserch and shall not
represent to any person or entity that it is an agent for Enserch. Enserch is
not authorized to act as agent for Tengasco and shall not represent to any
person or entity that it is an agent for Tengasco.

     11.6 The terms of this Agreement and any Sales Contract entered into
pursuant hereto, including, but not limited to pricing, contract quantity,
customer name and location, and all other material terms thereof shall be kept
confidential by the parties hereto, except to the extant that any information
must be disclosed to a third party for the purpose of effectuating

transportation of gas subject to the terms of this Agreement or to meet New York
Mercantile Exchange requirements or regulatory filing requirements where
necessary. Further, it is recognized that in connection with performance under
this agreement, Enserch may disclose to Tengasco certain other information or
material which it considers confidential or proprietary (the "Confidential
Information"), which Enserch shall identify as such at the time of the
disclosure. Tengasco shall treat Confidential Information confidentially and
shall not disclose the same to any person or entity except those employees and
professional advisors who have a need to know in connection with Tengasco's
performance under this Agreement. Tengasco shall not use Confidential
Information for any purpose other than the furtherance of the interest of the
parties hereto under this Agreement. Tengasco shall cause any employee,
professional advisor or any other individual receiving Confidential Information
to be bound by the terms of this confidentiality provision, and Tengasco shall
be liable for any breach of these provisions by any such party.

     11.7 This Agreement shall be construed and interpreted in accordance with
the laws of the State of Texas, and any litigation of such construction or
interpretation issues may only be filed and maintained in federal or state court
in Texas.

Tengasco Corp.                     Enserch Energy Services, Inc.
AGREED and ACCEPTED                AGREED and ACCEPTED
this 27 day of May, 1997           this 23 day of May 1997


By: /s/ [ILLEGIBLE]                By: /s/ [ILLEGIBLE]
Its: C.F.O.                        Its: Senior Vice President



                                       7





        Exhibit "A" To Energy Marketing Agreement dated ___________, 1997
                between Tengasco and Enserch Energy Services Inc.



                                    NOTICE OF
                          POTENTIAL REFERRED CUSTOMER

Name of Customer:     _________________________________________________________

Address:              _________________________________________________________

Phone/fax:            Ph.: (   ) _______________     Fax: (   ) _______________

Type of Company:      _________________________________________________________

Name of LDC:          _________________________________________________________


Name of LDC Rep:      _________________________________________________________

Phone of LDC Rep:     _________________________________________________________

Estimated load (therms,
MMBtu, etc.)          Summer/mo  _____    Winter/mo.  _______      Annual _____

Desired Pricing:      _________________________________________________________

Comments:             _________________________________________________________


                                       9






  Exhibit "B" To Energy Marketing Agreement dated ______________, 1997, between
                    Tengasco and Enserch Energy Services Inc.

     A Change in Control shall be deemed to have occurred upon, and shall mean:

     (i) The acquisition by any individual, entity or group (within the meaning
of Section l3(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of
either (1) of the then outstanding shares of Common Stock of Tengasco (also
referred to herein as the "Company") the Company (the "Outstanding Company
Common Stock") or (2) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following acquisitions shall not constitute a Change in Control: (w) any
acquisition directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (x) any acquisition by the Company, (y) any
acquisition by any employee benefit plan(s) (or related trust(s)) sponsored or
maintained by the Company or any corporation controlled by the Company, or (z)
any acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, immediately following the same, the conditions described in
clauses (1), (2) and (3) of subparagraph (iii) of this section are satisfied; or

     (ii) Individuals who, as of the date hereof, constitute the Company's Board
of Directors (the "Incumbent Board"), cease for any reason to constitute at
least a majority of the Company's Board of Directors, provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors constituting the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding for this purpose any such individual whose initial assumption of
office occurs as a result of either (1) an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act), or an actual or threatened solicitation of proxies or consents by

or on behalf of a Person other than the Company's Board of Directors or (2) a
plan or agreement to replace a majority of the members of the Company's Board of
Directors then comprising the Incumbent Board; or

     (iii) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case unless, immediately following such
reorganization, merger or consolidation, (1) more than 60% of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation (including, without limitation, a
corporation which as a result of such transaction owns the Company through one
or more subsidiaries) and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, to the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such

                                       10









reorganization, merger or consolidation, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be, (2) no person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 40% or more of
the Outstanding Company Common Stock or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 40% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (3) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

     (iv) Approval by the stockholders of the Company of (1) a complete
liquidation or dissolution of the Company or (2) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation with respect to which immediately following such sale or other
disposition, (A) more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors as then beneficially owned, directly or indirectly, by

all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership immediately
prior to such sale or other disposition of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be, (B) no person
(excluding the Company and any employee benefit plan (or related trust) of the
Company and/or its subsidiaries or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, 40% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 40% or more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Company's Board of
Directors providing for such sale or other disposition of assets.



                                       11

EX-16.1

                                  EXHIBIT 16.1










David T.
 Thomson P.C.                                        Certified Public Accountant
================================================================================

Securities and Exchange Commission
459 Fifth Street, N.W.
Washington, D.C. 20549

Gentlemen:

I was previously the auditor for Tengasco, Inc. (Formerly Onasco Companies,
Inc.) and on April 14, 1995 I reported on the financial statements of Tengasco,
Inc. at December 31, 1994, 1993 and 1992 and the years then ended. I have read
the statements made by Tengasco, Inc. in Form 10-SB, which I understand will be
filed with the Commission, with respect to the change in accountants from my
firm to Charles M. Stivers. I agree with paragraphs one, three, seven, and items
(1), (2), and (3) of paragraph six. I have little or no knowledge as to the
representations in paragraphs two and five. As to paragraph four, my opinion
dated April 14, 1995 had a paragraph added as to the Company's ability to
continue as a going concern.

Very truly yours,
 
/s/ David T. Thomson P.C.

David T. Thomson P.C.

Salt Lake City, Utah
July 28, 1997


    180 South 300 West, Suite 329, Salt Lake City, Utah 84101 (801) 328-3900

EX-16.2

                                  EXHIBIT 16.2







                               CHARLES M. STIVERS
                     --------------------------------------
                          Certified Public Accountant
                     --------------------------------------
                     1106 Manchester Square Shopping Center
        MEMBER             Manchester, Kentucky 40962             MEMBER        
   KENTUCKY SOCIETY OF          (606) 598-1464            AMERICAN INSTITUTE OF 
CERTIFIED PUBLIC ACCOUNTANTS                        CERTIFIED PUBLIC ACCOUNTANTS



                                  July 28, 1997

Securities and Exchange Commission
459 Fifth Street
Washington, D.C. 20549

Gentlemen:

     We have read the statements made by Tengasco in Form 10-SB, which we
understand will be filed with the Commission, with respect to the change in
accountants from Price-Bednar, LLP to our firm and thereafter, from our firm to
BDO Seidman LLP. We agree with the statements concerning our firm in such Form
10-SB.


                                             Very truly yours,
                                             
                                             /s/ Charles M. Stivers

                                             Charles M. Stivers
                                             Certified Public Accountant

EX-16.3

                                  EXHIBIT 16.3

 







[LOGO} PRICE o BEDNAR LLP
- --------------------------------------------------------------------------------
A Regional Accounting, Tax                             Fifteen East Fifth Street
  and Consulting Firm                                                 Suite 2200
                                                                 Tulsa, Oklahoma
                                                                      74103-4300
                                                                  (918) 584-4843
                                                              fax (918) 584-4838

July 28, 1997

Securities and Exchange Commission
459 Fifth Street
Washington, D.C. 20549

Gentlemen:

We have read the statements made by Tengasco in Form 10-SB, which we understand
will be filed with the Commission, with respect to the change in accountants
from our firm to Charles M. Stivers. We agree with the statements concerning our
firm in such Form 10-SB.

Very truly yours,

/s/ Price Bednar LLP



                 Tulsa o Oklahoma City o Denver o Los Angeles

EX-23.1

                                  EXHIBIT 23.1







                             CONSENT OF ACCOUNTANTS

     I consent to the reference to me under the captions "Experts" and "Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure"
and to the use of my report for the year ended December 31, 1995 in the
Registration Statement (Form 10SB) of Tengasco, Inc.


                                                   /s/ Charles M. Stivers
                                                   ----------------------------
                                                   Charles M. Stivers

EX-23.2

                                  EXHIBIT 23.2







David T.
 Thomson P.C.                                        Certified Public Accountant
================================================================================


                        CONSENT OF INDEPENDENT ACCOUNTANT

To The Board of Directors 
Tengasco, Inc. 
(Formerly Onasco Companies, Inc.)

I have issued my report dated April 14, 1995, accompanying the financial
statements of Tengasco, Inc., (Formerly Onasco Companies, Inc.) for the years
ended December 31, 1994, 1993, and 1992 included in the Registration Statement
(Form 10-SB). I consent to the use of my report, as stated above, in the
Registration Statement and I consent to the reference to me under the captions
"experts" and "Changes in and Disagreements with Accounts on Accounting and
Financial Disclosures".


David T. Thomson P.C.

/s/ David T. Thomson P.C.

Salt Lake City, Utah
July 31, 1997

 

    180 South 300 West, Suite 329, Salt Lake City, Utah 84101 (801) 328-3900

EX-23.3

                                  EXHIBIT 23.3

 





              Consent of Independent Certified Public Accountants

Tengasco, Inc.
Knoxville, Tennessee

     We hereby consent to the use in this Registration Statement of our report
dated June 5, 1997, relating to the consolidated financial statements of
Tengasco, Inc. Our report contains an explanatory paragraph regarding the
Company's ability to continue as a going concern.

 
                                        /s/ BDO Seidman, LLP

                                        BDO SEIDMAN, LLP

Atlanta, Georgia
July 28, 1997

EX-23.4

                                  EXHIBIT 23.4







                               CONSENT OF COUNSEL

     The consent of Robson & Miller, LLP is contained in the opinion filed as
Exhibit 5.1 to the Registration Statement.

EX-99.1

                                  EXHIBIT 99.1



EX-99.1           

BEECH CREEK LEASES  


                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
                                                                                            
  1       BARGER, FRANK                       7/9/96      6/10/95     80      290          109      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
  2       CITY OF MANCHESTER                11/15/96     11/15/94     79      543          315      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
  3       DAVIDSON, ROSCOE                   6/30/96      5/26/95     80      249           30      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
  4       DEZARN, GROVER                     8/20/96      8/29/94     79      583          300      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
  5       GRAY, NANNIE                       4/27/96      4/27/95     80       66          250      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
  6       GRUBB, AMOS                         7/9/96      6/10/95     80      294            7      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
  7       GRUBB, HARLAN                      7/16/96      7/16/94     79      547          191      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
  8       HENSLEY, CONLEY                    10/8/96      10/8/94     79      551        16.68      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
  9       HENSLEY, DELBERT                   10/8/96      10/8/94     79      567        37.43      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 10       HENSLEY, EDSEL                    10/26/96     10/26/94     79      555        18.78      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 11       HENSLEY, EUGENE                    10/8/96      10/8/94     79      571        18.47      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 12       HENSLEY, HERSCHEL                  10/8/96      10/8/94     79      559        18.36      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 13       JONES, TED                         8/30/96      8/30/94     79      575        3.129      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 14       LAKES, OLLIE                       5/31/96      5/31/95     80      261         71.4      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 15       LEE, JOHN ET AL                    6/10/96      6/10/95     80      306          108      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 16       LEE, WILL ET AL                     7/9/96      6/10/95     80      298          110      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 17       SPURLOCK, HUGH                     7/11/96      5/26/95     80      245          115      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 18       STOKES, LORENE                     10/8/96      10/8/94     79      563         7.29      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 19       WEBB, DONALD ET AL                 6/27/96      6/27/95     80      466          301      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 20       WHITE, DAUGH ET AL                 7/23/96      7/23/94     79      587          462      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 21       WOOTON, DON                        6/30/96       8/3/94     79      579          300      12.5%       82.5    100%
- ----------------------------------------------------------------------------------------------------------------------------
 22       COTTON, MARY                       5/26/96      5/26/95     80      253           55      12.5%       82.5    100%

- ----------------------------------------------------------------------------------------------------------------------------
 23       SMITH, VIRGIL                      6/30/96      6/21/95     80      302          168      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 24       LEWIS, HERMAN                      5/21/96      5/31/95     80      257          889      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 25       LEWIS, HERMAN                       6/7/96       6/7/95     80      454      2431.76      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 26       WEBB, DONALD                       6/30/96      6/30/95     80      470           60      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 27       HALE, GILBERT                       9/8/96       9/8/94     79      640          150      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 28       BURNETT, EDDIE                      6/4/96      6/24/95     80      458          265      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 29       COWENS, EVA                         8/5/96       8/5/95     80      536           92      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 30       GARRETT, NANNIE                    6/24/96      6/24/95     80      462          175      12.5%     85.938    100%
- ----------------------------------------------------------------------------------------------------------------------------
 31       BOWLING, PRESTON                   8/18/96      8/18/95     80      548          154      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------




EXHIBIT 99.1 CONTINUED
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                            
 32       SIZEMORE, RALEIGH                  8/18/96      8/18/95     80      544           13      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 33       WILSON, HUBERT                     8/22/96      8/22/95     80      524           20      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 34       CAMPBELL, FRANCIS                  8/22/96      8/22/95     80      528           34      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 35       BARRETT, EARNEST                   8/17/96      8/17/95     80      532           15      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 36       MCDONALD, JOSEPH                   8/17/96      8/17/95     80      540            3      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 37       B & C PROPERTIES                   8/31/96      8/31/95     81      180          500      18.8%         80    100%
- ----------------------------------------------------------------------------------------------------------------------------
 38       BARRETT, IRVIN                     9/30/96      9/20/95     81      206        105.3      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 39       JACKSON, ARMIS                     9/21/96      9/21/95     81      206          135      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 40       PRINGLE, ETHLENE                    8/3/96       8/3/95     81        5            2      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
 41       WEBB, MARY                         8/26/96      8/26/95     81        1            1      12.5%     84.375    100%
- ----------------------------------------------------------------------------------------------------------------------------
                                                                       TOTAL ACREAGE ..   8058
- ----------------------------------------------------------------------------------------------------------------------------

EX-99.2

                                  EXHIBIT 99.2







EXHIBIT 99.2

WILDCAT LEASES 


                                             NEXT        PRIMARY
LEASE #     LESSOR NAME                      RENT       XPIRATION     BOOK     PAGE    NET ACRE        LOR           NRI        WI
====================================================================================================================================
                                                                                                      
  1      GARRETT, NANNIE                    6/24/96      6/24/96       80      462          175        12.5%        84.375      100%
- ------------------------------------------------------------------------------------------------------------------------------------
  2      HACKER, JOE                         4/7/96       4/7/96       81      489          131        12.5%        84.375      100%
- ------------------------------------------------------------------------------------------------------------------------------------
  3      WEBB, DONALD                       7/29/96      7/29/96       80      466           60        12.5%        84.375      100%
- ------------------------------------------------------------------------------------------------------------------------------------
  4      WHITE, CARL B.                      7/2/96       7/2/96       81      618          300        12.5%        84.375      100%
- ------------------------------------------------------------------------------------------------------------------------------------
  5      BISHOP, PAUL & BRENDA              7/18/96      7/18/96       81      640           75        12.5%        84.375      100%
- --------------------------------------------------------------------------------------------===-------------------------------------
                                                                                                                            
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                     TOTAL ACREAGE          741 


                                     Page 1

EX-99.3

                                  EXHIBIT 99.3





EXHIBIT 99.3

BURNING SPRINGS LEASES


                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
                                                                                            
 1        ALVERAS                          12/7/92       12/7/92      77      494         260       12.5%       82.5   100
- ----------------------------------------------------------------------------------------------------------------------------
 2        CORNETT                         12/14/92      12/14/92      78      561           2       12.5%         80   100
- ----------------------------------------------------------------------------------------------------------------------------
 3        GREGORY                           8/8/92        8/8/93      78      219          85       12.5%     84.375   100
- ----------------------------------------------------------------------------------------------------------------------------
 4        HALE                             5/11/94       5/11/94      79      640         150       12.5%     84.375   100
- ----------------------------------------------------------------------------------------------------------------------------
 5        KEITH                             1/1/92        1/1/92      76      444          75       12.5%       82.5   100
- ----------------------------------------------------------------------------------------------------------------------------
 6        ROBINSON-ALVERAS                10/5/92        10/5/93      78      488         172       12.5%         80   100
- ----------------------------------------------------------------------------------------------------------------------------
          ALL PRODUCING WELLS                                   TOTAL ACREAGE             744
- ----------------------------------------------------------------------------------------------------------------------------


                                     Page 1

EX-99.4

                                  EXHIBIT 99.4





EXHIBIT 99.4

FENTRESS COUNTY, TN. LEASES


                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
                                                                                            
 1        CONATSER, CHARLES F.            4/18/96        4/18/96      32      16      50            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 2        DELK, MACK                      4/25/96        4/25/96      32      10      86            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 3        DILLARD, RAY HYDER              3/30/96        3/30/96      32      13     451            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 4        DUNCAN, EUGENE                  3/31/96        3/31/96      32       7     150            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 5        DUNCAN, GWENITH                 10/3/96        10/3/96      32       1     846            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 6        DUNCAN, GUY O.                  4/21/96        4/21/96      32       4     150            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 7        FRANKLIN, JESS                   4/1/96         4/1/96      32      25      35            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 8        REAGAN, RAY                     1/14/96        1/14/96      31     626     263            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
 9        WOODS, EARNEST                  7/11/96        7/11/96      31     540      90            12.5%     87.5     100%
- ----------------------------------------------------------------------------------------------------------------------------
                                                                 TOTAL ACREAGE      2121
- ----------------------------------------------------------------------------------------------------------------------------


                                     Page 1

EX-99.5

                                  EXHIBIT 99.5







                                   SWAN CREEK
                                (Hancock County)

                               LEASE FEE SCHEDULE







                                                                                         
                                                NEXT      PRIMARY                  ANNUAL        
  DATE       LESSOR NAME                        RENT     EXPIRATION    ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                        ----     ----------    -------      ---            ----------------------
OCTOBER                                                                           
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               
   10   Moore, Paul & Sharon                  10/10/97    10/10/99        52        $208 00    Rt. 2, Box 244B, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   10   Greene, Randell & Marjorie            10/10/97    10/10/98       105        $420.00    P.O. Box 176, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   14   Big Creek Missionary Baptist Church   10/14/97    10/14/00       0.5        $100.00    c/o Carson Moles, Rt. 2, Box 172, 
                                                                                                Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   26   Hensley, William P. and Lucretia E.   10/26/97    10/26/98       125        $500.00    Rt. 4 Box 268A Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   26   Royston, Leno and Mary                10/26/97    10/26/98        65        $260.00    Rt. 4 Box 266, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   26   Sutton, Ralph and Mae Dean            10/26/97    10/26/98        30        $200.00    Box 427, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   27   Russell, Kenneth and Lois             10/26/97    10/26/98      6.25         $25.00    8216 Filson St. Brookville FL 34613
- ------------------------------------------------------------------------------------------------------------------------------------
   27   Brewer, Harrison                      10/27/97    10/27/98        58        $300.00    Rt. 3 Box 426, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
     TOTAL ACRES & ANNUAL FEES -OCTOBER                               441.75      $2,013.00
- ------------------------------------------------------------------------------------------------------------------------------------



                         Hancock Co. Lease Fee Schedule
                                                                          Page 1







                                                                                        
                                                NEXT      PRIMARY                ANNUAL        
  DATE       LESSOR NAME                        RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                        ----     ----------  -------      ---            ----------------------
NOVEMBER                                                                         
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
   3    Cross, Brian Todd and Deanna Hodge    11/3/97     11/3/98      100 +/-    $100.00   Rt. 4 Box 339B, Sneedville TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   6    Bryant, Edmont T.                     11/6/97     11/6/98      110        $440.00   Rt. 4 Box 348, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------

   6    Lawson, Cecil                         11/6/97     11/6/98      240        $960.00   Rt. 4 Box 337, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   6    Lawson, Laura J.                      11/6/97     11/6/98      300 +/-  $1,200.00   Rt. 4 Box 332, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   6    Lawson, Steven et.al.                 11/6/97     11/6/98      302      $1,208.00   Rt. 4 Box 338, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   6    Portrum, Fred and Melisha             11/6/97     11/6/98       68        $272.00   2112 Washington Av, Morristown TN 37814
- -----------------------------------------------------------------------------------------------------------------------------------
   6    Winkler, Argle                        11/6/97     11/6/98       90        $360.00   Rt. 4 Box 316, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   8    Winkler, Willie and Hester            11/8/97     11/8/96       17         $68.00   Rt. 4 Box 315, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   8    Barnard, Andy                         11/8/97     11/8/98     66.5        $266.00   Rt. 4 Box 248, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   8    Ferguson, Clarence and Teresa         11/8/97     11/8/98       50        $200.00   Rt. 4 Box 284D, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
   9    Mitchell, Ester                       11/9/97     11/9/98      100        $400.00   8588 Bobolick, Cincinn. Oh 45231
- -----------------------------------------------------------------------------------------------------------------------------------
  14    Hatfield, George W. and Lona          11/14/97    11/14/98    61.5        $246.00   Rt. 2, Tazewell, TN 37879
- -----------------------------------------------------------------------------------------------------------------------------------
  14    Royston, Gustava                      11/14/97    11/14/98      12         $48.00   Rt. 3, Box 461A, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
  16    Shaw, Tommy and Allica                11/16/97    11/16/98       6         $25.00   711 Morningside, Rogersville, TN 37857
- -----------------------------------------------------------------------------------------------------------------------------------
  22    DePriest, Danny and Sharon            11/22/97    11/22/98      47        $188.00   Rt. 4 Box 268, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
  27    DePriest, Robert                      11/27/97    11/27/98      50        $200.00   Rt. 3 Box 428F, Sneedville, TN 37869
- -----------------------------------------------------------------------------------------------------------------------------------
  28    Smith, Cheryl R., Etal                11/28/97    11/28/98      65        $260.00   8221 Sherbourne Dr., Knoxville, TN 37923
- -----------------------------------------------------------------------------------------------------------------------------------
        TOTAL ACRES & ANNUAL FEES - NOV.                              1685      $6,441.00
- ------------------------------------------------------------------------------------------------------------------------------------


                         Hancock Co. Lease Fee Schedule
                                                                          Page 2







                                                                                        
                                               NEXT      PRIMARY                ANNUAL        
  DATE       LESSOR NAME                       RENT     EXPIRATION  ACREAGE      FEE           LESSOR MAILING ADDRESS
  ----       -----------                       ----     ----------  -------      ---           ----------------------
DECEMBER                                                                     
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
   1   Lawson, Wiley                         12/1/97     12/1/98      11        $44.00    Rt. 4 Box 334, Sneedville, TN 37869       
- ------------------------------------------------------------------------------------------------------------------------------------
   7   Mackey, George W. and Ruby            12/7/97     12/7/98      27       $108.00    Rt. 2 Box 228, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   7   Sutton, Dewey and Tavie               12/7/97     12/7/98     310     $1,240.00    Rt. 3 Box 429, Sneedville, TN 37869       

- ------------------------------------------------------------------------------------------------------------------------------------
  10   Cantwell, Archie and Linda           12/10/97    12/10/98      44       $176.00    4398 Woodhaven  Dr. Morristown 37813
- ------------------------------------------------------------------------------------------------------------------------------------
  10   Cantwell, Cesil and Patti            12/10/97    12/10/98      68       $272.00    Timberlake Sub Division, Rogersville 37857
- ------------------------------------------------------------------------------------------------------------------------------------
  10   Cantwell, Kenneth and Katherine      12/10/97    12/10/98    38.7        156.00    Rt. 3 Box 387, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
  10   Seals, Rodney and Jennie Mae         12/10/97    12/10/98      92       $368.00    Rt. 3 Box 380A, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  10   Seal, Edith, make ck. pbl: 
        Deanna Trent                        12/10/97    12/10/98      90       $360.00    Rt. 3 Box 379, Sneedville, TN 37869       
- ------------------------------------------------------------------------------------------------------------------------------------
  10   Trent, Ralph and Deanna              12/10/97    12/10/98      15        $60.00    Rt. 3 Box 379, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
  11   Carpenter, Lucille                   12/11/97    12/11/98      25       $100.00    Rt. 2 Box 238, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
  11   Jefferson, Wright                    12/11/97    12/11/98      45       $180.00    Rt. 2 Box 244, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
  11   Jefferson Jr., Wright                12/11/97    12/11/98      52       $208.00    Rt. 2 Box 244A, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  11   Mackey, Jeptha and Pearl             12/11/97    12/11/98      27       $108.00    Rt. 2 Box 232, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
  11   Zeller, Stanley                      12/11/97    12/11/98     108       $432.00    Rt. 2 Box 246A, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  15   Patton, Gary and Lynn                12/15/97    12/15/98      86       $344.00    360 Chaffin Rd. Roswell, GA 30075
- ------------------------------------------------------------------------------------------------------------------------------------
  28   Pierce, Dr. Truett H. and 
        Wanda and Gary Hicks                12/28/97    12/28/00     350     $1,400.00    Box 37, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
      TOTAL ACRES AND ANNUAL FEES - DECEMBER                    1,386.70     $5,556.00



                         Hancock Co. Lease Fee Schedule
                                                                          Page 3






                                                                                       
                                              NEXT      PRIMARY                ANNUAL        
  DATE       LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                      ----     ----------  -------      ---            ----------------------
JANUARY                                                                      
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
   5   Bauer, Virginia and Walter W.       1/5/98      1/5/99      10.5         $42.02    504 W. Aspen, Kanab, UT 84741
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Carr, Yvonne (trust)                1/5/98      1/5/99     15.54         $62.16    2215 Vina Del Mar, Oxnard CA 93035        
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Dixon, Richard                      1/5/98      1/5/99         5         $20.00    PO Box 249, Bean Station TN 37708       

- ------------------------------------------------------------------------------------------------------------------------------------
   5   Fuller, James M. And Mary B.        1/5/98      1/5/99        10         $40.00    4200 Easton Dr Ste 3, Bakersfield CA 93309
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Hart, William L.                    1/5/98      1/5/99     41.44        $165.76    3112 Solimar Beach Dr. Ventura CA 93001   
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Miller, Donna and Kevin             1/5/98      1/5/99      10.5         $42.02    1589 Wolverton Av, Camarillo CA 93010
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Powell, Robert                      1/5/98      1/5/99      10.9         $43.60    2101 Pinebrook Dr. Kingsport, TN 37662
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Salzeider, Gary                     1/5/98      1/5/99     20.72         $82.88    1724 13th Av Ct. NW, Puyallup, WA 98371
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Williams, Steven and Lisa           1/5/98      1/5/99      5.25         $21.01    620 Willow Oaks Drive, Ozark, AL 36360    
- ------------------------------------------------------------------------------------------------------------------------------------
   5   Witherspoon, Nancy and Wayne        1/5/98      1/5/99     15.54         $62.16    1375 Sweetwater Av, Camarillo, CA 93010
- ------------------------------------------------------------------------------------------------------------------------------------
   8   Ferguson, Hyle and Diana            1/8/98      1/8/99       100        $400.00    Rt. 2 Box 224, Sneedville, TN 37869       
- ------------------------------------------------------------------------------------------------------------------------------------
   8   McCoy, Maude                        1/8/98      1/8/99       100        $400.00    Rt. 2 Box 223, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
   9   McCoy, Dale and Mary Lucille        1/9/98      1/9/99        44        $176.00    Rt. 2 Box 223, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  15   Reed, Paul and Lucille             1/15/98     1/15/99       410      $1,640.00                   Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  25   Sutton, Darnell                    1/25/98     1/25/99        8          150.00    Rt. 2 Box 160, Tazewell, TN 37860
- ------------------------------------------------------------------------------------------------------------------------------------
       TOTAL ACRES AND ANNUAL FEES - JANUARY                    807.39       $3,347.61
- ------------------------------------------------------------------------------------------------------------------------------------


                         Hancock Co. Lease Fee Schedule
                                                                          Page 4
                                                                           




                                                                                       
                                              NEXT      PRIMARY                ANNUAL        
  DATE       LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
  ----       -----------                      ----     ----------  -------      ---            ----------------------
FEBRUARY                                                                      
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
  15     Nichols, Earl                         2/15/98     2/15/00    113         $452.00    Rt. 1 Box 289, Kyles Ford TN 37765  
- ------------------------------------------------------------------------------------------------------------------------------------
  15     Testerman, Henry & Joyce              2/15/98     2/15/00    191         $764.00    Rt. 1 Box 179, Kyles Ford TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
  16     Gibson, Harvey Jr. & Lois             2/16/98     2/16/00     80         $320.00    Rt. 1 Box 340, Kyles Ford TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
  16     Umbarger, Mary                        2/16/98     2/16/00     50         $200.00    Rt. 1 Box 194, Kyles Ford TN 37765  
- ------------------------------------------------------------------------------------------------------------------------------------

  16     Greene, John and Kathleen             2/16/98     2/16/00     25         $100.00    Rt. 1 Box 347, Kyles Ford TN 37765  
- ------------------------------------------------------------------------------------------------------------------------------------
  17     Kirby, Ted                            2/17/98     2/17/00      5          $20.00    Rt. 1 Box 225, Kyles Ford TN 37765  
- ------------------------------------------------------------------------------------------------------------------------------------
  17     Wallan, Frank & Kathy                 2/17/98     2/17/00     36         $144.00    Rt. 1 Box 201, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  17     Smith, David & Deborah                2/17/98     2/17/00     30         $120.00    Rt. 1 Box 143 Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  17     Johnson, Rickey & Delois              2/17/98     2/17/00     57         $228.00    Rt. 1 Box 329, Kyles Ford TN 37765  
- ------------------------------------------------------------------------------------------------------------------------------------
  17     Johnson, Hugh & Helen                 2/17/98     2/17/00     87         $348.00    Rt. 1 Box 324, Kyles Ford TN 37765  
- ------------------------------------------------------------------------------------------------------------------------------------
  19     Testerman, Robert                     2/19/98     2/19/00    101         $404.00    Rt. 1 Box 345, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  19     Livesay, Mattie                       2/19/98     2/19/00     63         $252.00    Rt. 1 Box 246, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  20     Johnson, Roy                          2/20/98     2/20/00     50         $200.00    Rt. 1 Box 348, Kyles Ford, TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
  20     Kinsler, Robert& Brenda               2/20/98     2/20/99    195         $780.00    Rt. 1 Box 76, Sneedville, TN 37869  
- ------------------------------------------------------------------------------------------------------------------------------------
  20     Gray, Joe and Donna                   2/20/98     2/20/00    112         $448.00    Rt. 1 Box 353AA, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  21     Dillon, Deborah and James             2/21/98     2/21/00     52         $208.00    Rt. 1 Box 157, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  21     Gilliam, Linburgh                     2/21/98     2/21/00    114         $456.00    Rt. 1 Box 77A, Eidson, TN 37731
- ------------------------------------------------------------------------------------------------------------------------------------
  21     Reed, Warren and Lillie Bell          2/21/98     2/21/99    250       $1,000.00    Rt. 3 Box 429, Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  21     Gibson, Ulyssus and Rose              2/21/98     2/21/00    115         $460.00    Rt. 1 Box 2015A, Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  21     Livesay, H.T. And Viola               2/21/98     2/21/00    435       $1,740.00    1414 Chambers St., Rogersville TN 37857
- ------------------------------------------------------------------------------------------------------------------------------------
  21     Albright, L.V. And Judy               2/21/98     2/21/00     34         $136.00    Rt. 1 Box 165, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  22     Holt, Charles & Maxine                2/22/98     2/22/00   1030       $4,120.00    Rt. 1 Box 97 Eidson, TN 37731
- ------------------------------------------------------------------------------------------------------------------------------------
  22     Gibson, Danny and Janette             2/22/98     2/22/00     35         $140.00    Rt. 1 Box 327 Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  23     Gibson, Goldie                        2/23/98     2/23/00    111         $444.00    Rt. 1 Box 338, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  23     Kinsler, Hobert & Valice              2/23/98     2/23/00     50         $200.00    Rt. 1 Box 303, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  23     Gibson, Harvey Jr. & Lois             2/23/98     2/23/00     12          $48.00    Rt. 1 Box 340, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
  23     Johnson, Ada Lee                      2/23/98     2/23/00    200         $800.00    Rt. 2 Box 36, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
  24     Nichols, Clyde                        2/24/98     2/24/00     42         $168.00    Rt. 1 Box 313, Sneedville, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------

                         Hancock Co. Lease Fee Schedule
                                                                          Page 5







                                                                                       
                                              NEXT         PRIMARY             ANNUAL        
  DATE       LESSOR NAME                      RENT       EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
  ----       -----------                      ----       ----------  -------    ---            ----------------------
FEBRUARY (Continued)                                                                     
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
 24       Kinsler, Homer & Annette             2/24/98     2/24/00    35        $140.00      Rt. 1, Box 176, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 24       Harrell, John                        2/24/98     2/24/00   105        $420.00      Rt. 3, Box 1293, Bean Station, TN 37708
- ------------------------------------------------------------------------------------------------------------------------------------
 27       Mabe, Luther                         2/27/98     2/27/00    87        $348.00      Rt. 1, Box 156, Kyles Ford, TN 37765   
- ------------------------------------------------------------------------------------------------------------------------------------
 27       Cagle, Jeannette and Cashus          2/27/98     2/27/00   150        $600.00      Rt. 1 Box 153A, Kyles Ford, TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Dunsmore, Lillian                    2/28/98     2/28/00    80        $320.00      Rt. 1 Box 343, Kyles Ford, TN 37765    
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Nichols, Oscar & Bobbie              2/28/98     2/28/00   150        $600.00      Rt. 1 Box 223, Kyles Ford, TN 37765    
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Catron, Bee DECEASED 1996            2/28/98     2/28/00    39        $156.00      Rt. 1 Box 184, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Nichols, Lincoln and Bobby           2/28/98     2/28/00     4         $16.00      Rt. 1 Box 223, Kyles Ford, TN 37765    
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Johnson, Allen  **payment to:                    
             Lois Gibson                       2/28/98     2/28/00    14         $56.00      Rt. 1 Box 340, Kyles Ford, TN 37765    
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Nichols, Rodger                      2/28/98     2/28/00    13         $52.00      Rt. 1 Box 332, Kyles Ford, TN 37765    
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Gibson, Gene                         2/28/98     2/28/00   130        $520.00      Rt. 1 Box 355, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Baker, Johnathan & Barbara           2/28/98     2/28/00    55        $220.00      Rt. 1 #307, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Lamb, Helen Nichols                  2/28/98     2/28/00    25        $100.00      Rt. 1 Box 332, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 28       Weston, Barbara Ann                  2/28/98     2/28/00    14         $56.00      Rt. 1 Box 307B Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 29       Fugate, Ruby                         2-29-98     2/29/00    25        $100.00      Rt. 1 Box 292, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 29       Kinsler, Lucian & Geneva                         
             **payment to: Norma Flennor       2-29-98     2/29/00    25        $100.00      Rt. 1 Box 290, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 29       Jarvis, Ray                          2-29-98     2/29/00    17         $68.00      P. O. Box 125, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 29       Wallen, Fred                         2-29-98     2/29/00    30        $120.00      Rt. 1 Box 200, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------

 29       Rogers, Etta  **payment to:                      
             Martha Nichols                    2-29-98     2/29/00    57        $228.00      Rt. 1 Box 244A, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 29       Holt, Lillie                         2-29-98     2/29/00   150        $600.00      Rt. 1 Box 96, Eidson, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
          TOTAL ACRES AND ANNUAL FEES - FEBRUARY                    4880     $19,520.00                                        
- ------------------------------------------------------------------------------------------------------------------------------------


                                                                             
                         Hancock Co. Lease Fee Schedule
                                                                          Page 6





                                                                                       
                                               NEXT     PRIMARY                ANNUAL        
 DATE        LESSOR NAME                       RENT    EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
 ----        -----------                       ----    ----------  -------      ---            ----------------------
MARCH                                                                     
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
 1       Smith, Inez **payment to: David Smith  3/1/98     3/1/00     39        $156.00    Rt. 1 Box 193, Kyles Ford, TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
 1       Johnson, Tyler & Virginia              3/1/98     3/1/00     30        $120.00    Rt. 1 Box 221 Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 1       Wagner, G. Michael and                            
            Elizabeth Kartinganer               3/1/98     3/1/00     87        $348 00    Rt. 1 Box 213, Kyles Ford, TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
 1       Presley, Dorothy and Ruby Blair        3/1/98     3/1/00    280      $1,120.00    Rt. 1 Box 50, Eidson, TN 37731        
- ------------------------------------------------------------------------------------------------------------------------------------
 1       Johns, Edna                            3/1/98     3/1/00    105        $420 00    Rt. 1 Box 162, Kyles Ford, TN 37765 
- ------------------------------------------------------------------------------------------------------------------------------------
 1       Presley, Rufus & Dorothy               3/1/98     3/1/00    275      $1,100.00    Rt. 1 Box 50, Eidson, TN 37731      
- ------------------------------------------------------------------------------------------------------------------------------------
 1       Belcher, Tommy & Brenda                3/1/98     3/1/00     35        $140.00    Rt. 1 Box 285, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Lula Sue                    3/2/98     3/2/00     75        $300.00    1319 Gregreen Ln Lakeland FL 33813 
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, John & Fern                 3/2/98     3/2/00     75        $300.00    8401 Malone Rd. Olive Branch MS 38654
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Dwight & Patsy              3/2/98     3/2/00     75        $300.00    Rt. 1, Kyles Ford 37765               
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Bill & Alice                3/2/98     3/2/00     75        $300.00    212 Russell Dr. Rogersville, TN 37857 
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Snodgrass, Dwight & Etal               3/2/98     3/2/00    100        $400.00    Rt. 1 Kyles Ford, TN 37765            
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Lorenz, Christine & Louis Jr.          3/2/98     3/2/00     75        $300.00    Rt. 1 Box 259B, Kyles Ford, TN 37765

- ------------------------------------------------------------------------------------------------------------------------------------
 2       Sizemore, James                        3/2/98     3/2/00      6         $24.00    Rt. 1 Box 223, Kyles Ford, TN 37765   
- ------------------------------------------------------------------------------------------------------------------------------------
 2       Trobaugh, James & Judy                 3/2/98     3/2/00     28        $112.00    2157 Frank Hodge Rd Talbott TN 37877
- ------------------------------------------------------------------------------------------------------------------------------------
 3       Gilliam, Shannon and Marie             3/3/98     3/3/00     25        $100.00    Rt. 1 Box 76 Eidson, TN 37731
- ------------------------------------------------------------------------------------------------------------------------------------
 4       Stewart Nora and Ida Rimes                        
            **Pyble to Nora Stewart             3/4/98     3/4/00    226        $904.00    Rt. 1 Box 103 Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 4       Whitney, Damnel, Edith & Ray           3/4/98     3/4/00     91        $364.00    Rt. 1 Box 76 Eidson, TN 37731
- ------------------------------------------------------------------------------------------------------------------------------------
 4       Hurd, Eva                              3/4/98     3/4/00     21         $84.00    Rt. 1 Box 135 Blackwater, VA 24221
- ------------------------------------------------------------------------------------------------------------------------------------
 4       Johnson, John & Minnie                 3/4/98     3/4/00     13         $52.00    Rt. 1 Box 321 Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 4       Willis, Douglas                        3/4/98     3/4/00      2          $8.00    Rt. 1 Box 198, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 4       Willis, Zelma                          3/4/98     3/4/00     75        $300.00    Rt. 1 Box 198A, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 5       Anderson, James & Nancy                3/5/98     3/5/00    283      $1,132.00    220 Lloyd Chapel Rd, Church Hill TN 37642
- ------------------------------------------------------------------------------------------------------------------------------------
 6       Maness, Sterling & Gilbertia           3/6/98     3/6/00     83        $332.00    Rt. 1 Box 216, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 6       Maness, Gilbertia & Sterling           3/6/98     3/6/00    115        $460.00    Rt. 1 Box 216, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 6       Willis, John Jr.                       3/6/98     3/6/00     18         $72.00    Rt. 1 Box 230, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 7       Kinsler, Mark Edward                   3/7/98     3/7/00     58        $232.00    Rt. 1 Box 183, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 7       Kinsler, Tyler & Jewell                3/7/98     3/2/00     15         $60.00    Rt. 1 Box 196, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------

                                                         
                                                                             
                         Hancock Co. Lease Fee Schedule
                                                                          Page 7






                                                                                       
                                              NEXT      PRIMARY                ANNUAL        
 DATE        LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
 ----        -----------                      ----     ----------  -------      ---            ----------------------
MARCH (Continued)                                                                    
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      
 8       Jones, Ronald & Michael             3/8/98     3/8/00    263      $1,052.00   510 Windsor Forrest Dr., Kingsport, TN 37663

- ------------------------------------------------------------------------------------------------------------------------------------
 11      Johnson, Clyde, Jr. & Dorothy J.    3/11/98    3/11/00    51        $204.00   1673 Christian Bend Rd, Church Hill, TN 37642
- ------------------------------------------------------------------------------------------------------------------------------------
 11      Moles, Dayton & Thelma              3/11/98    3/11/00    15         $60.00   Rt. 1, Box 274, Kyles Ford, TN 37765    
- ------------------------------------------------------------------------------------------------------------------------------------
 11      Shelburne, Thomas & Sarah           3/11/98    3/11/00    70        $280.00   P. O. Box 608, Rogersville, TN 37857  
- ------------------------------------------------------------------------------------------------------------------------------------
 11      Stapleton, Edward & Pauline         3/11/98    3/11/00    95        $380.00   538 W. Huntington, Monttelier Ind 47359
- ------------------------------------------------------------------------------------------------------------------------------------
 11      Wallen, Ronnie                      3/11/98    3/11/00    52        $208.00   117 Wellington Dr. Middlesboro KY 40965
- ------------------------------------------------------------------------------------------------------------------------------------
 12      Goodman, Calvie
          ** Make check to John Goodman      3/12/98    3/12/00    56        $224.00   Rt. 2 Box 158 Sneedville, TN 37869       
- ------------------------------------------------------------------------------------------------------------------------------------
 12      Johnson, Ada                        3/12/98    3/12/00    45        $180.00   Box 756, Churchville VA 24421            
- ------------------------------------------------------------------------------------------------------------------------------------
 12      Kinsler, Sonny                      3/12/98    3/12/00    20         $80.00   Rt. 1 Box 166 Kyles Ford TN 37765        
- ------------------------------------------------------------------------------------------------------------------------------------
 12      Seals, Naomi and Emery              3/12/98    3/12/00    38        $152.00   4218 Stansberry Rd. Morristown TN 37813
- ------------------------------------------------------------------------------------------------------------------------------------
 13      Collins, Margaret (administrator)   3/13/98    3/13/00   115        $460.00   Rt. 2 Box 340 Sneedville TN 37869         
- ------------------------------------------------------------------------------------------------------------------------------------
 13      Horton, Charlie                     3/13/98    3/13/00    58        $232.00   948 Melody LN Kingsport TN 37665        
- ------------------------------------------------------------------------------------------------------------------------------------
 13      Livesay, Jerry & Nancy              3/13/98    3/13/00   173        $692.00   Rt. 1 Box 36, Eidson, TN 37731         
- ------------------------------------------------------------------------------------------------------------------------------------
 13      Stout, Ethel                        3/13/98    3/13/00   136        $544.00   Rt. 1 Box 38 Eidson TN 37731
- ------------------------------------------------------------------------------------------------------------------------------------
 14      Hatfield, Lona                      3/14/98    3/14/00    40        $160.00   Rt. 2 Box 159, Tazewell TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 15      Barger, Ruth                        3/15/98    3/15/00     4         $16.00   921 Myrtle St. Kingsport, TN 37660
- ------------------------------------------------------------------------------------------------------------------------------------
 15      Nichols, Lee 
          **payment to: Clyde Nichols        3/15/98    3/15/00    77        $308.00   Rt. 1 Box 313 Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 15      Turner, Elsie                       3/15/98    3/15/00    45        $180.00   Rt. 1 Box 345, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 16      Sutton, Dayton & Julia              3/16/98    3/16/00 189.5        $758.00   Rt. 4 IDAS Chapel Rd Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 18      Cope Fred & Nancy 
          *Make check to: Fred Cope          3/18/98    3/18/00    80        $320.00   Rt. 4 Box 149 Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 18      Jones, Lewis & Zelma                3/18/98    3/18/00    21         $84.00   Rt. 4 Box 317A Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 19      Lawson, Ray E.                      3/19/98    3/19/00    14         $56.00   Rt. 3 Box 474 Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 20      Anderson, Herbert & Maxine          3/20/98    3/20/00    70        $280.00   160 Lena Dr. Rogersville TN 37857
- ------------------------------------------------------------------------------------------------------------------------------------
 20      Helton, Doris                       3/20/98    3/20/00    30        $120.00   Rt. 2 Box 157 A Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 20      Sizemore, Guy & Betty               3/20/98    3/20/00   435      $1,740.00   987 Lee Valley Rd. Whitesburg TN 37891
- ------------------------------------------------------------------------------------------------------------------------------------
 20      Winstead, Robert & Joyce            3/20/98    3/20/00    70        $280.00   Rt. 1 Box 173 Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------

 21      Greene, Rector & Fay                3/21/98    3/21/00    38        $152.00   312 E. Main St. Rt. 1 Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 21      McCoy, Jeff & Polly                 3/21/98    3/21/00    24         $96.00   Rt. 2 Tazewell TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 21      Willis, Walter & Alice              3/21/98    3/21/00    40        $160.00   Rt. 1 Box 185, Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 21      Wilson, Kyle & Ina                  3/21/98    3/21/00    23         $92.00   Rt. 4 Box 280 Sneedville TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 22      Rogers, Jack                        3/22/98    3/22/00    26        $104.00   Rt. 1 Box 154, Eidson TN 37731
- ------------------------------------------------------------------------------------------------------------------------------------


                         Hancock Co. Lease Fee Schedule
                                                                         Page 8







                                                                                       
                                                NEXT      PRIMARY              ANNUAL        
 DATE        LESSOR NAME                        RENT     EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
 ----        -----------                        ----     ----------  -------    ---            ----------------------
MARCH (CONTINUED)                                                                     
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
 22     Reed, Kenneth, Jr. & Penny              3/22/98    3/22/00    35       $140.00     P.O. Box 82, Sneedville, TN 37869     
- ------------------------------------------------------------------------------------------------------------------------------------
 24     Hechmer, Francis & Janet                3/24/98    3/24/99    60       $240.00     Rt. 4, Box 342, Sneedville, TN 37869    
- ------------------------------------------------------------------------------------------------------------------------------------
 25     Clonce, John & Louise                   3/25/98    3/25/00    32       $128 00     Rt. 3, Box 457, Sneedville, TN 37869   
- ------------------------------------------------------------------------------------------------------------------------------------
 26     Ogden, Sarah Elizabeth                  3/26/98    3/26/00    40       $160.00     160 Crossway Rd Brunswick GA      
        ** deposit to acct. No. 0090777, Citizens Bank of Sneedville                                                             
- ------------------------------------------------------------------------------------------------------------------------------------
 26     Darnell, Callie Mae                     3/26/98    3/26/00    74       $296.00     1020 Fairway St. Kingsport TN 37665     
- ------------------------------------------------------------------------------------------------------------------------------------
 27     Baker, Carl & Edith                     3/27/98    3/27/00   300     $1,200.00     Rt. 1 Box 264 Kyles Ford TN 37765       
- ------------------------------------------------------------------------------------------------------------------------------------
 28     Livesay, Elsie (Mrs. Braten)            3/28/98    3/28/00   196       $784.00     Rt. 1 Box 315 Kyles Ford TN 37765     
- ------------------------------------------------------------------------------------------------------------------------------------
 28     Snodgrass, Edward & Kelly               3/28/98    3/28/00   116       $464.00     Rt 1 Box 234 Kyles Ford TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 29     Dean, Larry E. & Gail                   3/29/98    3/29/00   143       $572.00     Rt. 4 Box 288 Sneedville TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
 29     Dodson, Earl & Betty                    3/29/98    3/29/00    40       $160.00     Rt. 3 Box 419 Sneedville TN 37869        
- ------------------------------------------------------------------------------------------------------------------------------------

        TOTAL ACRES AND ANNUAL FEES - MARCH                       5834.5    $23,338.00                                          
- ------------------------------------------------------------------------------------------------------------------------------------


                                                                              

                         Hancock Co. Lease Fee Schedule
                                                                          Page 9






                                                                                       
                                              NEXT      PRIMARY                ANNUAL        
 DATE        LESSOR NAME                      RENT     EXPIRATION  ACREAGE      FEE            LESSOR MAILING ADDRESS
 ----        -----------                      ----     ----------  -------      ---            ----------------------
APRIL                                                                    
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
 2       Dodson, Clarence & Joyce               4/2/98     4/2/00     68        $272.00    Rt. 3 Box 416, Sneedville TN 37869   
- ------------------------------------------------------------------------------------------------------------------------------------
 8       Pierce, Dr. Truett H., et al           4/8/98     4/8/99   7650     $10,000.00    P. O. Box 37, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 9       Seal, Jones                            4/9/98     3/9/00     50        $200.00    Rt. 2 Box 168 A Tazewell TN 37879        
- ------------------------------------------------------------------------------------------------------------------------------------
 10      Yeary, Bobby                           4/10/98    4/10/00    40        $160.00    Rt. 2 Box 161 A2 Tazewell TN 37879      
- ------------------------------------------------------------------------------------------------------------------------------------
 10      Smith, Larry and Lois and Linda        4/10/98    4/10/97   133        $532.00    Rt. 2 Box 157, Tazewell TN 37879   
- ------------------------------------------------------------------------------------------------------------------------------------
 11      Reed, Morris & Johnny                  4/11/98    4/11/00    12         $48.00    1465 Windcrest Dr. Morristown TN 37814  
         ** Johnny Reed: 13840 Bridlington Ct. Centerville VA 22020                                                                
- ------------------------------------------------------------------------------------------------------------------------------------
 17      Colson, William & Anita                4/17/98    4/17/00    60        $240.00    P. O. Box 27150, Panama City FL 32411   
- ------------------------------------------------------------------------------------------------------------------------------------
 18      Sutton, Hazel                          4/18/98    4/18/00  42.5        $170.00    Rt. 2 Box 158 Tazewell, TN 37879        
- ------------------------------------------------------------------------------------------------------------------------------------
 18      Sutton, Darnell                        4/18/98    4/18/00   102        $408.00    Rt. 2 Box 160 Tazewell, TN 37879        
- ------------------------------------------------------------------------------------------------------------------------------------
 20      Lange, Orville and Doris A.            4/20/98    4/20/00   107        $428.00    5521 Deer Park Dr., Roanoke, VA 24019   
- ------------------------------------------------------------------------------------------------------------------------------------
 22      Tillson, James and Edith               4/22/98    4/27/00    25        $100 00    Rt. 2 Box 20-1, Gore, OK 74435          
- ------------------------------------------------------------------------------------------------------------------------------------
         TOTAL ACRES AND ANNUAL FEES - APRIL                      8289.5     $12,558.00
- ------------------------------------------------------------------------------------------------------------------------------------


                         Hancock Co. Lease Fee Schedule
                                                                         Page 10







                                                                                       
                                           NEXT      PRIMARY                ANNUAL       
 DATE        LESSOR NAME                   RENT     EXPIRATION  ACREAGE      FEE           LESSOR MAILING ADDRESS
 ----        -----------                   ----     ----------  -------      ---           ----------------------
MAY                                                                    
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    
 2    Drinnon, Joel                        5/2/98     5/2/00     21        $84.00    Rt. 2, Box 225, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 2    Kinsler, Edith                       5/2/98     5/2/00     71       $284.00    P.O. Box 363 Sneedville, TN 37869        
- ------------------------------------------------------------------------------------------------------------------------------------
 7    Hopkins, Debbie                      5/7/98     5/7/00      8        $32.00    P.O. Box 231, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 8    Davis, Robert J. and Glenda J.       5/8/98     5/8/00     47       $188.00    Rt. 1 Box 361, Sneedville, TN 37869 
- ------------------------------------------------------------------------------------------------------------------------------------
 8    Hurst, Stan and Peggy                5/8/98     5/8/00    125       $500.00    Rt. 4 Box 316A, Sneedville, TN 37869     
- ------------------------------------------------------------------------------------------------------------------------------------
 8    Wallace, W. Pearl                    5/8/98     5/8/00      6        $24.00    P.O. Box 375, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 10   Rhea, Estate of Victor               5/10/98    5/10/00   115       $460.00    c/o Jewell Brown, Box 303 Rogersville, TN 37857
- ------------------------------------------------------------------------------------------------------------------------------------
 10   Shelburne, Thomas D. And Sarah C.    5/10/98    5/10/00    70       $280.00    P.O. Box 608, Rogersville, TN 37857      
- ------------------------------------------------------------------------------------------------------------------------------------
 11   Seal, Joe F. And Billie S.           5/11/98    5/11/00    20        $80.00    Rt. 2 Box 207, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
 11   Roberts, Wayne and Jeanette          5/11/98    5/11/00   150       $600.00    Rt. 2 Box 212-A, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Jack, Etal                  5/13/98    5/13/00  96.5       $386.00    3775 State Highway 33, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Jack and Jackie             5/13/98    5/13/00   103       $412.00    3775 State Highway 33, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Ethel McDaniel, Etal        5/13/98    5/13/00   175       $700.00    3775 State Highway 33, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 13   Barnard, Jack                        5/13/98    5/13/00   400     $1,600.00    3775 State Highway 33, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 13   Hagan, Ronald, Etal                  5/13/98    5/13/00    86       $344.00    5757 Brights Pike, Russellville, TN 37860
- ------------------------------------------------------------------------------------------------------------------------------------
 14   Griffin, Janelle and James           5/14/98    5/14/00     6        $24.00    Rt. 4 Box 383, Rutledge, TN 37861
- ------------------------------------------------------------------------------------------------------------------------------------
 14   Stewart, Eddie and Karen Wallen
       **ck to Karen Wallen                5/14/98    5/14/00    13        $52.00    Rt. 1 Box 103, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 14   Wallen, Dennis A. And Karen          5/14/98    5/14/00    18        $72.00    Rt. 1 Box 103, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 15   Greene, Matt. D. Estate              5/15/98    5/15/00   205       $820.00    Rt. 1 Box 172, Rutledge TN 37861
- ------------------------------------------------------------------------------------------------------------------------------------
 15   Moles, Carson and Etta               5/15/98    5/15/97   117       $468.00    Rt. 2 Box 172, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 15   Moles, Vester Neal                              5/15/97    51       $204.00    Rt. 3 Box 1035, Bean Station, TN 37708
- ------------------------------------------------------------------------------------------------------------------------------------
 16   LeBlanc, Tammy                       5/16/98    5/16/00    68       $272.00    Rt. 4 Box 321A, Sneedville, TN 37869

- ------------------------------------------------------------------------------------------------------------------------------------
 16   Royston, Grady and Phyllis           5/16/98    5/16/00    50       $200.00    Rt. 1 Box 32, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 16   Jefferson, Carl and Wanda            5/16/98    5/16/99     2        $10.00    Rt. 4 Box 320EE, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 17   McCoy, James and Elanor              5/17/98    5/17/00   150       $600.00    Rt. 2 Box 221, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 17   Seal, Horad Seal Estate
        **payable to Myrtle Seal           5/17/98    5/17/00   150       $600.00    Rt. 2 Box 208, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 20   Sutton, James D. And George E.       5/20/98    5/20/99    92       $368.00    3328 Sheila Circle, Whitepine, TN 37890
- ------------------------------------------------------------------------------------------------------------------------------------
 28   Johnson, Hugh and Helen              5/28/98    5/28/00    25       $100.00    Rt. 1 Box 324, Kyles Ford, TN 37765
- ------------------------------------------------------------------------------------------------------------------------------------
 31   Seals, Sherwin and Linda                        5/31/97    65       $260.00    Rt. 2 Box 161A, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 31   Johns, Porter and Ruby                          5/31/97   114       $456.00    Rt. 2, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------

      TOTAL ACRES AND ANNUAL FEES - MAY                      2619.5    $10,480.00
- ------------------------------------------------------------------------------------------------------------------------------------

                                                                               
                         Hancock Co. Lease Fee Schedule
                                                                         Page 11







                                                                                       
                                           NEXT    PRIMARY              ANNUAL        
 DATE        LESSOR NAME                   RENT   EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
 ----        -----------                   ----   ----------  -------    ---            ----------------------
JUNE                                                                 
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
 1    Turnmire J.C. and Joyce                        6/1/97     93     $372.00   6905 Mulberry Road, Knoxville, TN 37918 
- ------------------------------------------------------------------------------------------------------------------------------------
 7    McDaniel, Jewell, Admin., 
       Est. of Jepp Shockley              6/7/98     6/7/00     60     $240.00   136 Cardwell Drive, Tazewell TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 9    Seal, Ronald W. & Kimberly          6/9/98     6/9/00     25     $100.00   Rt. 2, Box 74, Sneedville, TN 37869              
- ------------------------------------------------------------------------------------------------------------------------------------
 18   Moles, Nellie                       6/18/98    6/18/98    86     $344.00   Route 2, Box 164, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
 20   Seal, Clem D. & Lois                6/20/98    6/20/99   288   $1,152.00   Route 2, Box 113, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 20   Wingo, Tom & Peggy                  6/20/98    6/20/00   110     $440.00   Rt. 3, Box 486, Briar Cr. Rd., Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------

 20   Winstead, Carl & Eveline            6/20/98    6/20/00    76     $304.00   Route 3, Box 502, Sneedville, TN 37869           
- ------------------------------------------------------------------------------------------------------------------------------------
 24   Seal, Clint and Mae                 6/24/98    6/24/00   140     $560.00   Route 3, Box 292, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 24   Seal, Tony H. & Pat                 6/24/98    6/24/00   101     $404.00   Route 3, Box 483-B, Sneedville, TN 37869     
- ------------------------------------------------------------------------------------------------------------------------------------
 24   Seal, Tony H., Timothy D. & Jeff S. 6/24/98    6/24/00   218     $872.00   Route 3, Box 483-B, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 24   Marion, Wilbur & Katherine          6/24/98    6/24/00    25     $100.00   Route 3, Box 506, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 24   White, Randy & Patricia             6/24/98    6/24/00    40     $160.00   Route 3, Box 395, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 25   Louthan, Euna & Charles
       on behalf Everett Sutton Est.      6/25/98    6/25/00   123     $492.00   Rt. 4, Box 239, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 28    Johnson, Kenneth & Tammy           6/28/98    6/28/00    65     $260.00   Rt. 4, Box 203, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 28    Seal, Ora M.                       6/28/98    6/28/00     8      $32.00   Rt. 3, Box 389, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
          TOTAL ACRES & ANNUAL FEES - JUNE                    1458   $5,832.00
- ------------------------------------------------------------------------------------------------------------------------------------



                         Hancock Co. Lease Fee Schedule
                                                                         Page 12






                                                                                     
                                       NEXT     PRIMARY              ANNUAL        
 DATE        LESSOR NAME               RENT    EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS
 ----        -----------               ----    ----------  -------    ---            ----------------------
JULY                                                              
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
 1   Greene, Bessie Lee & Tillman, Jr. 7/1/98   7/1/99     17       $68.00         Rt. 2, Box 301, Sneedville, TN 37869  
- ------------------------------------------------------------------------------------------------------------------------------------
 2   Seal, Tyler C. & Tener            7/2/98   7/2/00    420    $1,680.00         Rt. 3, Box 510, Sneedville, TN 37869         
- ------------------------------------------------------------------------------------------------------------------------------------
 2   Reed, Ruby & Heirs,                                                      
         Est. Of Lawrence Reed         7/2/98   7/2/00    317    $1,268.00         Rt. 4, Box 264, Sneedville, TN 37869         
- ------------------------------------------------------------------------------------------------------------------------------------
 8   Lawson, Ray & Glenda              7/8/98   7/8/00     25      $100.00         Rt. 3, Box 474, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 9   Mathis, Jeff & Barbara            7/9/98   7/90/00    70      $280.00         Rt. 3, Box 740, Sneedville, TN 37869 
- ------------------------------------------------------------------------------------------------------------------------------------

 9   Bryant, Herman & Ethel            7/9/98   7/9/00      6       $24.00         P. O. Box 223, Sneedville, TN 37869      
- ------------------------------------------------------------------------------------------------------------------------------------
 11  Tabor, Jack       Claiborne Co.   7/11/98  7/11/00   465    $1,860.00         600 Sugar Loaf Road, Brevard, NC 28712     
- ------------------------------------------------------------------------------------------------------------------------------------
 11  Cook, Richard A., Jr. And Denese  7/11/98  7/11/00 123.3      $738.00         9449 Decatur Road, Laurel, MD 20723
- ------------------------------------------------------------------------------------------------------------------------------------
 11  Clonce, Estate of John               Pd.   7/11/97    34      $500.00 (Total) c/o John Clonce,Jr., Rt.3, Box 457, 
                                                                                      Sneedville 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 15  Seal, Wilma G.                       Pd.   7/15/98     4      $100.00 (Total) Rt. 3, Box 376, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 15  Seal, James & Inez                7/15/98  7/15/00    61      $244.00         4023 Old Kentucky Rd., Morristown, TN 37814     
- ------------------------------------------------------------------------------------------------------------------------------------
 16  Pendey Jimmy & Charlotte          7/16/98  7/16/00             $24.00         Rt. 3, Box 492C, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 16  Trent, Buddy                      7/16/98  7/16/00     4       $16.00         Rt. 3, Box 493, Sneedville, TN 37869            
- ------------------------------------------------------------------------------------------------------------------------------------
 17  Mills, Mattie L.                  7/17/98  7/17/00     6       $24.00         P. O. Box 346, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 17  Greene, Faye (Mrs. Rector)        7/17/98  7/17/00    36      $144.00         Rt. 1, 312 E. Main St., Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 18  Seal, Mamie Hopkins               7/18/98  7/18/00    43      $172.00         Rt. 3, Box 475, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 23  Lawson, Fay H.                    7/23/98  7/23/00    33      $132.00         Rt. 3, Box 477, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 23  Lawson, Fay H. & Ray E.           7/23/98  7/23/00    35      $140.00         Rt. 3, Box 477, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 25  Seal, Randy & Joyce               7/25/98  7/25/99   210      $840.00         Rt. 1, Box 384, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 26  Mathis, George L. & Bobbie A.     7/26/98  7/26/00    15       $60.00         3116 Westlake Dr., Rogersville, TN 37857
- ------------------------------------------------------------------------------------------------------------------------------------
 26  Rippy, James & Geneva J.          7/26/98  7/26/99    25      $100.00         2617 W. Crenshaw, Tampa, FL 33614
- ------------------------------------------------------------------------------------------------------------------------------------
 29  Johnson, Est. Of Glen                                                    
         *Chk. To Betty Johnson        7/29/98  7/29/00    44       $176.00        Rt.3, Box 507, Ferguson Rd., Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                
     TOTAL ACRES & ANNUAL FEES - JULY                  1998.3     $8,690.00
- ------------------------------------------------------------------------------------------------------------------------------------



                         Hancock Co. Lease Fee Schedule
                                                                         Page 13





                                                                                     
                                           NEXT    PRIMARY              ANNUAL        
 DATE        LESSOR NAME                   RENT   EXPIRATION  ACREAGE    FEE            LESSOR MAILING ADDRESS

 ----        -----------                   ----   ----------  -------    ---            ----------------------
AUGUST                                                                  
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
5    Hardin, E. J. & Betsey 
          Claiborne Co.                  8/5/97    8/5/00      250      $1,000.00    Box 162, Tazewell, TN 37879
- ------------------------------------------------------------------------------------------------------------------------------------
7    Johnson, Ellis, James & Larry
          *Ck. to Ellis                  8/7/97     8/7/00       7         $28.00    Rt. 2, Box 4990, Bean Station, TN 37708
- ------------------------------------------------------------------------------------------------------------------------------------
8    Seal, Carl                          8/8/97     8/8/00      72        $288.00    P. O. Box 326 Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
13   Reed, Kyle & Ma Jo                  8/13/97    8/13/00     35        $144.00    1518 N. Glen Street, Morristown, TN 37814
- ------------------------------------------------------------------------------------------------------------------------------------
15   Smith, David & K.D.   Claiborne Co. 8/15/97    8/15/00     56        $224.00    3823 Kingston Pike, Knoxville, TN 37919
- ------------------------------------------------------------------------------------------------------------------------------------

     TOTAL ACRES AND ANNUAL FEES - AUGUST                      420      $1,680.00
- ------------------------------------------------------------------------------------------------------------------------------------


                         Hancock Co. Lease Fee Schedule
                                                                         Page 14







                                                                                     
                                        NEXT       PRIMARY               ANNUAL        
 DATE        LESSOR NAME                RENT      EXPIRATION  ACREAGE     FEE           LESSOR MAILING ADDRESS
 ----        -----------                ----      ----------  -------     ---           ----------------------
SEPT.                                                               
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
 4   Pareti, Ronald & Susan             9/4/97     9/4/00    135         $550.00    Rt. 3, Box 394 River Road, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 9   Cantwell, Jeff and Myrtle          9/9/97     9/9/98  166.5         $666.00    Rt. 3, Box 401, Sneedville, TN 37869
- ------------------------------------------------------------------------------------------------------------------------------------
 9   Roberts, Hugh, Bruce and J. B.     9/9/97     9/9/98    156         $624.00    2105 Brights Pike, Morristown, TN 37814 
- ------------------------------------------------------------------------------------------------------------------------------------
 9   Roberts, Hugh                      9/9/97     9/9/98     61         $244.00    2105 Brights Pike, Morristown, TN 37814       
- ------------------------------------------------------------------------------------------------------------------------------------
 17  Bailey, Linda S.                   9/17/97    9/17/99    26         $104.00    Route 2, Box 122, Sneedville, TN 37869        
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
     TOTAL ACRES AND ANNUAL FEES - SEPTEMBER               544.5       $2,188.00
- ------------------------------------------------------------------------------------------------------------------------------------
     
     GRAND TOTAL ACRES AND ANNUAL FEES                  30367.14     $101,643.61     
- ------------------------------------------------------------------------------------------------------------------------------------


                         Hancock Co. Lease Fee Schedule
                                                                         Page 15

EX-99.6

                                  EXHIBIT 99.6







EXHIBIT 99.6

ALABAMA LEASES



                                             NEXT       PRIMARY
LEASE #    LESSOR NAME                       RENT       XPIRATION    BOOK    PAGE     NET ACRE      LOR       NRI       WI
============================================================================================================================
                                                                                             
  1       ABRAMSON, EDVIN C.              11/30/96      11/30/98      2       413       497         12.5%     87.5%    100%
- ----------------------------------------------------------------------------------------------------------------------------
  2       ABRAMSON, VERNON                11/30/96      11/30/98      2       411       139         12.5%     87.5%    100%
- ----------------------------------------------------------------------------------------------------------------------------
  3       DALE, MARK F.                   12/18/96      12/18/98      2       415     100.19        12.5%     87.5%    100%
- ----------------------------------------------------------------------------------------------------------------------------
  4       WYLIE, RUBEN A.                 12/20/96      12/20/98      2       419       267         12.5%     87.5%    100%
- ----------------------------------------------------------------------------------------------------------------------------

                                                         TOTAL ACREAGE ..........    1003.19
- ----------------------------------------------------------------------------------------------------------------------------


                                                           Page 1

EX-99.7

                                  EXHIBIT 99.7







                          Coburn Petroleum Engineering


R.W. Coburn

                                  June 18, 1997


Mr. Dan Follmar, President
Tengasco, Inc.
603 Main Avenue, Suite 500
Knoxville, Tennessee 37902

                                                           RE: Tengasco, Inc.
                                                               December 31, 1996

Dear Mr. Follmar:

Pursuant to your request, I have evaluated the oil and gas properties of
Tengasco, Inc., as of December 31, 1996. The results of this study are as
follows:

                             As of December 31, 1996
                                (All Values Net)

                                                                         Net
                                                      Net Future       Revenue
                            Oil            Gas          Undisc.       Disc @ 10%
                          (Bbls)          (Mcf)          ($)            ($)
Proved Developed          ------        ----------    ----------     ----------
  Non Producing                0         7,167,350    21,762,357     12,438,762
Proved Undeveloped        10,156        15,400,005    50,349,552     28,909,335
                          ------        ----------    ----------     ----------
                          10,156        22,567,355    72,111,909     41,348,097

Required Future Investment..........................................$ 5,775,000

The investment figure above includes the remaining cost of building a pipeline
to the Swan Creek Field. Costs of the pipeline will be recovered by a gathering
charge accounted for by adjusting the gas price to be received by producing gas
wells in the in the Swan Creek Field. The large increase in reserves over the
report as of December 31, 1995 is due to acquisition and development of the Swan
Creek Field in Hancock County Tennessee. A discussion of this field as well as
the Burning Springs, Beech Creek, and Fentress properties has been covered in
reports previously submitted to you.

Details by properties are shown in the following tables. All of the oil and gas
properties are located in the states of Kentucky and Tennessee. In the absence
of and operating cost history our




        9 East 4th Street o Suite 1000 o Tulsa, Oklahoma 74103-5107 o
                    918-587-7585 o Facsimile 918-584-4426





best judgement was used to estimate future operating costs. Well costs are based
on drilling costs in the area.

Reserve and future performance estimates were prepared utilizing standard
petroleum engineering methods. These methods include decline curve analysis,
volumetric calculations, pressure history, analogy, various correlations and
technical judgment. Reserve definitions conform to the Securities and Exchange
Commission Guidelines.

Information was obtained from interest owners, State Regulatory Agencies,
commercial services, outside operators and our files.

Information furnished is accepted as true and correct. Changes in economic
conditions, reservoir performance, and unforeseen mechanical problems will
likely make it necessary to make future reserve revisions.


                                    Respectfully Submitted,
                                    Coburn Petroleum Engineering

                                    /s/ R.W. Coburn
                                    R.W. Coburn
                                    Registered Petroleum Engineer
                                    Oklahoma #3449




RWC/eaa


                          Coburn Petroleum Engineering





                                   CERTIFICATE

     I, R.W. Coburn, of the City of Tulsa, in the State of Oklahoma, United
States of America, hereby certify:

     That I am a Consulting Engineer and a principal of Coburn Petroleum
Engineering, with offices at 9 East 4th Street, Suite 900, Tulsa, Oklahoma
74103.


     I further certify that:

     1. I am a graduate of the University of Tulsa (1943) and hold a B.S. Degree
in Petroleum Engineering.

     2. I have been practicing my profession for the past 51 years.

     3. I am registered with the Board of Professional Engineers of Oklahoma.
(Registration #3349)

     4. The information for this report was obtained from discussion with field
operating personal, from examination of production data, well tests, prior
engineering studies and prior geologic studies. Some state well records were
available for examination as were oil and gas sales records.

     5. I have no direct or indirect interest whatsoever in the properties or
the company involved. All fees are based on services rendered and are not
contingent on the contents of the report. 

     Dated at Tulsa, Oklahoma, this 18 day of June, 1997.


                                        /s/ R.W. Coburn
                                        ------------------------------------
                                        R.W. Coburn
                                        Registered Petroleum Engineer #3349





                              PROFESSIONAL HISTORY
                                   R.W. COBURN

EDUCATION

1937              Graduated from Richmond Hill High School,
                  New York City, New York

1937-1939         Hofstra College, Hemstead, New York
                  Business Administration

1939-1943         Graduated from Tulsa University, Tulsa
                  Oklahoma * B.S. Petroleum Engineering

MILITARY

1943-1946         Socony-Vacuum Oil Co. - Summer work (pipe
                  fitter apprentice and control chemist)
                  Brooklyn, New York Refinery

1946-1952         The Atlantic Refinery
1946              Junior Engineer-Reservoir Engineering,
                  Dallas, Texas

1947              District Engineer-Franklin, Louisiana
1948              District Production Foreman- Franklin,
                  Louisiana
1949              Ass't Dist. Superintendent-Denver City,
                  Texas
1952              Drilling Engineer- Offshore-Corpus Christi,
                  Texas
1952-1958         Champlin Oil & Refining Company-Enid,
                  Oklahoma. Chief Engineer and Division
                  Production Supt.

1958-1962         W.E. Stiles Consulting Engineers- Vice President and Manager
                  of Field Operations. Managed and directed the operation of oil
                  and gas properties in Southwest U.S. Served as Production
                  Manager and Technical Consultant to Petrorep, French oil
                  company.

1963-1992         Consulting Engineer. Engineered and supervised drilling and
                  completion operations in the U.S., Canada, France and Algeria.
                  Developed new well completion methods which changed existing
                  completion methods and are now standard practice throughout
                  the world.




1992-Present      Staghorn (was Buttonwood) Petroleum
                  Operations Manager

Wrote and published numerous articles on well completions for technical journals
and Engineering Societies.

Preparation of Engineering Evaluations for property purchases, sale and
registration with the Securities Exchange Commission.

Registered Petroleum Engineer - Oklahoma - #3349

GEOGRAPHICAL AREAS OF KNOWLEDGE & EXPERIENCE

1. U.S.           Oklahoma          Tennessee        Indiana
                  Arkansas          Kansas           Kentucky
                  Texas             West Virginia    Mississippi
                  New Mexico        Pennsylvania     Montana
                  Louisiana         Ohio             California
                  Illinois

2.  CANADA        Alberta           Ontario

3.  EUROPE        Paris Basin

4.  AFRICA        Algeria           Sudan (Redsea)   Nigeria
                  Tunisia

                           SPECIFIC AREAS OF EXPERTISE


1.                Drilling-Planning-Supervision
2.                Workover-Planning-Supervision
3.                Production-Operation-Supervision
4.                Reserve Evaluation-Securities-Banking
5.                Prospect Evaluation-Drilling Programs
6.                Legal Expert Witness






                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA


            TENGASCO INC.                         AS OF DECEMBER 31, 1996                                      UNESC. CASE
- ---------------------------------------------------------------------------------------------------------------------------------
                                                           SUMMARY                                                        LEVEL 2

                                         PROVED DEVELOPED NON-PRODUCING & PROVED UNDEVELOPED

                             * RESERVE  ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

                                                                                                                                 
PERIOD ENDING                 12-31-1997 12-31-1998 12-31-1999 12-31-2000 12-31-2001 12-31-2002 12-31-2003 12-31-2004 12-31-2005 
                              ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 
                                                                                                
GROSS VALUES            UNITS
   OIL/COND             BBL                   13616      23022      18363      14648      11684       9320       7434       5930 
   GAS                  MCF       369110    3635245    3647919    3237408    2684119    2228264    1052008    1541226    1204231 
   OPERATING COST       $          67200     147600     162000     162000     162000     162000     162000     162000     162000 
   INTANGIBLE INVES     $        1250000    1225000                                                                              
   CAPITAL INVES        $        2600000     700000                                                                              

NET VALUES
   OIL/COND             BBL                   11063      18705      14920      11952       9493       7573       6040       4818 
   GAS                  MCF       311168    2991201    3035345    2702399    2239405    1057633    1542498     128122    1066818 
   OIL/COND             $                    204997     346804     276468     220544     175985     140326     111921      80278 
   GAS                  $        1022271   10874861   10909243    1562441    7910556    6549596    5427357    4501241    3736469 
   REVENUE TO HI        $        1022271   11079858   11255847    9838909    8131100    6725501    5567685    4813162    3825747 
   INTANGIBLE INVES     $        1250600    1225008                                                                              
   CAPITAL INVES        $        2600000     700006                                                                              
   OPERATING COST       $          66000     143706     158100     158100     158100     158100     158100     158100     158100 
- ---------------------------------------------------------------------------------------------------------------------------------
   NET INCOME           $       -2893723    9011158   11097147    9660909    7973000    6587401    5409585    4455082    3667647 
   CUMULATIVE INCOME    $       -2893723    6117435   17215182   26805901   34868991   41436392   46845977   51301039   54968686 
CUM. P WORTH @ 10.00%   $       -2759457    5051673   13796539   20731391   25923629   29811698   32723164   34902924   36534283 

- ---------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%  37796873             P WORTH @14.00% 34716928         P WORTH @ 15.00% 33326253       P WORTH @ 20.00% 27544471
- ---------------------------------------------------------------------------------------------------------------------------------

                                                       TOTAL OF     

PERIOD ENDING                   12-31-2006 12/31/2006+ 85.39 YRS    
                                ---------- ----------- ----------   
                                                                    
                                                     
GROSS VALUES            UNITS                                       
   OIL/COND             BBL           4730      16253     125000    
   GAS                  MCF        1071511    5848766   27419739    
   OPERATING COST       $           162000    2004413    3595213    
   INTANGIBLE INVES     $                                2475800    
   CAPITAL INVES        $                                3300808    
                                                                    
NET VALUES                                                          
   OIL/COND             BBL           3843      13208     181565    
   GAS                  MCF         808639    4650129   22567355    
   OIL/COND             $            71211     244748    1882802    
   GAS                  $          3104527   15885993   79484561    
   REVENUE TO HI        $          3175738   16130739   81366563    
   INTANGIBLE INVES     $                                2475008    
   CAPITAL INVES        $                                3300808    
   OPERATING COST       $           158100    2005154    3479554    
- ------------------------------------------------------------------
   NET INCOME           $          3017638   14125585   72111909    
   CUMULATIVE INCOME    $         57986324   14125585   72111909    
CUM. P WORTH @ 10.00%   $         37754499    3593598   41340097    
- ------------------------------------------------------------------
                                        P WORTH @ 25.00% 23204705   
- ------------------------------------------------------------------








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA


            TENGASCO INC.                         AS OF DECEMBER 31, 1996                                      UNESC. CASE
- ---------------------------------------------------------------------------------------------------------------------------------
                                                           SUMMARY                                                        LEVEL 1

                                                  PROVED DEVELOPED NON-PRODUCING

                             * RESERVE  ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

                                                                                                                                 
PERIOD ENDING                 12-31-1997 12-31-1998 12-31-1999 12-31-2000 12-31-2001 12-31-2002 12-31-2003 12-31-2004 12-31-2005 
                              ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 
                                                                                                

GROSS VALUES            UNITS
   OIL/COND             BBL
   GAS                  MCF       389110    1437151    1190026     989656     626081     691854     581265     489846     414076 

   OPERATING COST       $          67200      81600      81600      81600      81640      81600      81600      81600      81600 
   INTANGIBLE INVES     $                                       
   CAPITAL INVES        $        1200000                                                                                         
                                                                
NET VALUES                                                      
   OIL/COND             BBL                                     
   GAS                  MCF       311168    1067869     884688     735623     613622     513327     430598     362165     305425 
   OIL/COND             $                                       
   GAS                  $        1022277    3681600    3048219    2531577    2108138    1750798    1472437    1234819    1037953 
   REVENUE TO HI        $        1022277    3681600    3048219    2531577    2108138    1759798    1472437    1234819    1037953 
   INTANGIBLE INVES     $                                       
   CAPITAL INVES        $        1200000                                                                                         
   OPERATING COST       $          66000      77700      77700      77700      77700      77700      77700      77700      77700 
- ---------------------------------------------------------------------------------------------------------------------------------
   NET INCOME           $        -243723    3603980    2970519    2453877    2030438   16482098    1394737    1157119     960253 
   CUMULATIVE INCOME    $        -243723    3360177    6338696    8704573   10815011   12497109   13891846   15048965   16009218 
CUM. P WORTH @ 10.00%   $        -232381    2891423    5232150    6989986    8312263    9308109   10058765   10624917   11052035 
- ---------------------------------------------------------------------------------------------------------------------------------

P WORTH @ 12.00%  11446869            P WORTH @ 14.00%  10591287    P WORTH @ 15.00%  10285895       P WORTH @ 20.00%  8605662   
- ---------------------------------------------------------------------------------------------------------------------------------

                                                       TOTAL OF     
PERIOD ENDING                   12-31-2006 12/31/2006+ 85.39 YRS    
                                ---------- ----------- ----------   
                                                                    
                                                     
GROSS VALUES            UNITS                                       
   OIL/COND             BBL                                         
   GAS                  MCF         351098   2459582    9819739     
   OPERATING COST       $            81600    648148    1449748     
   INTANGIBLE INVES     $                                           
   CAPITAL INVES        $                               1200000     
                                                                    
NET VALUES                                                          
   OIL/COND             BBL                                         
   GAS                  MCF         258277   1684568    7167350     
   OIL/COND             $                                           
   GAS                  $           874552   5525176   24296546     
   REVENUE TO HI        $           874552   5525176   24296546     
   INTANGIBLE INVES     $                                           
   CAPITAL INVES        $                               1200000     
   OPERATING COST       $            77700    568689    1334189     
- -----------------------------------------------------------------
   NET INCOME           $           796852   4956287   21762357     
   CUMULATIVE INCOME    $         16806070   4956287   21762357     
CUM. P NORTH @ 10.00%   $         11374252   1064510   12436762     
- -----------------------------------------------------------------
                                     P WORTH @ 25.00% 7401758       
- -----------------------------------------------------------------
                                







                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA


            TENGASCO INC.                        AS OF DECEMBER 31, 1996                                      UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                               SUMMARY
                                                   PROVED DEVELOPED NON-PRODUCING

LEASE NUMBER LEASE NAME           N.I. CURRENT  F.N.R.     NET EXPEN  NET OIL  OIL PR. ULT OIL  CUN OIL  REM OIL  INITIAL LIFE
PM RANKING   OPERATOR             N.I. CURRENT  PM@ 10.00% NET INVES  NET GAS  GAS PR. ULT GAS  CUN GAS  REM GAS  RATE    NO WELL(S)
- -----------  ---------------      FRACTION----- $--------- $--------  MB,MMF-  $/B,S/N MB,MMF   MB,MWF-- MB,MMF-- B/M,W/M ----------
                                                                                                
                                                                                              
11           Daugh White #1          .2500000     728108     27900      0.0     0.00      0.0     0.0      0.0        0   85.4 YRS
 9           Tengasco                .2187500     318276         0    262.5     3.00   1200.0     0.0   1200.0    12000   1 WELL(S)
                                                                                                
12           Daugh White #2         1.0000000    2156484    111600      0.0     0.00      0.0     0.0      0.0        0   73.5 YRS
 5           Tengasco                .8750000     960480         0    787.5     3.00    900.0     0.0    900.0     9120   1 WELL(S)
                                                                                                
13           Grubb #1               1.0000000    1778407    111600      0.0     0.00      0.0     0.0      0.0        0   67.1 YRS
 6           Tengasco                .8750000     800036         0    656.3     3.00    750.0     0.0    750.0     7600   1 WELL(S)
                                                                                                
14           Dezarn                 1.0000000     833405    111600      0.0     0.00      0.0     0.0      0.0        0   47.4 YRS
 6           Tengasco                .8750000     396297         0    328.1     3.00    375.0     0.0    375.0     3800   1 WELL(S)
                                                                                                
21           Combined Leases        1.0000000     702966    483540      0.0     0.00      0.0     0.0      0.0        0   10.1 YRS
 7           Tengasco                .8750000     547248         0    520.4     2.35    613.6    10.9    594.7    10000   6 WELL(S)
                                                                                                
31           B. Colson #1           1.0000000    3795578    127433      0.0     0.00      0.0     0.0      0.0        0   25.8 YRS
 2           Tengasco                .8750000    2440356         0   1050.0     3.00   1200.0     0.0   1200.0    20000   1 WELL(S)
                                                                                                
32           George Patton #2        .7500000    2049894     95576      0.0     0.00      0.0     0.0      0.0        0   25.8 YRS
 3           Tengasco                .6583000    1830406         0    787.6     3.00   1200.0     0.0   1200.0    20000   1 WELL(S)
                                                                                                
33           Paul Reed #1           1.0000000    8261417    153600      0.0     0.00      0.0     0.0      0.0        0   32.2 YRS
 1           Tengasco                .7500000    5067365         0   2250.0     3.86   3000.0     0.0   3000.0    45000   1 WELL(S)
                                                                                                
34           Sutton UT #1           1.0000000    1852178    111340      0.0     0.00      0.0     0.0      0.0        0   22.3 YRS
 4           Tengasco                .8750000    1202446         0    525.0     3.80    600.0     0.6    600.0    10000   1 WELL(S)
                                                                                                
35           Gas Transmission Line  1.0000000   -1260000         0      0.0     0.00      0.0     0.0      0.0        0   0.0 YRS
10           Tengasco               1.0000000   -1144155   1200000      0.0     0.00      0.0     0.0      0.0        0   0 WELL(S)
- ------------------------------------------------------------------------------------------------------------------------------------
                                               









                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

         TENGASCO INC.                                  AS OF DECEMBER 31, 1996                                    UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
Daugh White #1                        Beech Crk/ Blg Squeal        (1)NI  25      %          NI 21.875     %            LIMIT
Tengasco                              Devonian Shale               (2)NI          %          NI            %            LIMIT
- -                                     DEPTH 1100/2000 FT           (3)NI          %          NI            %            LIMIT
Clay COUNTY                           Kentucky                     (4)NI          %          NI            %            LIMIT
LEASE NO: 11                          API NO.  16-051-XXXXX        RRC/OTC NO

                             * RESERVE ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

- -------------------------------------------     -------------------------------------------------     ----------------------------
CUMULATIVE: OIL =   0  BBL,   GAS =  0  MCF *** ULTIMATE:    OIL =    0 BBL,    GAS = 1200000 MCF *** FUTURE NET INCOME = $ 728106
- -------------------------------------------     -------------------------------------------------     ----------------------------
FIRST PERIOD STARTS 12-31-1997   DELAY IS = 12 months (From as of date)

PERIOD ENDING                12-31- 12-31-  12-31-   12-31-  12-31-  12-31-   12-31-   12-31-  12-31-   12-31-   12-31-     TOTAL OF
                             1997   1998    1999     2000    2001    2002     2003     2004    2005     2006     2006+     85.39 YRS
                             ------ ------  ------   ------  ------  ------   ------   ------  ------   ------   -----    ----------
                                                                                    
GROSS VALUES          UNITS
   OIL/COND           BBL
   GAS                MCF          129930   106800   89341   75848   65184    56627    49650    43889    39875    543664   1200000
   GOR                M/B
   OPERATING COST     $              3600     3600    3600    3600    3600     3600     3600     3600     3600     79200    111600
   OIL PRICES         $/B
   GAS PRICES         $/W            3.00     3.00    3.00    3.00    3.00     3.00     3.00     3.00     3.00      3.00          
   INTANGIBLE INVES   $  
   CAPITAL INVES      $  

TAXES
   OIL SERVERANCE     $/B
   GAS SERVERANCE     $/B             .12      .12     .12     .12     .12      .12      .12      .12      .12       .12          
   MISC TAXES         $/B

NET VALUES
   OIL/COND           BBL
   GAS                MCF           26422    23363   19543   16590   14259    12387    10861     9601     8548    118928    262502
   OIL/COND           $  
   GAS                $             81855    67285   56284   47779   41066    35675    31280    27651    24618    342515    756000
   REVENUE TO NI      $             81855    67285   56284   47779   41066    35675    31280    27651    24618    342515    756000
   INTANGIBLE INVES   $  
   CAPITAL INVES      $  
   OPERATING COST     $               900      900     900     900     900      900      900      900      900     19800     27900
- ------------------------------------------------------------------------------------------------------------------------------------
   NET INCOME         $             80955    66385   55384   46079   40166    34715    30380    26751    23718    322715    728108
   CUMULATIVE INCOME  $             80955   147348  202724  249603  289769   324544   354924   381675   405393    322715    728108
CUM. P WORTH @ 10.00% $             70171   122481  102155  192684  216463   235180   250844   261943   271533     46743    318276
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%      288205    P WORTH @ 14.00%  263458   P WORTH @ 15.00% 252626   P WORTH @20.00% 209373  P WORTH @ 25.00% 178343
- ------------------------------------------------------------------------------------------------------------------------------------
REMARKS/BASIS OF RESERVE ESTIMATES .........            STARTING PRICES & COSTS              PROJECTIONS.......................

  Gas price is $3.50/Wcf adj less $ 0.50/Mcf            Gas: 3    $/W                        INITIAL RATE IS = 12000 W/N
  for gathering and compression charge.                 Oil:  0   $/B                        (1)NYP @ 19.39 %/YR TO ELG AT 1200 NWF
                                                        Operating Cost: 300 $/M              (2)
                                                                                             (3)
                                                        NUMBER OF WELL(S) =  1 GAS           (4)
                                                        ECONOMIC LIMIT =   114.3 N/M         (5)










                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

         TENGASCO INC.                                  AS OF DECEMBER 31, 1996                                    UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
Daugh White #2                        Beech Crk/ Blg Squeal        (1)NI  100     %          NI 87.5       %            LIMIT
Tengasco                              Chattanooga Shale            (2)NI          %          NI            %            LIMIT
- -                                     DEPTH 1100/2000 FT           (3)NI          %          NI            %            LIMIT
Clay COUNTY                           Kentucky                     (4)NI          %          NI            %            LIMIT
LEASE NO : 12                         API NO.  16-051-  XXXXX      RRC/OTC NO.

                             * RESERVE ESTIMATES AND PREDICTED CASH FLOW * BEFORE FEDERAL INCOME TAX *

- -------------------------------------------     ------------------------------------------------     ----------------------------
CUMULATIVE: OIL =   0  BBL,  GAS =   0  MCF *** ULTIMATE:   OIL =    0 BBL,    GAS =  900000 MCF *** FUTURE NET INCOME = $2156484
- -------------------------------------------     ------------------------------------------------     ----------------------------
FIRST PERIOD STARTS 12-31-1997   DELAY IS = 12 months (from as of date)

PERIOD ENDING                12-31- 12-31-  12-31-   12-31-  12-31-  12-31-   12-31-   12-31-  12-31-   12-31-   12-31-     TOTAL OF
                             1997   1998    1999     2000    2001    2002     2003     2004    2005     2006     2006+     73.46 YRS
                             ------ ------  ------   ------  ------  ------   ------   ------  ------   ------   -----    ----------
                                                                                    
GROSS VALUES            UNITS                                                                                                      
   OIL/COND             BBL
   GAS                  MCF         98774    81238    67979   57726   49630   43126     37821     33439    29776  400499    900000
   GOR                  M/B
   OPERATING COST       $            3600     3600     3600    3600    3600    3600      3600      3600     3600   79200    111600
   OIL PRICES           $/B
   GAS PRICES           $/M          3.00     3.00     3.00    3.00    3.00    3.00      3.00      3.00     3.00    3.00          
   INTANGIBLE INVES     $  
   CAPITAL INVES        $  

TAXES
   OIL SEVERANCE        $/B
   GAS SEVERANCE        $/N           .12      .12      .12     .12     .12     .12       .12       .12      .12     .12          
   MISC TAXES           $/B

NET VALUES
   OIL/COND             BBL

   GAS                  MCF         86427    70076    59482   50510   43426   37735     33093     29259    26054  350439    787501
   OIL/COND             $  
   GAS                  $          248910   204699   171308  145469  125067  108677     95308     84206    75036 1019264   2260084
   REVENUE TO NI        $          248910   204699   171308  145469  125067  108677     95308     84206    75036 1019264   2260084
   INTANGIBLE INVES     $  
   CAPITAL INVES        $  
   OPERATING COST       $            3600     3600     3600    3600    3600    3600      3600      3600     3600   79280    111600
- ------------------------------------------------------------------------------------------------------------------------------------
   NET INCOME           $          245310   201099   167708  141869  121467  105077     91766     80666    71436  930084   2156404
   CUMULATIVE INCOME    $          245310   446409   614117  755986  877453  982538   1074236   1154954  1226340  930064   2156404
CUM. P WORTH @ 10.00%   $          212631   371094   491232  583621  655532  712085    756956    792836   821722  138759    960480
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%   870451        P WORTH @ 14.00% 796166  P WORTH @ 15.00% 763594  P WORTH @ 20.00% 633315  P WORTH @ 25.00% 539675
- ------------------------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES .........            STARTING PRICES & COSTS              PROJECTIONS.......................
  Gas price is $3.50/Wcf adj less $ 0.50/Wcf            Gas: 3   $/W                         INITIAL RATE IS = 9120 M/W
  for gathering and compression charge.                 Oil: 0   $/B                         (1)NYP @ 19.34 %/YR TO ELG AT 900 MWF
                                                        Operating Cost 300 $/N               (2)
                                                                                             (3)
                                                        NUMBER OF WELL(S) =  1 GAS           (4)
                                                        ECONOMIC LIMIT =   114.3 N/M         (5)









                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Grubb #1                 Beech Crk/Blg Squeal                    (1) NI    108      %      NI     87.5     %        LIMIT
Tengasco                 Chattanooga Shale                       (2) NI             %      NI              %        LIMIT
- -                        DEPTH 1100/2000 FT                      (3) NI             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) NI             %      NI              %        LIMIT
LEASE NO:  13            API NO. 16-051-XXXXX                    ARC/OTC NO.    -         



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   750000  MCF *** FUTURE NET INCOME= $    1778407
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1997    DELAY IS = 12 months (From as of date)



PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003   

- -------------                         ----------   ----------    ----------    ----------   ----------   ----------    ----------   
                                                                                                            
GROSS VALUES                  UNITS                                                                                    
      OIL/COND                 BBL                                                                                     
      GAS                      MCF                      82406         67916         56938        48423        41685         36262   
      GOR                      M/B                                                                                     
      OPERATING COST            $                        3600          3600          3600         3600         3600          3600   
      OIL PRICES               $/B                                                                                     
      GAS PRICES               $/N                       3.00          3.00          3.00         3.00         3.00          3.00   
      INTANGIBLE INVES          $                                                                                      
      CAPITAL INVES             $                                                                                      
TAXES                                                                                                                  
      OIL SEVERANCE            $/B                                                                                     
      GAS SEVERANCE            $/N                        .12           .12           .12          .12          .12           .12   
      MISC TAXES               $/B                                                                                     
NET VALUES                                                                                                             
      OIL/COND                 BBL                                                                                     
      GAS                      MCF                      72187         59427         49821        42370        36474         31729   
      OIL/COND                                                                                                         
      GAS                                              207668        171150        143484       122026       165045         91380   
      REVENUE TO NI             $                      207668        171150        143484       122026       165045         91380   
      INTANGIBLE INVES          $                                                                                      
      CAPITAL INVES             $                                                                                      
      OPERATING COST            $                        3600          3600          3600         3600         3600          3600   
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                                       204068        167550        139884       118426       101445         87780   
      CUMULATIVE INCOME         $                      204068        371618        511502       629928       731373        819153   
CUM.  P. WORTH  AT 10.00%       $                      176883        300910        409116       486238       546296        593540   
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            725256              P WORTH AT 14.00%     663472             P WORTH AT 15.06%    636366               
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           67.06 YRS       
- -------------                 ----------        ----------      ----------          -----------           ---------       
                                                                                                         
GROSS VALUES                                                                                                               
      OIL/COND                                                                                                             
      GAS                          31032             20168           25102              331266              750200         
      GOR                                                                                                                  
      OPERATING COST                3600              3600            3600               79200              111600         
      OIL PRICES                                                                                                           
      GAS PRICES                    3.00              3.00            3.00                3.00                             
      INTANGIBLE INVES                                                                                                     
      CAPITAL INVES                                                                                                        
TAXES                                                                                                                      
      OIL SEVERANCE                                                                                                        
      GAS SEVERANCE                  .12               .12             .12                 .12                             
      MISC TAXES                                                                                                           
NET VALUES                                                                                                                 
      OIL/COND                                                                                                             
      GAS                          27053             24647           21964              289860              656252         

      OIL/COND                                                                                                             
      GAS                          80217             70983           63256              834798             1890007         
      REVENUE TO N1                80217             70983           63256              834798             1890007         
      INTANGIBLE INVES                                                                                                     
      CAPITAL INVES                                                                                                        
      OPERATING COST                3600              3600            3600               79200              111680         
- -----------------------------------------------------------------------------------------------------------------------
      NET INCOME                   76617             67363           59656              755598             1778407         
      CUMULATIVE INCOME           895778            963153         1022809              755598             1778407         
CUM.  P. WORTH  AT 10.00%         631027            660999          685121              114915              808036         
- -----------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%                         P WORTH AT 20.00%   527824                          P WORTH AT 25.00%  449760    
- -----------------------------------------------------------------------------------------------------------------------
REMARKS / BASIS OF RESERVE ESTIMATES. . . . . . .  STARTING PRICES & COSTS         PROJECTIONS . . . . . . . . . . . . . . 
Gas price is $3.50/Ncf adj less $0.50/Mcf          Gas:  3   $/N                   INITIAL RATE IS = 7600 M/W
for gathering and compression charge.              Oil:  0   $/0                   (1) HYP @ 19.13 %/YR TO ELG AT 750 MWF
                                                   Operating cost: 300 $/N         (2)
                                                                                   (3)
                                                   NUMBER OF WELL(S) =  1 GAS      (4)
                                                   ECONOMIC LIMIT =   114.3 M/W    (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Dezarn #1                Beech Crk/Blg Squeal                    (1) %1    108      %      NI     87.5     %        LIMIT
Tengasco                 Chattanooga Shale                       (2) %1             %      NI              %        LIMIT
- -                        DEPTH 1100 / 2000 FT                    (3) %1             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) %1             %      NI              %        LIMIT
LEASE NO:  14            API NO.   16-015-XXXXX                  ARC/OTC NO.  -                          
                                                                                                          


                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   375088  MCF *** FUTURE NET INCOME= $     833405
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1997    DELAY IS = 12 months (From as of date)


PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003   
- -------------                         ----------   ----------    ----------    ----------   ----------   ----------    ----------   
                                                                                                         
GROSS VALUES                 UNITS
      OIL/COND                BBL

      GAS                     MCF                        41435         34500         29171        24989        21646         16931  
      GOR                     M/B
      OPERATING COST           $                          3600          3600          3600         3600         3600          3600  
      OIL PRICES              $/B
      GAS PRICES              $/N                         3.00          3.00          3.00         3.00         3.00          3.00  
      INTANGIBLE INVES         $
      CAPITAL INVES            $
TAXES
      OIL SEVERANCE           $/B
      GAS SEVERANCE           $/N                          .12           .12           .12          .12          .12           .12  
      MISC TAXES              $/B
NET VALUES
      OIL/COND                BBL
      GAS                     MCF                        36256         36188         25525        21865        18948         16565  
      OIL/COND
      GAS                      $                        104417         86941         73512        62971        54547         47707  
      REVENUE TO NI            $                        104417         86941         73512        62971        54547         47707  
      INTANGIBLE INVES         $
      CAPITAL INVES            $
      OPERATING COST           $                          3600          3600          3600         3600         3600          3600  
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME               $                        100817         83341         69912        59371        56947         44107  
      CUMULATIVE INCOME        $                        100817        184158        254070       313441       364386        488495  
CUM. P. WORTH  AT 10.00%       $                         87387        153058        203140       241804       271966        295704  
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%           359939                P WORTH AT 14.00%     329652             P WORTH AT 15.00%    316303              
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           67.06 YRS       
- -------------                 ----------        ----------      ----------          -----------           ---------       
                                                                                                         
GROSS VALUES            
      OIL/COND          
      GAS                          16697             14837          13271               159523             375000     
      GOR                                                                                                             
      OPERATING COST                3600              3600           3600                79200             111600     
      OIL PRICES                                                                                                      
      GAS PRICES                    3.00              3.00           3.00                 3.00                        
      INTANGIBLE INVES                                                                                                
      CAPITAL INVES                                                                                                   
TAXES                                                                                                                 
      OIL SEVERANCE                                                                                                   
      GAS SEVERANCE                  .12               .12            .12                  .12                        
      MISC TAXES                                                                                                      
NET VALUES                                                                                                            
      OIL/COND                                                                                                        
      GAS                          14618             12982          11612               139584             328127     
      OIL/COND                                                                                                        
      GAS                          42077             37368          33443               402002             945005     
      REVENUE TO NI                42077             37368          33443               402002             945005     
      INTANGIBLE INVES                                                                                                

      CAPITAL INVES                                                                                                   
      OPERATING COST                3600              3600           3600                79200             111608     
- -----------------------------------------------------------------------------------------------------------------------
      NET INCOME                   38477             33786          29843               322802             833405     
      CUMULATIVE INCOME           446972            400700         510603               322802             833405     
CUM. P. WORTH  AT 10.00%          314530            329559         341626                50671             396297     
- -----------------------------------------------------------------------------------------------------------------------
                           P WORTH AT 20.00%      262601                          P WORTH AT 25.00%          223794      
- -----------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES. . . . . . .   STARTING PRICES & COSTS         PROJECTIONS . . . . . . . . . . . . .
Gas price is $3.50/Mcf adj less $0.50/Mcf           Gas:  3   $/M                   INITIAL RATE IS  = 3800 M/M
for gathering and compression charge.               OIL :   0   $/B                 (1) HYP AT 18.14 %/YR TO ELG AT 375 MWF
                                                    Operating cost:  300 $/M        (2)
                                                                                    (3)
                                                    NUMBER OF WELL(S) =  1 GAS      (4)
                                                    ECONOMIC LIMIT =   114.3 M/W    (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Combined leases          Burning Springs                         (1) NI    100      %      NI     87.5     %        LIMIT
Tengasco                 Murfsboro                               (2) NI             %      NI              %        LIMIT
S - T - R                Approx 2600 ft                          (3) NI             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) NI             %      NI              %        LIMIT
LEASE NO:  21            API NO.   16-051-xxxxx                  ARC/OTC NO.                             



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =  0 BBL,  GAS = 18675 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   613614  MCF *** FUTURE NET INCOME = $    702966
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1996  


PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003   
- -------------                         ----------   ----------    ----------    ----------   ----------   ----------    ----------   
                                                                                                         
GROSS VALUES                 UNITS
      OIL/COND                BBL
      GAS                     MCF         110756         94143         80021        68018         57815        49143         41712
      GOR                     M/B                                                                                                 
      OPERATING COST           $           48000         48000         48000        48000         48000        48000         48000

      OIL PRICES              $/B                                                                                                 
      GAS PRICES              $/N           2.35          2.35          2.35         2.35          2.35         2.35          2.35
      INTANGIBLE INVES         $                                                                                                  
      CAPITAL INVES            $                                                                                                  
TAXES                                                                                                                             
      OIL SEVERANCE           $/B                                                                                                 
      GAS SEVERANCE           $/N            .07           .07           .07          .07           .07          .07           .07
      MISC TAXES              $/B                                                                                                 
NET VALUES                                                                                                                        
      OIL/COND                BBL                                                                                                 
      GAS                     MCF          96912         82375         70019        59516         50589        43000         36550
      OIL/COND                 $
      GAS                      $          220959        187815        159643       135696       115343         98040         83334
      REVENUE TO NI            $          220959        187815        159643       135696       115343         98040         83334
      INTANGIBLE INVES         $                                                                                                  
      CAPITAL INVES            $                                                                                                  
      OPERATING COST           $           48000         48000         48000        48000         48000        48000         48000
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                          172959        139815        111643        87696         67343        50040         35334
      CUMULATIVE INCOME        $          172959        312774        424417       512113        579456       629496        664830
CUM. P. WORTH  AT 10.00%       $          164910        286099        374072       436894        480749       510374        529391
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%           524131                P WORTH AT 14.00%     562966             P WORTH AT 15.00%    493046
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           10.07 YRS       
- -------------                 ----------        ----------      ----------          -----------           ---------       
                                                                                                         
GROSS VALUES                      
      OIL/COND           
      GAS                          35606             30100          25653               1732                594739     
      GOR                                                                                                              
      OPERATING COST               48000             48000          48000               3546                483540     
      OIL PRICES                                                                                                       
      GAS PRICES                    2.35              2.35           2.35               2.35                           
      INTANGIBLE INVES                                                                                                 
      CAPITAL INVES                                                                                                    
TAXES                                                                                                                  
      OIL SEVERANCE                                                                                                    
      GAS SEVERANCE                  .07               .07            .07                .07                           
      MISC TAXES                                                                                                       
NET VALUES                                                                                                             
      OIL/COND                                                                                                         
      GAS                          31068             26408          22446               1515                520398     
      OIL/COND                                                                                                         
      GAS                          70835             60210          51177               3454               1186506     
      REVENUE TO NI                70835             60210          51177               3454               1186506     
      INTANGIBLE INVES                                                                                                 
      CAPITAL INVES                                                                                                    
      OPERATING COST               48000             48000          48000               3548                483548     
- -----------------------------------------------------------------------------------------------------------------------

      NET INCOME                   22835             12210           3177                -86                702966     
      CUMULATIVE INCOME           687665            699875         703052                -86                702966     
CUM. P. WORTH  AT 10.00%          540564            545995         547279                -32                547248     
- -----------------------------------------------------------------------------------------------------------------------
                            P WORTH AT 20.00%         449119                     P WORTH AT 25.00%            412921            
- -----------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES. . . . . . .        STARTING PRICES & COSTS         PROJECTIONS . . . . . . . . . . . . . . . .
MAP QUAD MANCHESTER  7.5  SEC:  AC                       Gas:  2.35  $/7                 INITIAL RATE IS  = 10000 M/M
Wells included are the Alverez - Kleth 2 -               OIL:  0     $/8                 (1) CPD AT 15 %/YR TO ELG AT 613.614 MWF
  Cornett 1- Cornett 2                                   Operating cost: 4000  $/M       (2) 
Glibert - Hale cumulative prod shown is 1996 prod only                                   (3) 
                                                         NUMBER OF WELL(S) =  0 GAS      (4) 
                                                         ECONOMIC LIMIT =   1945.3 M/W   (5) 









                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
B. Colson #1             Swan Creek                              (1) NI    100      %      NI     87.5     %        LIMIT
Tengasco                 Knox Formation                          (2) NI             %      NI              %        LIMIT
11-1S-74E                4449-4523 OA                            (3) NI             %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  31            API NO.   41-067-xxxxx                  ARC/OTC   NO.  --



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   1200000 MCF *** FUTURE NET INCOME= $    3799578
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)



PERIOD ENDING                         12-31-1997   12-31-1998    12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003   
                                      ----------   ----------    ----------    ----------   ----------   ----------    ----------   
                                                                                                            
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF         58533        207694          169755       139149       114060        93495         76638 
  GOR                          M/B
  OPERATING  COST               $           4800          4800            4800         4800         4800         4800          4800 
  OIL  PRICES                  $/B

  GAS  PRICES                  $/M          3.86          3.86            3.86         3.86         3.86         3.86          3.86 
  INTANGIBLE  INVES             $
  CAPITAL  INVES                $
TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M           .12           .12             .12          .12          .12          .12           .12 
  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF         51216        161207          148536       121755        99803        81886         67058 
  OIL/COND                      $
  GAS                           $         191548        677714          555525       455364       373263       365962        250797 
  REVENUE TO NI                 $         191548        677714          555525       455364       373263       365962        250797 
  INTANGIBLE INVES              $
  CAPITAL INVES                 $
  OPERATING COST                $           4800          4800            4800         4800         4800         4800          4800 
- ------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $         186748        672914          550725       450564       368463       301162        245997 
  CUMULATIVE INCOME             $         186748        859662         1410387      1860951      2229414      2536576       2776573 
CUM. P WORTH @ 10.00  %         $         178057        761328         1195292      1518054      1758007      1936302       2668699 
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             2272497               P WORTH @ 14.00%      2125197             P WORTH @ 15.00%   2858143             
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+            25.80 YRS       
                               ----------        ----------     ----------         -----------            ---------       
                                                                                                         
GROSS VALUES            
  OIL/COND              
  GAS                               62826             51494          42210              184752             1280000 
  GOR                                                                                                              
  OPERATING  COST                    4800              4800           4800               79433              127433 
  OIL  PRICES                                                                                                      
  GAS  PRICES                        3.86              3.86           3.86                3.86                     
  INTANGIBLE  INVES                                                                                                
  CAPITAL  INVES                                                                                                   
                                                                                                                   
TAXES                                                                                                              
  OIL SEVERANCE                                                                                                    
  GAS SEVERANCE                       .12               .12            .12                 .12                     
  MISC TAXES                                                                                                       
NET VALUES                                                                                                         
  OIL/COND                                                                                                         
  GAS                               54968             45057          36934              161661             1050003 
  OIL/COND                                                                                                         
  GAS                              265580            168513         138133              604612             3927011 
  REVENUE TO NI                    265580            168513         138133              604612             3927011 
  INTANGIBLE INVES                                                                                                 
  CAPITAL INVES                                                                                                    
  OPERATING COST                     4800              4800           4800               79433              127433 
- --------------------------------------------------------------------------------------------------------------------

  NET INCOME                       200786            163713         133833              525179             3799578 
  CUMULATIVE INCOME               2977353           3141066        3274399              525179             3799578 
CUM. P WORTH @ 10.00  %           2166936           2239755        2293670              146686             2440356 
- --------------------------------------------------------------------------------------------------------------------
                             P WORTH @ 20.00%         1775471                       P WORTH @ 25.00%         1558596   
- --------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES................   STARTING PRICES & COSTS        PROJECTIONS............................
July 1996 flowed 1250 Mcf/d 1/2 inch choke           Gas: 3.86 $/M                  INITIAL RATE IS = 20000 M/N
ftp=185 psi @ltp 1750 (72 hrs)  795 fnl  1000 fel    Oil: 0 $/B                     (1) CPD @ 18.02 %/YR TO ELG AT 1200 MMF
pfs 4449-55 4476-84 4492-96 4512-23                  Operating Cost: 400 $/M        (2)
Gas price $4.26/Mcf (w/Btu adj) less $0.40/Wcf                                      (3)
  Pipeline Gathering Charge                          NUMBER OF WELL(S) = 1 GAS      (4)
                                                     ECONOMIC LIMIT = 118.4 M/N     (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
George Patton #2         Swan Creek                              (1) NI    75       %      NI     65.63    %        LIMIT
Tengasco                 Knox Gas                                (2) NI             %      NI              %        LIMIT
6-15-75E                 4590-4610 OA                            (3) NI             %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  32            API NO.   41-867-xxxxx                  ARC/OTC   NO.  --



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   1200606 MCF *** FUTURE NET INCOME = $   2849694
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)



PERIOD ENDING                         12-31-1997    12-31-1998     12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003 
                                      ----------    ----------     ----------    ----------   ----------   ----------    ---------- 
                                                                                                            
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF         58533        207694         169755        139149       114860        93495         70638 
  GOR                          M/B
  OPERATING  COST               $           4800          4800           4800          4800         4800         4800          4800 
  OIL  PRICES                  $/B
  GAS  PRICES                  $/M          3.86          3.86           3.86          3.86         3.86         3.86          3.86 

  INTANGIBLE  INVES             $
  CAPITAL  INVES                $

TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M           .12           .12            .12           .12          .12          .12           .12 
  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF         38415        135916         111418         91323        74858        61361         50298 
  OIL/COND                      $
  GAS                           $         143672        508326         416673        341548       279969       229490        188115 
  REVENUE TO NI                 $         143672        508326         416673        341548       279969       229490        188115 
  INTANGIBLE INVES              $
  CAPITAL INVES                 $
  OPERATING COST                $           3600          3600           3600          3600         3600         3600          3600 
- ------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $         140072        504726         413073        337948       276369       225890        184515 
  CUMULATIVE INCOME             $         140072        644798        1057871       1395819      1672180      1898078       2482593 
CUM. P WORTH @ 10.00  %         $         133553        571042         696538       1138627      1318686      1452338       1551645 
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             1704567               P WORTH @ 14.00%     1594016              P WORTH @ 15.00%   1543727             
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+            25.80 YRS       
                               ----------        ----------     ----------         -----------            ---------       
                                                                                                         
GROSS VALUES           
  OIL/COND             
  GAS                               62820             51494          42210              184752             1280000  
  GOR                                                                                                               
  OPERATING  COST                    4800              4800           4800               79435              127435  
  OIL  PRICES                                                                                                       
  GAS  PRICES                        3.86              3.86           3.86                3.86                      
  INTANGIBLE  INVES                                                                                                 
  CAPITAL  INVES                                                                                                    
                                                                                                                    
TAXES                                                                                                               
  OIL SEVERANCE                                                                                                     
  GAS SEVERANCE                       .12               .12            .12                 .12                      
  MISC TAXES                                                                                                        
NET VALUES                                                                                                          
  OIL/COND                                                                                                          
  GAS                               41229             33796          27702              121251              707559  
  OIL/COND                                                                                                          
  GAS                              154196            126397         103605              453479             2945479  
  REVENUE TO NI                    154196            126397         103605              453479             2945479  
  INTANGIBLE INVES                                                                                                  
  CAPITAL INVES                                                                                                     
  OPERATING COST                     3600              3600           3600               59576               95576  
- --------------------------------------------------------------------------------------------------------------------

  NET INCOME                       150596            122797         100005              393903             2849894  
  CUMULATIVE INCOME               2233189           2355986        2455991              393903             2849894  
CUM. P WORTH @ 10.00  %           1625329           1679948        1720386              110020             1838486  
- --------------------------------------------------------------------------------------------------------------------
                            P WORTH @ 20.00%          1331706                      P WORTH @ 25.00%          1169040   
- --------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES.....................   STARTING PRICES & COSTS     PROJECTIONS............................
June 1996 fwd 1500 Mcf/day ftp = 250 1/2 inch             Gas: 3.86  $/M              INITIAL RATE IS = 20000 M/M
Choke slp 1750  72 hrs 2950 fnl  2550 fel                 Oil: 0  $/B                 (1) CPD @ 18.02 %/YR TO ELG AT 1200 MMF
Gas price $4.26/Mcf (w/Btu adj) less $0.40/Mcf Pipeline   Operating Cost: 400 $/M     (2)
  Gathering Charge                                                                    (3)
                                                          NUMBER OF WELL(S) = 1 GAS   (4)
                                                          ECONOMIC LIMIT = 118.4 M/M  (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Paul Reed #1             Swan Creek                              (1) NI    100      %      NI     75       %        LIMIT
Tengasco                 Knox Formation                          (2) NI             %      NI              %        LIMIT
18-1S-74E                4414-4624 0A                            (3) NI             %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  33            API NO.   41-867-xxxxx                  ARC/OTC   NO.  --



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   3860606 MCF *** FUTURE NET INCOME = $   8261417
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)



PERIOD ENDING                         12-31-1997    12-31-1998     12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003 
                                      ----------    ----------     ----------    ----------   ----------   ----------    ---------- 
                                                                                                         
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF        132017         472636        394997        336111       275885       230566        192691 
  GOR                          M/B
  OPERATING  COST               $           4800           4800          4800          4800         4800         4800          4800 
  OIL  PRICES                  $/B
  GAS  PRICES                  $/M          3.86           3.86          3.86          3.86         3.86         3.86          3.86 

  INTANGIBLE  INVES             $
  CAPITAL  INVES                $
TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M           .12            .12           .12           .12          .12          .12           .12 
  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF         99013         354477        296248        247583       206914       172925        144518 
  OIL/COND                      $
  GAS                           $         370309        1325744       1107968        925968       773858       646740        540497 
  REVENUE TO NI                 $         370309        1325744       1107968        925968       773858       646740        540497 
  INTANGIBLE INVES              $
  CAPITAL INVES                 $
  OPERATING COST                $           4800           4800          4800          4800         4800         4800          4800 
- ------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $         365509        1320944       1103168        921160       769058       641948        535697 
  CUMULATIVE INCOME             $         365509        1686453       2769621       3710781      4479839      5121779       5657476 
CUM. P WORTH @ 10.00  %         $         348499        1493473       2362753       3622626      3523458      3963503       4191818 
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             4714981              P WORTH @ 14.00%      4391341              P WORTH @ 15.00%   4244963             
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+            32.24 YRS       
                               ----------        ----------     ----------         -----------            ---------       
                                                                                                         
GROSS VALUES           
  OIL/COND             
  GAS                              161038            134585         112417               562997             3000608 
  GOR                                                                                                               
  OPERATING  COST                    4800              4800           4800               105608              153600 
  OIL  PRICES                                                                                                       
  GAS  PRICES                        3.86              3.86           3.86                 3.86                     
  INTANGIBLE  INVES                                                                                                 
  CAPITAL  INVES                                                                                                    
TAXES                                                                                                               
  OIL SEVERANCE                                                                                                     
  GAS SEVERANCE                       .12               .12            .12                  .12                     
  MISC TAXES                                                                                                        
NET VALUES                                                                                                          
  OIL/COND                                                                                                          
  GAS                              128779            100939          84358               422250             2250004 
  OIL/COND                                                                                                          
  GAS                              451713            377512         315499              1579217             8415017 
  REVENUE TO NI                    451713            377512         315499              1579217             8415017 
  INTANGIBLE INVES                                                                                                  
  CAPITAL INVES                                                                                                     
  OPERATING COST                     4800              4800           4800               105600              153600 
- ---------------------------------------------------------------------------------------------------------------------
  NET INCOME                       446913            372712         318699              1473617             8261417 
  CUMULATIVE INCOME               6104389           8477101        6787800              1473617             8261417 

CUM. P WORTH @ 10.00  %           4410482           4576263        4701898               385471             5097369 
- ---------------------------------------------------------------------------------------------------------------------
                              P WORTH @ 20.00%        3634150                      P WORTH @ 25.00%           3172165   
- ---------------------------------------------------------------------------------------------------------------------

REMARKS/BASIS OF RESERVE ESTIMATES..........................    STARTING PRICES & COSTS      PROJECTIONS............................
Reserves are based on: Bht=124F  GasSG= .6 (drid Amoco)         Gas 3.86  $/M                INITIAL RATE IS = 45000 M/M
Net Pay=68 ft (pfs) 80 acres Pul= 1900 psl Por = .17  Su=.30    Oil: 0  $/B                  (1) CPD @ 16.42 %/YR TO ELG AT 3000 MMF
Purchased from Amoco 850 fsl 850 fel                            Operating Cost: 400 $/W      (2)
Gas price $4.26/Mcf (w/Btu adj) less $0.40/Mcf Pipeline                                      (3)
  Gathering Charge                                              NUMBER OF WELL(S) = 1 GAS    (4)
                                                                ECONOMIC LIMIT = 138.2 M/M   (5)









                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Sutton UT #1             Swan Creek                              (1)  NI   100      %      NI     87.5     %        LIMIT
Tengasco                 Knox Formation                          (2)  NI            %      NI              %        LIMIT
4 - IS - 75E             4464-4416                               (3)  NI            %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4)  NI            %      NI              %        LIMIT
LEASE NO:  34            API NO. 41-667-xxxxx                    ARC/OTC NO.--



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   600000  MCF *** FUTURE NET INCOME = $   1852178
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 09-31-1997    DELAY IS = 9 months (From as of date)


PERIOD ENDING                        12-31-1997     12-31-1998    12-31-1999    12-31-2000    12-31-2001   12-31-2002    12-31-2003
- -------------                        ----------     ----------    ----------    ----------    ----------   ----------    ----------
                                                                                                         
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF        29271         103637         85852         69800         57283        47010         38588
      GOR                      M/B                                                              
      OPERATING COST            $          4800           4800          4800          4800          4800         4800          4800 
      OIL PRICES               $/B                                                              
      GAS PRICES               $/N         3.86           3.86          3.86          3.86          3.86         3.86          3.86 
      INTANGIBLE INVES          $                                                               
      CAPITAL INVES             $                                                               

TAXES                                                                                           
      OIL SEVERANCE            $/B                                                              
      GAS SEVERANCE            $/N          .12            .12           .12           .12           .12          .12           .12 
      MISC TAXES               $/B                                                              
NET VALUES                                                                                      
      OIL/COND                 BBL                                                              
      GAS                      MCF        25612          90682         74421         61075         50123        41134        334758 
      OIL/COND                                                                                  
      GAS                                 95789         339151        276335        228421        187460       153641        126255 
      REVENUE TO NI             $         95789         339151        276335        228421        187460       153641        126255 
      INTANGIBLE INVES          $                                                               
      CAPITAL INVES             $                                                               
      OPERATING COST            $          4800           4800          4800          4800          4800         4800          4800 
- -----------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $         90989         334351        273535        223621        182660       149641        121455 
      CUMULATIVE INCOME         $         90989         425340        698675        922496       1105156      1254197       1375652 
CUM. P. WORTH  AT 10.00%        $         86755         376565        592186        752297        871251       959487       1024854 
- -----------------------------------------------------------------------------------------------------------------------------------
P WORTH AT AT 12.00%         1120794             P WORTH AT 14.00%     1048920             P WORTH AT 15.00%    1016139             
- -----------------------------------------------------------------------------------------------------------------------------------



                                                                                                         TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+           22.25 YRS       
- -------------                  ----------        ----------     ----------         -----------           ---------       
                                                                                                         
GROSS VALUES            
      OIL/COND          
      GAS                           31662             25984          21324               90397              600060  
      GOR                                                                                                           
      OPERATING COST                 4800              4800           4800               63340              111340  
      OIL PRICES                                                                                                    
      GAS PRICES                     3.86              3.86           3.86                3.86                      
      INTANGIBLE INVES                                                                                              
      CAPITAL INVES                                                                                                 
TAXES                                                                                                               
      OIL SEVERANCE                                                                                                 
      GAS SEVERANCE                   .12               .12            .12                 .12                      
      MISC TAXES                                                                                                    
NET VALUES                                                                                                          
      OIL/COND                                                                                                      
      GAS                           27704             22736          18659               79100              525004  
      OIL/COND                                                                                                      
      GAS                          103613             85033          69785              295835             1963518  
      REVENUE TO NI                103613             85033          69785              295835             1963518  
      INTANGIBLE INVES                                                                                              
      CAPITAL INVES                                                                                                 
      OPERATING COST                 4800              4800           4800               63340              111348  
- ------------------------------------------------------------------------------------------------------------------
      NET INCOME                    98813             80233          64985              232495             1852178  
      CUMULATIVE INCOME           1474465           1554898        1619683              232495             1852178  
CUM. P. WORTH  AT 10.00%          1073201           1106889        1135166               67286             1202446  
- ------------------------------------------------------------------------------------------------------------------

                             P WORTH AT 20.00%     677548              P WORTH AT 25.00%    770837
- ------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . .     STARTING PRICES & COSTS       PROJECTIONS . . . . . . . . . . . . . . .
Reserves are based on: Bht=124F Gas SG=.6 (drid Amoco)       Gas:  3.86   $/mM             INITIAL RATE IS  + 10000 M/M
Net Pay=$2 ft (pfs) 80 acres Pwd=1900 psi  Per=.17 Sw=.30    OIL :   0   $/0               {1} CPD AT 17.93 %/YR TO ELG AT 600 MMF
Purchased from AMOCO 400 fsl 900 fel                         Operating cost: 400 S/M       {2}
Gas price $4.26/Ncf(w/Btu adj) less $8.48/Mcf Pipeline                                     {3}
Gathering Charge                                             NUMBER OF WELL(S) =  1 GAS    {4}
                                                             ECONOMIC LIMIT =   118.4 M/M  {5}








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Gas Transmission Line    Swan Creek                              (1)  NI   100      %      NI     100      %        LIMIT
Tengasco                 --                                      (2)  NI            %      NI              %        LIMIT
xx-xxS-xxZ               --                                      (3)  NI            %      NI              %        LIMIT
Hancock COUNTY           Tennessee                               (4)  NI            %      NI              %        LIMIT
LEASE NO:  35            APT NO. 41-667-xxxxx                    ARC/OTC NO.  --                                           
                                                                 


                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,     GAS =   0    MCF *** FUTURE NET INCOME = $  -1200000
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1996    DELAY IS = 6 months (From as of date)


PERIOD ENDING                           12-31-1997     12-31-1998    12-31-1999   12-31-2000    12-31-2001   12-31-2002   12-31-2003
- -------------                           ----------     ----------    ----------   ----------    ----------   ----------   ----------
                                                                                                         
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF
      GOR                      M/B
      OPERATING COST            $
      OIL PRICES               $/B
      GAS PRICES               $/N
      INTANGIBLE INVES          $
      CAPITAL INVES             $          1200000                                                                                  
TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/N

      MISC TAXES               $/B
NET VALUES
      OIL/COND                 BBL
      GAS                      MCF
      OIL/COND
      GAS
      REVENUE TO NI             $
      INTANGIBLE INVES          $
      CAPITAL INVES             $          1200000                                                                                  
      OPERATING COST            $
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $         -1200000                                                                                  
      CUMULATIVE INCOME         $         -1200000                                                                                  
CUM. P. WORTH  AT 10.00%        $         -1144155                                                                                  
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT AT 12.00%        -1133893          P WORTH AT 14.00%   -1123903              P WORTH AT 15.00%     1119806 
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                 12-31-2004        12-31-2005      12-31-2006          12-31-2006+           6.06 YRS       
- -------------                 ----------        ----------      ----------          -----------           ---------       
                                                                                                         
GROSS VALUES           
      OIL/COND         
      GAS              
      GOR              
      OPERATING COST   
      OIL PRICES       
      GAS PRICES       
      INTANGIBLE INVES 
      CAPITAL INVES                                                                                         1200000             
TAXES                                                                                                                           
      OIL SEVERANCE                                                                                                             
      GAS SEVERANCE                                                                                                             
      MISC TAXES                                                                                                                
NET VALUES                                                                                                                      
      OIL/COND                                                                                                                  
      GAS                                                                                                                       
      OIL/COND                                                                                                                  
      GAS                                                                                                                      
      REVENUE TO N1                                                                                                            
      INTANGIBLE INVES                                                                                                         
      CAPITAL INVES                                                                                         1200000            
      OPERATING COST                                                                                                           
- ---------------------------------------------------------------------------------------------------------------------
      NET INCOME                                                                                           -1200000            
      CUMULATIVE INCOME                                                                                    -1200000            
CUM. P. WORTH  AT 10.00%                                                                                   -1144155            
- ---------------------------------------------------------------------------------------------------------------------
                         P WORTH AT 20.00%  -1895445                                P WORTH AT 25.00%        -1073313 
- ---------------------------------------------------------------------------------------------------------------------


REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . .         STARTING PRICES & COSTS       PROJECTIONS . . . . . . . . . . .
Cost estimated to complete line 1200 N$                          Gas:    0   $/M               INITIAL RATE IS  = 6 M/M
Operating and amortization costs are accounted for by $0.40/Mcf  OIL :   0   $/B               {1}
Gathering fee charged producing wells.                           Operating cost:  0  $/M       {2}
                                                                                               {3}
                                                                 NUMBER OF WELL(S) =  0 GAS    {4}
                                                                 ECONOMIC LIMIT =   0.0 M/M    {5}








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------

                                                            S U M M A R Y                                                   LEVEL 1
                                                         PROVED UNDEVELOPED
                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *



PERIOD ENDING                           12-31-1997   12-31-1998     12-31-1999    12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                        ----------   ----------     ----------    ----------   ----------   ----------    ----------
                                                                                                         
GROSS VALUES                  UNITS
      OIL/COND                 BBL                        13616          23022         18363        14648        11684          9320
      GAS                      MCF                      2198094        2457893       2247744      1858838      1536350       1270743
      OPERATING COST            $                         66000          80400         80400        80400        80400         80400
      INTANGIBLE INVES          $          1250000      1225000                                                                     
      CAPITAL INVES             $          1400000       700000                                                                     
NET VALUES                                                          
      OIL/COND                 BBL                        11053          16705         14920        11902         9493          1573
      GAS                      MCF                      1923332        2150657       1966776      1825783      1344306       1111900
      OIL/COND                  $                        204997         346604        276466       220544       175905        140328
      GAS                       $                       7193261        7661824       7030864      5802418      4789798       3954920
      REVENUE TO NI             $                       7398258        8207626       7307332      6022962      4965703       4095248
      INTANGIBLE INVES          $          1250000      1225000                                                                     
      CAPITAL INVES             $          1400000       700000                                                                     
      OPERATING COST            $                         66000          80400         80400        80400        80400         80400
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $         -2650000      5407258        8127228       7226932      5942562      4885303       4014848
      CUMULATIVE INCOME         $         -2650000      2757258       10884486      10111418     24053980     28939283      32954131
CUM. P WORTH AT 10.00 %         $         -2526676      2160250        8564389      13741485     17611366     20503589      22664399
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            26358084             P WORTH AT 14.00%     24125641            P WORTH AT 15.00%   23120358            
- ------------------------------------------------------------------------------------------------------------------------------------




                                                                                                          TOTAL OF
PERIOD ENDING                   12-31-2004        12-31-2005     12-31-2006          12-31-2006+          28.58 YRS       
- -------------                   ----------        ----------     ----------          -----------          ---------       
                                                                                                         
GROSS VALUES           
      OIL/COND                        7434              5938           4730                16253             125000            
      GAS                          1051380            870161         720413              3369164           17600000            
      OPERATING COST                 80400             80400          80400              1436265            2145465            
      INTANGIBLE INVES                                                                                      2475000            
      CAPITAL INVES                                                                                         2100000            
SET VALUES                                                                                                                     
      OIL/COND                        6040              4818           3843                13208             101565            
      GAS                           919957            701391         630362              2965541           15400005            
      OIL/COND                      111921             89278          71211               244746            1882002            
      GAS                          3266422           2698516        2229975             10360817           55180015            
      REVENUE TO NI                3378343           2787194        2301186             10665563           57076017            
      INTANGIBLE INVES                                                                                      2475000            
      CAPITAL INVES                                                                                         2100000            
      OPERATING COST                 80400             80400          80400              1436265            2145465            
- ---------------------------------------------------------------------------------------------------------------------
      NET INCOME                   3297943           2707394        2220786              9169290           58349552            
      CUMULATIVE INCOME           36252074          38959468       41180254              9169290           58349552            
CUM. P WORTH AT 10.00 %            2428007          25482248       26388247              2529080           28989335            
- ---------------------------------------------------------------------------------------------------------------------
                              P WORTH AT 20.00%       18930889                      P WORTH AT 25.00%        15802947 
- ---------------------------------------------------------------------------------------------------------------------








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------

                                                              SUMMARY
                                                         PROVED UNDEVELOPED


LEASE NUMBER LEASE NAME             N.I. CURRENT F.H.R.      NET EXPEN  NET OIL OIL PR. ULT OIL  CUM OIL REN OIL  INITIAL LIFE
PW RANKING   OPERATOR               N.I. CURRENT PW@ 16.66%  NET INVES  NET GAS GAS PR. ULT GAS  CUM GAS REN GAS  RATE    NO WELL(S)
- ------------ ---------------------- FRACTION---- $---------  $--------  MB,MNF- $/B,$/N NB,NMF-  NB,NWF- NB,NWF-  B/N,M/N ----------
                                                                                              
1 PUD        4 Well Group            1.0000000     7152012     432000       0.0   0.00      0.0    0.0       0.0        0  28.5 YRS
 3           Tengasco                 .8750000     3454697     488008    2880.0   3.08   3200.0    0.0    3200.0    42000  4 WELL(S)
                                                                                                                           
2 PUD        Offse Franklin #1       1.0000000     1601734     160268     101.6  19.10    125.0    0.0     125.0     2400  17.5 YRS
 4           Tengesco                 .8125000      996283     120000       0.0   0.00      0.0    0.0       0.0        0  1 WELL(S)
                                                                                                                           
3 PUD        1997 Knox Drilling Prg  1.0000000    27736933    1029005       0.0   0.80      0.0    0.0       0.0        0  26.0 YRS

 1           Tengasco                 .6750000    16506212    2650000    6400.0   3.86   9600.8    0.0    9600.8   160000  8 WELL(S)
                                                                                                                           
4 PUD        1998 Knox Drilling Prg  1.0000000    13858873     524132       0.0   0.88      0.0    0.0       0.0        0  25.5 YRS
 2           Tengesco                 .8750000     7949946    1325000    4200.0   3.86   4800.0    0.0    4800.0    80000  4 WELL(S)

                                     -----------------------------------------------------------------------------------------------
      TOTALS                         4.0000000    50349552    2145465     101.6           125.0    0.0     125.0     2400  28.5 YRS
                                     3.4375000    28909336    4575000   15400.0         17600.8    0.0   17600.8   282000  17 WELLS
                                                                                                                           








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
4 Well Group             Beech Crk/Big Squeal                    (1) NI    100      %      NI     87.5     %        LIMIT
Tengasco                 Chattanooga Shale                       (2) NI             %      NI              %        LIMIT
- -                        Depth 1100/2000 ft                      (3) NI             %      NI              %        LIMIT
Clay COUNTY              Kentucky                                (4) NI             %      NI              %        LIMIT
LEASE NO:  1 PUD          API NO.      16-051-XXXXX               ARC/OTC NO.  --



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   3200000 MCF *** FUTURE NET INCOME= $    7152012
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 07-3-1999    DELAY IS = 30 months (From as of date)


PERIOD ENDING                           12-31-1997    12-31-1998  12-31-1999     12-31-2000   12-31-2001   12-31-2002    12-31-2003 
                                        ----------    ----------  ----------     ----------   ----------   ----------    ---------- 
                                                                                                            
GROSS VALUES                  UNITS
  OIL/COND                     BBL
  GAS                          MCF                                    242435         431731       369458       316154        270547 
  GOR                          M/B
  OPERATING  COST               $                                      14400          14400        14400        14400         14400 
  OIL  PRICES                  $/B
  GAS  PRICES                  $/M                                      3.00           3.00         3.00         3.00          3.00 
  INTANGIBLE  INVES             $                        480000
  CAPITAL  INVES                $

TAXES
  OIL SEVERANCE                $/B
  GAS SEVERANCE                $/M                                       .12            .12          .12          .12           .12 

  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL
  GAS                          MCF                                    212131         377765       323269       276635        236729 
  OIL/COND                      $
  GAS                           $                                     616937        1087963       931015       796709        681780 
  REVENUE TO NI                 $                                     616937        1087963       931015       796709        681780 
  INTANGIBLE INVES              $                        480000                                                                     
  CAPITAL INVES                 $
  OPERATING COST                $                                      14460          14400        14400        14400         14400
- ------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $                       -480000       598537        1673563       916615       782389        667380 
  CUMULATIVE INCOME             $                       -480000       116537        1190100      2106715      2889624       3556404 
CUM. P WORTH @ 10.00  %         $                       -416056        54006         823054      1419979      1883125       2242313 
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             3057298                P WORTH @ 14.00%   2728649               P WORTH @ 15.00%   2571361             
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                          TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006          12-31-2006+           67.06 YRS       
                               ----------        ----------     ----------          -----------           ---------       
                                                                                                         
GROSS VALUES           
  OIL/COND             
  GAS                              231518            198126         169540               970505            3200080    
  GOR                                                                                                                
  OPERATING  COST                   14400             14400          14400               316808             432000    
  OIL  PRICES                                                                                                       
  GAS  PRICES                        3.00              3.00           3.00                 3.00                     
  INTANGIBLE  INVES                                                                                         406606
  CAPITAL  INVES                                                                                                    
                                                                                                                    
TAXES                                                                                                               
  OIL SEVERANCE                                                                                                     
  GAS SEVERANCE                       .12               .12            .12                  .12                     
  MISC TAXES                                                                                                        
NET VALUES                                                                                                          
  OIL/COND                                                                                                          
  GAS                              202578            173355         148348               149194            2800804  
  OIL/COND                                                                                                          
  GAS                              583425            499282         427242              2445679            8064012  
  REVENUE TO NI                    583425            499282         427242              2445679            8064012  
  INTANGIBLE INVES                                                                                          480000  
  CAPITAL INVES                                                                                                     
  OPERATING COST                    14400             14400          14400               316800             432098
- --------------------------------------------------------------------------------------------------------------------
  NET INCOME                       569025            484862         412842              2128879            7152012  
  CUMULATIVE INCOME               4125429           4610291        5023133              2128879            7152012  
CUM. P WORTH @ 10.00  %           2520723           2736389        2903326               551571            3454897  
- --------------------------------------------------------------------------------------------------------------------
                              P WORTH @ 20.00%        1970930                       P WORTH @ 25.00%         1544712       
- --------------------------------------------------------------------------------------------------------------------


REMARKS/BASIS OF RESERVE ESTIMATES.............................. STARTING PRICES & COSTS     PROJECTIONS............................
Forecast assumes initial rates of 360 Mcf/D/Well Ultimate        Gas: 3  $/M                 INITIAL RATE IS = 42000 M/M
Recovery of 600 MMF/Well & operating costs of $300/well/month.   Oil: 0  $/B                 (1) CPD @ 14.42 %/YR TO ELG AT 3200 MMF
$3.50/Mcf adj less $0.50/Mcf for gathering & compression charge. Operating Cost: 1260 $/M    (2)
                                                                                             (3)
                                                                 NUMBER OF WELL(S) = 4 GAS   (4)
                                                                 ECONOMIC LIMIT = 674.8 M/M  (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
Offse Franklin #1        Fentress fld7                           (1) NI   100       %      NI     81.25    %        LIMIT
Tengasco                 Wells Creek/Knox                        (2) NI             %      NI              %        LIMIT
- -                        DEPTH 2000 FT                           (3) NI             %      NI              %        LIMIT
Fentress COUNTY          Tennessee                               (4) NI             %      NI              %        LIMIT
LEASE NO:  2 PUD         API NO.   41-049-xxxxx                  ARC/OTC  NO.  --



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   125000 BBL,    GAS =   0 MCF *** FUTURE NET INCOME= $    1601734
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 07-1-1998    DELAY IS = 18 months (From as of date)



PERIOD ENDING                         12-31-1997    12-31-1998    12-31-1999    12-31-2000   12-31-2001    12-31-2002    12-31-2003 
                                      ----------    ----------    ----------    ----------   ----------    ----------    ---------- 
                                                                                                            
GROSS VALUES                  UNITS
  OIL/COND                     BBL                       13616         23022         18363        14648         11684          9320 
  GAS                          MCF
  GOR                          M/B
  OPERATING  COST               $                         8400          8400          8400         8400          8400          8400 
  OIL  PRICES                  $/B                       19.10         19.10         19.10        19.10         19.10         19.10 
  GAS  PRICES                  $/M
  INTANGIBLE  INVES             $                       120000                                                                      
  CAPITAL  INVES                $

TAXES
  OIL SEVERANCE                $/B                         .57           .57           .57          .57           .57           .57 
  GAS SEVERANCE                $/M

  MISC TAXES                   $/B
NET VALUES
  OIL/COND                     BBL                       11063         18705         14928        11902          9493          7573 
  GAS                          MCF
  OIL/COND                      $                       204997        346604        276460       220544        175905        140328 
  GAS                           $
  REVENUE TO NI                 $                       204997        346604        276460       220544        175905        140328 
  INTANGIBLE INVES              $                       120000                                                                      
  CAPITAL INVES                 $
  OPERATING COST                $                         8400          8400          8400         8400          8400          8400 
- ------------------------------------------------------------------------------------------------------------------------------------
  NET INCOME                    $                        76597        338204        268068       212144        167505        131928 
  CUMULATIVE INCOME             $                        76597        414801        682869       895013       1002518       1194446 
CUM. P WORTH @ 10.00  %         $                        60393        332896        524924       663078        762245        883249 
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH @ 12.00%             917700                P WORTH @ 14.00%     848263              P WORTH @ 15.00%     816536             
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                         TOTAL OF
PERIOD ENDING                  12-31-2004        12-31-2005     12-31-2006         12-31-2006+           67.06 YRS       
                               ----------        ----------     ----------         -----------           ---------       
                                                                                                         
GROSS VALUES           
  OIL/COND                           7434              5930           4730               16253              125808    
  GAS                                                                                                                 
  GOR                                                                                                                 
  OPERATING  COST                    8400              8400           8400               84668              160268    
  OIL  PRICES                       19.10             19.10          19.10               19.10                        
  GAS  PRICES                                                                                                         
  INTANGIBLE  INVES                                                                                         120000    
  CAPITAL INVES                                                                                                      
                                                                                                                      
TAXES                                                                                                                 
  OIL SEVERANCE                       .57               .57            .57                 .57                        
  GAS SEVERANCE                                                                                                       
  MISC TAXES                                                                                                          
NET VALUES                                                                                                            
  OIL/COND                           6040              4818           3843               13288              101565    
  GAS                                                                                                                 
  OIL/COND                         111921             89278          71211              244746             1882002    
  GAS                                                                                                                 
  REVENUE TO NI                    111921             89278          71211              244746             1882002    
  INTANGIBLE INVES                                                                                          120000    
  CAPITAL INVES                                                                                                       
  OPERATING COST                     8400              8400           8400                84600             168260    
- --------------------------------------------------------------------------------------------------------------------
  NET INCOME                       103521             80878          62811              160678             1601734    
  CUMULATIVE INCOME               1297967           1378845        1441656              160678             1601734    
CUM. P WORTH @ 10.00  %            883988            919874         945272               51008              996280    
- --------------------------------------------------------------------------------------------------------------------
                              P WORTH @ 20.00%         682274                       P WORTH @ 25.00%          579244    
- --------------------------------------------------------------------------------------------------------------------


REMARKS/BASIS OF RESERVE ESTIMATES................     STARTING PRICES & COSTS              PROJECTIONS...........................
Reserve is based on analogy Franklin $1Np > 100 MB     Gas 0 $/M                            INITIAL RATE IS = 2400 B/M
                                                       Oil: 19.1 $/B                        (1) CPD @ 20.23 %/YR TO ELG AT 125 WBF
                                                       Operating Cost: 708 $/M              (2)
                                                                                            (3)
                                                       NUMBER OF WELL(S) = 1 Oil            (4)
                                                       ECONOMIC LIMIT = 36.0 B/M            (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
1997 Knox Dribling Prg   Swan Creek                              (1) NI    100      %      N1     87.5     %        LIMIT
Tengasco                 Knox Formation                          (2) NI             %      N1              %        LIMIT
S-1S-75E                 4500 ft                                 (3) NI             %      N1              %        LIMIT
Hancock COUNTY           Tennessee                               (4) NI             %      N1              %        LIMIT
LEASE NO :  3 PUD        API NO.  41-067- xxxxx                  ARC/OTC NO.  --



                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  BBL,  GAS =   9600000 MCF *** FUTURE NET INCOME = $  27736933
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 12-31-1997    DELAY IS = 12 months (From as of date)



PERIOD ENDING                         12-31-1997     12-31-1998    12-31-1999     12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------     ----------    ----------     ----------   ----------   ----------    ----------
                                                                                                         
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF                      1741181       1427248        1169917       958982       786078        644349
      GOR                      M/B
      OPERATING COST            $                         38400         30400          38400        38400        38400         38400
      OIL PRICES               $/B      
      GAS PRICES               $/M                         3.86          3.86           3.86         3.86         3.86          3.86
      INTANGIBLE INVES          $        1250000
      CAPITAL INVES             $        1400000
TAXES                                   
      OIL SEVERANCE            $/B      
      GAS SEVERANCE            $/M                          .12           .12            .12          .12          .12           .12
      MISC TAXES               $/B      

NET VALUES                              
      OIL/COND                 GBL      
      GAS                      MCF                      1523533       1248042        1023677       839109       687818        563805
      OIL/COND                  $      
      GAS                       $                       5698013       4670669        3628552      3138268      2572439       2108631
      REVENDUE TO NI            $                       5698013       4670669        3628552      3138268      2572439       2108631
      INTAGIBLE INVES           $        1250000
      CAPITAL INVES             $        1400000
      OPERATING COST            $                         38400         38400          38400        38400        38400         38400
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $       -2650000        5659613       4632269        3790152      3099868      2534039       2676231
      CUMULATIVE INCOME         $       -2650000        3009613       7641882       11432034     14531902     17065941      19136172
CUM. P WORTH AT 10.00%          $       -2526676        2378967       6029148        8744226     18762946     12263104      13377369
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            15131640               P WORTH AT 14.00%  13927847              P WORTH AT 15.00%  13379930            
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                           TOTAL OF
PERIOD ENDING                   12-31-2004        12-31-2005     12-31-2006         12-31-2006+            26.00 YRS       
                                ----------        ----------     ----------         -----------            ---------       
                                                                                                         
GROSS VALUES           
      OIL/COND         
      GAS                           528174            432944         354885             1556242             9600000
      GOR                                                                                                          
      OPERATING COST                 38400             38400          38400              683465             1029065
      OIL PRICES                                                                                                   
      GAS PRICES                      3.86              3.86           3.86                3.86                    
      INTANGIBLE INVES                                                                                      1250000
      CAPITAL INVES                                                                                         1400000
TAXES                                                                                                              
      OIL SEVERANCE                                                                                                
      GAS SEVERANCE                    .12               .12            .12                 .12                    
      MISC TAXES                                                                                                   
NET VALUES                                                                                                         
      OIL/COND                                                                                                     
      GAS                           462152            378026         310524             1361714             8406000
      OIL/COND                                                                                                     
      GAS                          1728448           1416809        1161360             5092809            31415990
      REVENDUE TO NI               1728448           1416809        1161360             5092809            31415990
      INTAGIBLE INVES                                                                                       1250000
      CAPITAL INVES                                                                                         1400000
      OPERATING COST                 38460             38400          38400              683465             1629065
- ---------------------------------------------------------------------------------------------------------------------
      NET INCOME                   1690048           1378409        1122960             4409344            27736933
      CUMULATIVE INCOME           20626220          22204629       23327589             4409344            27736933
CUM. P WORTH AT 10.00%            14264271          14817384       15271465             1236747            16508212
- ---------------------------------------------------------------------------------------------------------------------
                             P WORTH AT 20.00%        11083749                    P WORTH AT 25.00%           9336507   
- ---------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . . . .   STARTING PRICES & COSTS       PROJECTIONS . . . . . . . . . . . . . .

Reserve estimate 1200 MMcf/w - analogy with completed wells    Gas: 3.66 $/m                 INITIAL RATE IS = 100000 M/M
8 GW w/ gathering line + 2 dn per program                      Oil:   8      $/m             (1)CPD AT 18.82 $/YR TO ELG AT 9600 MMF
Tangible: B(125+50) = 1400 MS  Intangible:  10(125)= 1250 MS   Operating Cost:  3200 $/m     (2)
Gas price $4.26/Mcf (w/Btu adj)  less $6.40/mcf Pipeline                                     (3)
  Gathering Charge                                             NUMBER OF WELL(S) = 8 Gas     (4)
                                                               ECONOMIC LIMIT =   776.6 M/M  (5)








                                COBURN PETROLEUM ENGINEERING / PETROLEUM ENGINEERS / TULSA, OKLAHOMA

TENGASCO INC.                                      AS OF DECEMBER 31, 1996                             UNESC. CASE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                
1998 Knox Drilling Prg   Swan Creek                               (1) WI   108      %      N1     87.5     %        LIMIT
Tengasco                 Knox Formation                           (2) WI            %      N1              %        LIMIT
S-1S-75E                 4500 ft                                  (3) WI            %      N1              %        LIMIT
Hancock COUNTY           Tennessee                                (4) WI            %      N1              %        LIMIT
LEASE NO :  4 PUD        API NO.  41-067- xxxxx                   ARC/OTC NO.  --


                               *  RESERVE ESTIMATES AND PREDICTED CASH FLOW  * BEFORE FEDERAL INCOME TAX  *
- -------------------------------------------     ------------------------------------------------     -------------------------------
                                                                                                                  
CUMULATIVE:  OIL =   0 BBL,   GAS =   0 MCF *** ULTIMATE:   OIL =   0  GBL,  GAS =   4806900 MCF *** FUTURE NET INCOME = $  13858873
- -------------------------------------------     ------------------------------------------------     -------------------------------
FIRST PERIOD STARTS 07-1-1996    DELAY IS = 18 months (From as of date)



PERIOD ENDING                         12-31-1997     12-31-1998    12-31-1999     12-31-2000   12-31-2001   12-31-2002    12-31-2003
                                      ----------     ----------    ----------     ----------   ----------   ----------    ----------
                                                                                                         
GROSS VALUES                  UNITS
      OIL/COND                 BBL
      GAS                      MCF                       456913        768210         646096      529606        434116       355647 
      GDR                      M/B
      OPERATING COST            $                         19200         19200          19200       19200         19200        19200 
      OIL PRICES               $/B
      GAS PRICES               $/M                         3.86          3.86           3.86        3.86          3.86         3.86 
      INTANGIBLE INVES          $                        625000                                                                     
      CAPITAL INVES             $                        700000                                                                     
TAXES
      OIL SEVERANCE            $/B
      GAS SEVERANCE            $/M                          .12           .12            .12         .12           .12          .12 
      MISC TAXES               $/B
NET VALUES
      OIL/COND                 BBL
      GAS                      MCF                       399799        689684         565334      463405        379853       311366 

      OIL/COND                  $
      GAS                       $                       1495246       2579416        2114349     1733135       1420650      1164509 
      REVENUE TO NI             $                       1495246       2579416        2114349     1733135       1420650      1164509 
      INTAGIBLE INVES           $                        625000
      CAPITAL INVES             $                        700000
      OPERATING COST            $                         19200         19200          19200       19200         19200        19200 
- ------------------------------------------------------------------------------------------------------------------------------------
      NET INCOME                $                        151048       2500218        2695149     1713935       1461450      1145389 
      CUMULATIVE INCOME         $                        151048       2711206        4800415     6520350       7921600      9067169 
CUM.  P WORTH AT 10.00%         $                        136926       2148341        3649202     4765364       5595058      6211469 
- ------------------------------------------------------------------------------------------------------------------------------------
P WORTH AT 12.00%            7243366               P WORTH AT 14.00%    6629682             P WORTH AT 15.00%    6352531            
- ------------------------------------------------------------------------------------------------------------------------------------



                                                                                                           TOTAL OF
PERIOD ENDING                   12-31-2004        12-31-2005     12-31-2006         12-31-2006+            25.50 YRS       
                                ----------        ----------     ----------         -----------            ---------       
                                                                                                         
GROSS VALUES           
      OIL/COND         
      GAS                           291686            239697         195986              862437             4800000
      GDR                                                                                                          
      OPERATING COST                 19200             19200          19200              351332              524132
      OIL PRICES                                                                                                   
      GAS PRICES                      3.86              3.86           3.86                3.86                    
      INTANGIBLE INVES                                                                                       625000
      CAPITAL INVES                                                                                          700000
TAXES                                                                                                              
      OIL SEVERANCE                                                                                                
      GAS SEVERANCE                    .12               .12            .12                 .12                    
      MISC TAXES                                                                                                   
NET VALUES                                                                                                         
      OIL/COND                                                                                                     
      GAS                           255227            209210         171490              754633             4200001
      OIL/COND                                                                                                     
      GAS                           954549            762445         641373             2822329            15700005
      REVENUE TO NI                 954549            762445         641373             2822329            15700005
      INTAGIBLE INVES                                                                                        625000
      CAPITAL INVES                                                                                          700000
      OPERATING COST                 19200             19200          19200              351332              524132
- ---------------------------------------------------------------------------------------------------------------------
      NET INCOME                    935340            763246         622173             2470997            13856873
      CUMULATIVE INCOME           10002458          10765703       11387870             2470997            13856873
CUM.  P WORTH AT 10.00%            6869114           7000603        7260160              689761             7949946
- ---------------------------------------------------------------------------------------------------------------------
                             P WORTH AT 20.00%         5201856                      P WORTH AT 25.00%       4342464
- ---------------------------------------------------------------------------------------------------------------------

REMARKS / BASIS OF RESERVE ESTIMATES . . . . . . . . . . . .  STARTING PRICES & COSTS        PROJECTIONS . . . . . . . . . . . . . .
Reserve estimate 1200 MMcf/w - analogy with completed wells   Gas: 3.66 $/m                  INITIAL RATE IS = 00000 M/M
4 GW w/ gathering line +1 DH per program                      Oil:   0  $/m                  (1)CPD AT 18.82 $/YR TO ELG AT 9600 MMF
Tangible: 4(125+50) = 700 MS  Intangible: 5(125)= 625 MS      Operating Cost:  1600 $/m      (2)

Gas price $4.26/Mcf (w/Btu adj)  less $0.40/Ncf Pipeline                                     (3)
  Gathering Charge                                            NUMBER OF WELL(S) = 4 Gas      (4)
                                                              ECONOMIC LIMIT =  388.3 M/M    (5)