tengasco, inc. (tgc) - polymer gel

by:Demi     2019-09-01
tengasco, inc. (tgc)  -  polymer gel
Washington, DC Securities and Exchange CommissionC.
Report Form 10-20549K(Mark one)
☒Annual Report submitted under Section 13 or 15 (d)
Securities Trading Act of 1934 on fiscal year 31, 2018 or☐Transition reports submitted under sections 13 or 15 (d)
According to the Securities Trading Act of 1934, the transition period from _ th to _ th.
Commission file number1-
15555 tenasco(
The name of the registrant specified in the articles of association)Delaware87-0267438(
State or other jurisdiction of company or organization)(I. R. S.
Employee Identification Number)8000 E. Maplewood Ave.
130 suites CO80111 Greenwood Village (
Main executive office address)(Zip Code)
The registrant's telephone number, including the area code :(720)420-4460.
Securities registered under article 12 (b)
The Bill: No.
Securities registered under article 12 (g)
Bill: Common stock, dollar.
Face value per share 001.
Indicate by check mark whether the registrant is a well
According to the definition of Rule 405 of the securities law, well-known experienced issuers.
Yes. ☐No. ☒Indicate by check mark whether the registrant does not need to submit a report under Section 13 or section 15 (d)of the Act.
Yes. ☐No. ☒By checking whether the registrant (1)
All reports submitted as required by Article 13, 15 (d)
In the past 12 months, the Securities Trading Act of 1934 (
Or a short period of time required for the registrant to submit such reports), and (2)
This filing requirement has been bound for the last 90 days.
Yes. ☒No. ☐Indicate by check mark whether the registrant has been electronically submitted and posted on its company website (if any), each interactive data submitted and published in accordance with S-Regulation section 405thT (§ 232.
This Chapter 405)
Within the first 12 months (
Or in such a short time that the registrant is required to submit and publish these documents)
Yes. ☒No. ☐Indicate by check mark whether default declarant is disclosed in accordance with S-regulation item 405thK (§229.
This Chapter 405)
As the registrant is aware, it is not included here and will not be included in the final proxy or information statement referenced in Part 3 of this form --
K or any amendments to this form 10K.
☐Indicate by check mark whether the registrant is a large accelerated file manager, a non-accelerated file manager
A smaller reporting company, or an emerging growth company.
See the definition of "large accelerated reporting companies", "Small reporting companies" and "emerging growth companies" in rule 12b
2 of the Trading Act.
Big speed Filer☐Speed up Filer☐Non
Speed up Filer☐Small Reporting Company☒(
Do not check if there are smaller reporting companies)
Emerging growth companies☐If an emerging growth company, please indicate by check mark whether the registrant chooses not to use the extended transition period to comply with any new or revised financial accounting standards provided under section 13 (a)
Trade Act☐Indicate whether the registrant is a shell company with a match number (
Defined in Rule 12b-
2 parts of the transaction law).
Yes. ☐No. ☒Total market value of voting and non-voting
Voting Ordinary Shares held by non-shareholders
Affiliates refer to the price of the last sale of common stock or the average bid and asking price of such common stock, and as of the last working day of the second fiscal quarter recently completed by the registrant, it is about $3. 9 million (
Closing price of $0 on June 29, 2018. 75).
Number of issued shares of registrant $.
001 par ordinary shares are 10,644,252 at the end of business as of March 25, 2019.
Table for ContentsPART IPageItem 1.
Business project 1A.
Item 1B of risk factor 11.
Outstanding Staff Opinion item 17 2.
Project 3.
The fourth legal procedure.
The third part is the fifth mine safety disclosure.
The registrant's common stock market, related shareholder matters and 22 items 6 of the purchase of equity securities.
22 Selected Financial Data 7.
Management's Discussion and Analysis of the financial status and results of the operation of 23 projects 7A.
Quantitative and qualitative disclosure of market risks
Item 9 Financial Statements and supplementary data 28.
Changes and differences with accountants in accounting and financial disclosure
Control and procedures for Item 9B.
Section IIIItem 10 of other information.
29 director, executive officer and corporate governance of Project 11.
Item 12 administrative compensation 33.
Secured ownership of certain beneficial owners, management and related shareholders
Certain relationships and related party transactions and 37 independent directors 14.
Major accounting fees and services
Annex, financial statements and schedule 41. signatures432table content forward-looking statement the information contained in this report includes forward-looking in some cases
Forward-looking statements in the sense of applicable securities law. Forward-
Forward-looking statements include statements about the company's "expectations", "expectations", "intentions", "beliefs" or "strategies" or any similar words or phrases about the future. Forward-
The View report also includes the income margin, expenses and income analysis report of 2018 and beyond;
Oil and gas prices;
Exploration activities;
Expenditure on development;
Cost of compliance;
Environmental issues;
Technological development;
Product or product development in the future;
Product and distribution development strategy;
A potential acquisition or Strategic Alliance;
Liquidity and expected cash requirements and availability;
Prospects for successful financing activities;
Prospect or market or price of common stock of the company;
Control of the company. All forward-
Forward-looking statements are based on information available to the company as of the date of this agreement and the company is not obliged to update any such forward-looking statements
Statement.
The actual results of the company may be significantly different from the forward
Look at the report.
Factors that may lead to significant differences in results include factors discussed in the "risk factors" in Item 1A of this report.
The impact of forecasting commodity prices on the time spent on production and development includes factors beyond the control of many companies, which have been very unstable over the past few years.
The company's estimated net future cash flows of proven reserves and their present value are based on various assumptions about future production levels, prices and costs that may prove incorrect over time
Any significant difference in the assumptions may result in significant differences in future net actual cash flows from estimates.
Oil and Gas Glossary The following are abbreviations and definitions of certain terms commonly used in the oil and gas industry and this document: Bbl
1 tank barrel, or 42S.
Refer to the volume of the gallon liquid used by oil or other liquid hydrocarbons. Bcf.
1 billion cubic feet of natural gas. BOE.
A tank barrel equivalent to oil, calculated by converting the volume of natural gas to the equivalent of oil barrels at a ratio of 6,000 cubic feet of natural gas to 1 barrel of oil. BOPD.
A bucket of oil every day. Btu.
British heat unit
A British thermal unit is the amount of heat needed to increase the temperature of a pound of water by one degree F.
Develop oil and gas reserves.
Developed oil and gas reserves are any class of reserves that can be expected to be recovered :(i)
Existing wells through existing equipment and operating methods, or compared to the cost of new wells, the cost of required equipment is relatively small; and (ii)
By operating the mining equipment and infrastructure installed at the time of the reserve estimate, if the exploitation does not involve the well.
Development Project.
Development projects are a means of bringing oil resources to an economically productive state.
For example, the development of a single reservoir or oilfield, the incremental development of the production field or the integrated development of multiple fields and related facilities with common ownership may constitute a development project.
Good development.
Drilling wells in proven oil or natural gas reservoirs into well layers of known productivityDifferential.
Adjustments to oil or gas prices from established spot market prices to reflect differences in oil or gas quality and/or location.
Economically productive.
The term "economic production" related to resources refers to resources that generate revenues that exceed or reasonably anticipate operating costs.
The value of the products that generate income should be determined at the end of the oil and gas production activities.
The terminal point is generally regarded as an outlet valve on a leased or on-site storage tank.
3 Table of Contents for final recovery (EUR).
Estimated final recovery is the sum of the remaining reserves as of the given date and the cumulative production as of that date, to explore the well.
Drilling, looking for Wells in new fields or new storage layers in previously discovered fields.
Generally, an exploration well refers to any well that is not a development well, an extension well, a service well, or a formation test well. Farmout.
Transfer of interest in the encrypted location and associated area, provided that a well is drilled in that location. Gas. Natural gas. MBbl.
1,000 barrels of oil or other liquid hydrocarbons. MBOE.
1,000 BoeMcf.
1,000 cubic feet of natural gas. Mcfd.
1,000 cubic feet of natural gas per day.
Equivalent to 1 million cubic feet of natural gas. MMBOE. 1 million Beijing EastMMBtu.
1 million British heat unitsMMcf.
1 million cubic feet of natural gas. NYMEX.
New York Mercantile ExchangeOil.
Crude oil, condensate and natural gas liquids. Operator.
Individuals or companies responsible for the exploration and/or production of wells or gas wells or leases. Play.
A geographic area with the potential of carbohydrates. Polymer.
Polymer gel treatment of wells produced from water
Oil displacement is to reduce excessive water production and increase oil and gas production.
Candidate Jingtong often produces natural fracture-type reservoirs from mature oil fields, such as sandstone and limestone.
Successful treatment has also been carried out in some types of sandstone reservoirs.
Other practical applications of polymer gels include the treatment of water flooding water injection wells to correct channeling or change the injection profile, improve the ability of the injected fluid to sweep the production wells on site, and make the water injection more effective, and allows the operator to recover more oil in a shorter period of time.
Proven oil and gas reserves.
Proven oil and natural gas reserves refer to the quantity of oil and natural gas, which can reasonably determine economic production starting from a given date through the analysis of Earth science and engineering data, under existing economic conditions and mode of operation, government regulations before the expiration of a contract providing the right to operate, unless the evidence indicates that the renewal is reasonably determined, regardless of whether the deterministic or probabilistic method is used for estimation.
The project to extract hydrocarbons must have already started, or the operator must reasonably determine that it will start the project within a reasonable period of time.
The proven reservoir area includes all of the following :(i)
Areas identified by the drilling and restricted by fluid contact, if any; and (ii)
Based on the existing Earth science and engineering data, it can be reasonably and surely judged that the adjacent undrilled parts of the reservoir are continuous and contain economically viable oil and gas.
In the absence of data on fluid contact, the number of proven reservoirs is limited by the minimum hydrocarbons known in well penetration or performance data and reliable technology to establish a lower connection with reasonable certainty.
4 The table of contents, where direct observations from well penetration define the known highest oil elevation and the potential of the associated gas roof exists, only when Earth science, engineering or performance data and reliable technology establish a higher connection with reasonable certainty can proven oil reserves be allocated to a higher part of the reservoir's structure.
Through the application of improved recycling technology, the reserves that can be economically produced (
Including but not limited to fluid injection)
When the certificate is classified :(i)
Successful testing of pilot projects in a reservoir area where attributes are not more favorable than the entire reservoir, the operation of procedures installed in a reservoir or similar reservoir or other evidence using reliable technology determines the reasonable certainty of the engineering analysis on which the project or procedure is based; and (ii)
The project has been approved by all necessary parties and entities, including government entities, for development.
Existing economic conditions include prices and costs under which the economic production capacity of the reservoir will be determined.
The price should be the average price within twelve years.
The one-month period before the end date of the reporting period, identified as an unweighted arithmetic mean for the first monthday-of-the-
Monthly price for the period, unless the price is determined by the contractual arrangement, excluding upgrades based on future conditions.
Prove the increase in reserves.
Sum of proven reserves added from expansion, Discovery, improved recovery, acquisition and revision of previous estimates. Reserves.
Reserves are estimated remaining quantities of oil and natural gas and related substances, and are expected to be economically viable for a given date by applying development projects to known reserves.
In addition, it must exist, or it must have reasonable expectations, in the production of legitimate production rights or income benefits, the way in which oil and natural gas or related substances are transported to the market, and all licensing and financing needed to implement the project.
Unless these reservoirs are penetrated and assessed as economically productive, reserves should not be allocated to adjacent reservoirs isolated by major, potentially closed faults.
The reservation should not specify the region, and it is clear that the knownacceptance is not
Productive reservoir (i. e.
No reservoir, low reservoir structure or negative test results).
Potential resources may be included in these areas (i. e.
, Potential recoverable resources in the accumulation that have never been discovered).
Increase reserves.
Changes in proven reserves due to previous estimates, expansion, Discovery, improved recovery and other increases and purchases of reservesplace. Reserve life.
A measure of the production life of an oil or gas property or a group of properties expressed in the year.
Royalty interest
Interest in the lease of oil and gas, giving the equity owner the right to obtain part of production from the leased area (
Or Proceeds from sale)
, But generally does not require the owner to pay for drilling or operating any part of the well on the leased area.
Royalties can be the royalties of the landowner, retained by the owner of the leased area at the time the lease is granted, or may be an overriding royalty, which is usually retained by the easement owner, related to the transfer to the subsequent owner.
Standardized measures.
Present value, calculated at a discount of 10% per year, is the estimated future net income calculated by applying the selling price used to estimate proven oil and gas reserves to that year --
The final quantity of these reserves, valid as of these estimated dates, remains the same throughout the production life of the reserves and deducts development, production, abandonment of proven reserves (
Calculated by year-
Assuming the existing economic conditions continue.
Calculate future income tax by applying the appropriate year
Taking into account the future tax rate already legislated, the statutory federal and state income tax rates are closed to pre-
Tax future cash flows, deducting the tax base of the property in question and utilizing the available tax carry-over related to proven oil and gas reserves. SWD.
Salt water treatment Wells.
Reserves of oil and gas have not been developed.
Untapped and natural gas reserves are reserves of any category and are expected to recover new wells that have never been drilled for an area or existing wells that require significant expenditure to be re-completed.
Reserves of undrilled areas shall be limited to those areas where production is reasonably determined at the time of drilling to directly offset the development spacing, unless there is evidence of the use of reliable technology that is economically productive at further distances
Sites that have not been drilled can only be classified as unexploited reserves when a development plan has been passed, indicating that the plan is drilled within five years, unless the circumstances prove that the time is longer.
In no event shall the estimate of undeveloped reserves be attributed to consideration of the application of fluid injection or other area for the improvement of the recovery technology, except in the actual project of the same reservoir or similar reservoir, or other evidence of the use of reliable technology to establish reasonable certainty proves that this technology is effective.
5 catalogues.
A secondary mining method in which water is injected into the reservoir to replace the remaining oil.
The water injected into the well physically sweeps the displaced oil to the adjacent production well.
Interest in work
An interest in the lease of oil and gas, giving the equity owner the right to drill and produce oil and gas from the leased area, and requiring the owner to pay part of the drilling and production operations.
The "Company", "we" and "ours" mentioned here refer to Tengasco, Inc. PART IITEM 1. BUSINESS.
The company was originally established in Utah in 1916 and was later changed to Onasco Companies, Inc.
In 1995, the company was renamed from Onasco Companies, Inc.
By merging into Tengasco, Inc.
A company in Tennessee, specifically established for this purpose.
On June 11, 2011, the shareholders of the company approved a merger agreement and plan stipulating that the company was merged into a wholly owned company.
A wholly owned subsidiary established in Delaware with the aim of changing the place of incorporation of the company from Tennessee to Delaware.
The company is now a company in Delaware.
The company is engaged in the exploration and production of oil and gas.
The company's main exploration and production area is located in Kansas.
Wholly owned by the company-
Subsidiary of Tencent Pipeline Company (“TPC”)
Own and operate a pipeline built to deliver natural gas from the Company's Swan Creek Field to customers in Kingsport, Tennessee.
The company sold all pipeline assets in August 16, 2013.
Wholly owned by the company-
Subsidiary of the manufacturing methane company (“MMC”)
Operate a treatment and delivery facility in Church Hill, Tennessee to extract methane gas from landfill sites and eventually sell or generate electricity as natural gas.
The company sold all methane facility assets other than the applicable USS.
Patent, January 26, 2018. General1.
The property operated by the company in Kansas is located in central Kansas, and as of December 31, 2018, it includes 174 production wells.
38 active disposal wells (
Kansas real estate ").
The company has on-site production management and on-site personnel in Hays Office, Kansas.
The lease of a Kansas property provides for a royalty fee of 12 for the landowner. 5%.
Some wells are subject to overriding royalties benefits from around 0. 5% to 15%.
The company maintains 100% of its work interest in most oil wells in Kansas.
During the period from 2018, the company participated in drilling two operating wells, one of which was completed as a production well and the other three.
None of these wells were completed as production wells.
The company's current reserve value, production, oil and gas revenues and future development goals all stem from the company's continued interest in Kansas. By using 3-
Dseismic evaluates the company's existing leases, which have historically added proven direct offset locations.
ContentsA monthly table.
The company's oil production in Kansas fell by 1. From 121 m to 5 MBbl.
From 7 MBbl to 120 in 2017. 2 MBbl in 2018.
This decline was primarily the result of a natural decline in 2018, partially offset by polymer work in the second and third quarters of 2018 and drilling completion in October 2018.
The company's capital projects in 2018 were mainly funded by cash flow. B.
Well ten drilling project, Kansas in September 17, 2007, the company and Hoactzin Partners, L. P. (“Hoactzin”)
Consisting of drilling rigs on the company's Kansas property (the “Program”). Peter E.
Salas is the chairman of the board of directors of the company and is the holder of Hoactzin and Dolphin Offshore PartnersP.
The largest shareholder of the company.
The terms of the plan also provide that Hoactzin will receive all work interests in the production well and will pay the company an initial fee of 25% of the work Interest income, net of operating expenses as management fees.
The amount paid to the company increased from 25% in February 2014 to 85%.
In 2018, the total production of the planned oil wells was 6.
Among them, the income of 8 MBbl comes from 5.
8 MBbl is net for the company.
In 2018, the company acquired Hoactzin's interest in the project wells for $131,290. 2.
Properties in Tennessee
In July 1995, the company acquired the Swan Creek leasing company and began to develop the oil field.
In 2001, the company completed the construction of a 65-mile pipeline from the tengoose Creek Field to several meter stations in Kingsport, Tennessee.
On August 16, 2013, the company closed the sale of all the company's oil and gas leasing and production assets in Tennessee to Swan Creek partner LLC for $1 and all pipeline assets of the company. 5 million. B.
On October 24, 2006, the company signed a 20-
Annual agreement on the sale of landfill gas ("Agreement ")
Has nothing to do with the predecessors of Republic Services(“Republic”).
The company transferred its interest in the agreement to MMC.
The agreement stipulates that MMC will purchase the entire natural gas stream collected by the catagur Valley municipal solid waste landfill site owned and operated by the hills, Tennessee.
The company has installed a proprietary combination of advanced gas treatment technology to extract the methane composition that purchased the airflow. (
"Methane Project ").
MMC announced the launch of the commercial operation of the methane project on April 1, 2009.
The total cost of the entire start-up of the methane project, including pipeline construction, is about $4. 5 million.
On April 2011, MMC purchased a Caterpillar generator set from Baihui service group in Lafayette, Lanna state, Louis, which was delivered at the end of 2011 and installed at the factory to generate electricity on site.
The total cost of generators, including installation and connectivity to the grid, is about $1. 1 million.
In January 25, 2012, MMC began selling electricity at the Carter Valley site.
Under a 20-year fixed price contract with Holston Cooperative, Inc. , electricity generation is sold
Local distributor and Tennessee Valley Authority (“TVA”)
Through the Generation Partner Program of TVA.
The project accepts renewable energy sources up to 999KW;
According to the power generation partner program, mmc's power generation equipment is rated at 974 KW to maximize power generation revenue.
The price clause under this contract pays MMC the current retail price charged by Holston Cooperative monthly to small commercial customers, plus a "green" premium of 3 cents per kWh (KWH)
Or about $. 129 per KWH.
Starting from January 2022, the electricity bill will no longer include three-
The "green" premiere. A one-
The eighth electricity bill has been paid to the landfill owner.
In September 17, 2007, Hoactzin was conveyed an interest in a net profit of 75% per cent for the methane project.
There has been no methane gas sales or revenue since the beginning of 2014, and therefore no net profit attributable to Hoactzin's net profit interest.
On January 26, 2018, the company closed the sale of all methane-making assets of Tennessee Renewable Energy Group Co. , Ltd. , except for the applicable United StatesS. patent, for $2. 65 million.
Under the above-mentioned September 17, 2007 net profit agreement, Hoactzin expressly released all claims against the company and Tennessee Renewable Energy Group Co. , Ltd. for a period of time to come. 3.
Although the company's other development areas focus on developing its current Kansas holding company, the company will continue to review potential transactions in the production of properties and undeveloped areas in Kansas, as well as in other states
Government-regulated companies are subject to many state and federal regulations, including environmental and other regulations that may have a significant negative impact on their profitability.
For a discussion of the risks involved in such regulations, see, "The impact of existing or possible government regulations on businesses and the cost and impact of compliance with environmental law", below in this section.
The main market for the company's crude oil is the local refining company.
At present, the crude oil produced by the company in Kansasis is sold to coffiville Resources Refining and Marketing Co. , Ltd. in or near the oil well (“Coffeyville”)
At the Kansas City and CHS McPherson refineries, Kansas (“CHS”)
Macpherson, Kansas.
Both Coffeyville and CHS are solely responsible for transporting the oil they purchased to their refineries.
As oil prices offered by the refinery fluctuate from time to time, the company may sell some or all of its output to one or more additional refineries to maximize revenue.
The electricity generated by the company at the MMC site in Tennessee was sold to Holston electric and TVA.
The company does not currently own drilling rigs or any related drilling equipment.
From time to time, the company receives the required drilling services from various drilling contractors.
The distribution method of crude oil for products or services is usually transported to the Kansas refinery by tanker.
The electricity generated by the company's methane facility is distributed to the grid.
Competitive business conditions, industry competitive position and competitive methods the company's expected oil and gas exploration activities in Kansas or other states will be carried out in a highly competitive and speculative business atmosphere.
In the search for any other suitable oil and gas assets for acquisitions, the company will compete with a number of other companies, including large oil and gas companies with greater financial resources, as well as other independent operators.
Management does not believe that the company's competitive position in the oil and gas industry will be as important as the company's current presence.
There are many producers of real estate in Kansas.
Some of these companies are larger and have more financial resources than the company.
These companies compete with the company for rental positions in known production areas currently operated by the company, as well as other potential areas of interest.
Although management expects that there will be no difficulty in purchasing contract rigs, several factors, including increased competition in the region, may limit the supply of rigs, future rig operators and associated personnel and/or equipment.
This restriction will have a natural adverse effect on the profitability of the company's operations.
The company is expected to not be difficult to obtain a drilling permit in any state.
The company usually does not apply for a permit until it is actually ready to start drilling operations.
The price of the company's products is controlled by the world oil market.
Competitive pricing is therefore considered impossible;
However, competition in the oil and gas exploration industry exists in the form of competition to obtain the most promising block area and to obtain the most favorable product transportation process.
The source and availability of raw materials include the development of oil and gas reserves and the production of oil and gas, and the company's operations are not dependent on the acquisition of any raw materials.
Relying on one or several major customers, Kansas Real Estate's crude oil is being purchased at the oil well and transported by coffeville and CHS trucks, responsible for transporting the purchased crude oil.
As oil prices offered by the refinery fluctuate from time to time, the company may sell some or all of its output to one or more additional refineries to maximize revenue.
Patent, Trademark, license, franchise, royalty agreement or labor contract, including in October 19, 2010, MMC, a subsidiary of the company, obtained the U. S. patent number
According to the application submitted in January 10, 2007, 7,815,713 is used for landfill gas purification methods and systems.
The patent period is 20 years from the date of submission, plus the adjustment period of the patent award due to the length of the review process is 595 days.
This patent is applicable to the process of design and use of MMC in Carter Valley landfill.
This patent may lead to a competitive advantage for MMC in the search for a new project, as well as to receive licensing fees for other projects that may be in use or wish to use the process in the future.
However, the number of high Btu projects currently existing and operated by others is limited, and the processes available for high Btu projects are diverse, the impact of the current natural gas market and the reduction or non-application of green energy incentives for these projects, resulting in the importance of any licensing opportunities provided by the patent being difficult to determine or estimate, and therefore, if the license fee for any patent is received, may not be satisfied with the overall operating results of the company.
Major products or services require government approval the main products provided by the company do not require government approval, although a permit is required for drilling wells or gas wells.
The impact of existing or possible government regulations on commercial exploration and production activities related to oil and gas leases is subject to many environmental laws, rules and regulations.
The federal Clean Water Act requires the company to build a fresh water containment barrier between the surface and the underlying water level of each drilling site.
This includes inserting steel sleeves in each well, with cement outside the casing.
The company fully complies with this environmental regulation.
As part of the company's purchase of Kansas properties, the company obtained a statewide license to drill in Kansas.
Applications under such permits are applied and issued within one to two weeks prior to drilling.
At the moment, Kansas does not require the posting of bonds to allow or ensure that the company's wells are properly blocked when they are abandoned.
All wells of the Kansas property have all the permits required, which the company believes is in compliance with Kansas law.
The company's exploration, production and marketing operations are widely regulated at the federal, state and local levels.
The company has and will continue to spend on compliance with environmental and other regulatory requirements.
In addition, the regulatory environment for oil and gas may change, thus greatly increasing these costs.
These regulations affect the operation of the company and limit the number of hydrocarbons that the company may produce and sell.
Other regulated matters include marketing, pricing, transportation and valuation of royalties.
The operation of the company is also subject to many frequently changing laws and regulations governing the discharge of materials into the environment or other aspects related to environmental protection.
For example, in May 2014, under the federal Endangered Species Act, the company became a protected target for threatened species.
In order to avoid severe penalties for violations of these regulations, the company entered a state --
If drilling operations follow certain conservation methods and the company pays remediation fees for any well identified as likely to interfere with the habitat of threatened species, a voluntary agreement to avoid these penalties is implemented.
These costs may increase the company's cost of drilling in Kansas by about $40,000 per well.
Company owned or leased, owned or leased in the past, property used for the exploration and production of oil and gas and the waste of these properties and their disposal on these property may be subject to the Comprehensive Environmental Response, Compensation and Liability Act, the Oil Pollution Act of 1990, the resource protection and recovery act, the Federal Water Pollution Management Act and similar state laws.
Under these laws, companies may need to remove or remedy waste or property contamination previously released.
The table of contents of laws and regulations for the protection of the environment often becomes more strict, and in some cases, it may be "strictly responsible" for environmental damage ".
Strict liability means that the company may take responsibility for the damage without regard to its negligence or other fault.
Environmental laws and regulations may make the company liable for the conduct of ofor conditions caused by others or for acts that comply with all applicable laws at the time of execution.
Failure to comply with these laws and regulations may result in administrative, civil and criminal penalties.
While management believes that the company's operations largely meet the existing requirements of government agencies, the ability of the company to conduct ongoing operations depends on meeting applicable regulatory and licensing controls.
The company's current licenses and authorizations, as well as its ability to obtain future licenses and authorizations, may be subject to more scrutiny and increased complexity, resulting in an increase or delay in the cost of receiving appropriate authorizations.
The company maintains the environmental response policy and emergency response policy plan.
A plan was adopted that provided for the erection of signs in each well containing the company's office telephone number.
Both the company's office and key personnel homes have a list of the phone numbers required for fire fighting, police, emergency services and the handling of emergencies by company employees.
The above is only a brief summary of some existing environmental laws, rules and regulations on which the company's business operations are based, and there are many other laws, rules and regulations whose impact may adversely affect the company.
Future legislation in this area will be enacted and the current law will be revised.
There is no guarantee of the impact of these current and future laws, rules and regulations on the company's current and future operations.
No research and development.
Total number and number of employees-
In December 31, 2018, the company had 12 full-time employees, no part-timetime employees.
The employees are located in Colorado, Kansas and Texas.
In January 26, 2018, the company reduced its full-time staff from 14 to 13 and no longer had any staff in Tennessee.
The layoff is the result of the company's sale of artificial methane assets at the Carter Valley landfill in Tennessee.
During 2018, the company reduced one Kansas employee, resulting in 12 full-time employees in December 31, 2018.
The available information company is a reporting company because the term is defined under the Securities Act and therefore reports are submitted, including Quarterly Reports on Form 10
Q and annual report for Form 10
K This report, agency information report, etc. and the Securities and Exchange Commission (“SEC”).
You can read and copy any material of the company's documents in the public expansion room at 100 NE Street, Washington, D. C. C.
20549 after payment of the prescribed fees.
You can get information about public data room operations by calling SEC 1-1800-SEC-0330.
In addition, the company is an electronic document provider that submits reports and information to the SEC through the SEC's electronic data collection, analysis and retrieval system (“EDGAR”).
SEC maintains a website containing reports, agency and information statements and other information about issuers who submit electronic documents to SEC through EDGAR, including all documents submitted by the company to SEC
This information can be read and printed free of charge on the SEC website.
The address of that website is www. sec. gov.
The company's website is located at www. tengasco. com.
On the homepage of the website, you have free access to the Company's Annual Report on Form 10K.
Under the Investor Information, SEC filing tab, you will find quarterly reports in form 10
Q: Current Report of Form 8
Section K and section 16th (Forms 3, 4 and 5)
After the company submits these reports electronically to the SEC, any changes to these reports are reasonable and feasible.
The information contained on the company's website is not part of this report or any other report submitted to SEC. ITEM 1A.
Risk Factors, in addition to other information contained in this form 10-
K. the following risk factors should be taken into account in assessing the Company's business and future prospects.
The risk factors described below are not exhaustive and we encourage you to conduct your own investigation into the company and its business.
You should also read the other information in this form 10.
Including financial statements and related notes.
The company's debt, global recession or disruption to domestic and global financial markets may adversely affect the Company's operating results and financial conditions.
As of December 31, 2018, the company had no outstanding debt principal under the credit loan of the prosperous bank.
Although the company does not have bank liabilities, if the level of liabilities increases, coupled with the relevant fluctuations in domestic and global economic conditions, energy prices, the degree of confusion in the credit market and the continued lack of relative liquidity, if it continues for a long time, there are several important and adverse consequences for the company's business and operations.
For example, any one or more of these factors can (i)
Making it difficult for companies to provide services or refinance their existing debts; (ii)
Increase the vulnerability of companies in additional adverse changes in economic and industry conditions; (iii)
Require the company to use most or all of the funds in the operation and proceeds of any debt or equity issuance or asset sales to pay or repay the debt; (iv)
Limiting the company's ability to respond to changes in our business and operating markets; (v)
Put the company at the disadvantage of our competitors, because our competitors are not so highly leveraged; or (vi)
Limits the company's ability to raise funds or raise equity for our working capital, capital expenditures, acquisitions, debt repayment requirements, investments, general corporate activities or other financing needs.
The company continues to pay close attention to the global financial and credit markets, as well as the sharp fluctuations in prices in the oil and gas markets.
As these events occur, the company will continue to assess and respond to any impact on the company's operations.
The company has and will continue to adjust drilling plans and capital expenditures as needed.
However, external financing of the capital market may not be readily available, and without sufficient capital resources, drilling and other activities of the company may be restricted and the company's business may be limited, the financial position and results of the operation may be affected.
In addition, given the volatility of credit markets and oil and gas pricing, the company's ability to establish future beneficial relationships with third parties for exploration and production activities may be limited, so, it may adversely affect the current operational strategy and related business plans.
Agreements governing corporate debt may limit the company's ability to execute capital expenditures or respond to other plans or opportunities that may arise.
Because the company's availability of borrowing from prosperous banks under the company's revised and restated credit loan terms is subject to the ceiling of the lender's estimated borrowing base, limiting the future cash flow of the company's oil and gas reserves, the company expects that if the prices of these goods continue to decline for any longer period of time, it is likely to lead to a reduction in the company's borrowing base.
The reduction in the company's borrowing base may be significant, so not only will it reduce the capital available to the company, but it may also be necessary to repay the principal to the lender under the terms of the loan.
In addition, the company's revised and restated credit loan terms with boom bank limit the company's ability to increase its debt.
Credit loans contain contractual and other conventional restrictions on oil and gas loan basis credit loans, including restrictions on debts, liens and dividends, voluntary redemptions of debts, investments and asset sales.
In addition, the credit mechanism requires companies to comply with certain financial tests and financial covenants.
If, due to limited or other reasons for access to the credit market, the company is unable to obtain future debt financing when required, or is unable to obtain it on acceptable terms, the company may not be able to invest the money it needs for drilling and exploration activities, to take advantage of business opportunities, to cope with competitive pressures, and to refinance its debt.
In addition, the company may be forced to sell some of the company's assets without timely or unfavorable conditions.
Any of these results may have a significant adverse effect on the company's operating results and financial position.
11 The content sheet lender may reduce the company's loan base under its credit mechanism.
The loan base under the Company's revolving credit mechanism will be determined by the lender from time to time in accordance with its natural gas and crude oil loan practices.
The reduction in the company's estimates of natural gas and crude oil reserves may lead to a reduction in the company's borrowing base, which will reduce the financial resources available under the Company's revolving credit mechanism to meet its capital requirements.
This reduction may be due to a decline in commodity prices or production, inability to drill or unfavorable drilling results, changes in natural gas and crude oil reserve works, and the lender's inability to agree on sufficient loan bases, or the lender's practice in estimating reserves has changed adversely.
If, for any reason, the operating cash flow or the company's borrowing base is reduced, the company's ability to engage in exploration and development activities may be adversely affected.
As a result, the company may have limited capacity to replace production.
In addition, these adverse conditions may result in tonon-
Compliance with certain credit arrangement covenants ultimately leads the company to default under its revolving credit arrangement.
The company's credit line is subject to variable interest rates and contains certain financial covenants that may have a negative impact on the company.
Under the credit loans of the company and the prosperous bank, the borrowing interest rate is variable, which puts the company at risk of interest rate.
If the interest rate rises, even if the amount of the loan remains the same, the company's debt repayment obligations to the variable interest rate debt will increase and the company's income and cash flow will decrease.
According to the performance of the company, the company's credit financing agreement contains certain financial contracts.
If the company's financial performance results in any of these covenants being breached, the prosperous bank may choose to demand a faster repayment of outstanding loans than is currently required by the agreement.
The fall in oil or gas prices has and will have a significant adverse effect on the company's revenue.
The company's financial position and results of operations depend largely on the price of the company's oil and gas production and the cost of finding, acquiring, developing and producing reserves.
In recent years, oil and gas prices have been subject to extreme fluctuations due to changes in supply, market uncertainty and various additional factors beyond the control of the company.
These factors include global political instability (
Especially in the Middle East and other oil producing areas)
Foreign oil and gas supply, foreign import prices, level of drilling activities, level of demand for consumer goods, government regulations and taxes, prices and supply of alternative fuels, speculative activities in the commodity market, and the overall economic environment.
As oil prices fell, the company's operations were severely adversely affected.
The lower price has greatly affected the company's drilling revenue.
In addition, the drilling of new wells, the development of companies and the acquisition of new properties are also adversely affected and restricted.
As a result, the company's potential revenue from its operations and the company's proven reserves may be significantly reduced in times when oil prices are much higher.
Future oil or gas prices are not guaranteed.
A substantial or long-term decline in oil or gas prices will have a significant adverse effect on the company's financial position, operating results, the volume of oil and gas that may be economically produced, and access to capital.
Oil and gas prices have been and are not stable.
This volatility makes it difficult to accurately estimate the value of the production property in the acquisition, and it is also difficult to budget and predict the return on exploration and development projects involving the company's oil and gas property.
In addition, unusually volatile prices often disrupt the market for oil and gas properties, as it is more difficult for buyers and sellers to agree on the purchase price of the property.
The risk of oil and gas production, development expenditure and cash flow may have a significant impact on the company's finances.
Predict the impact of commodity prices on production and the timing of development expenditures, including factors beyond the control of many companies.
The estimate of the net future cash flow and its present value of the company's identified and other reserves is based on various assumptions about future production levels, prices, over time, the cost may prove incorrect.
Any significant discrepancy in the assumptions could result in significant differences in future net actual cash flows from estimates, which would have a significant impact on the company's financial position.
The company has a history of major losses.
In the early stages of the development of the oil and gas business, the company suffered significant losses due to its operations, in particular its development at Swan Creek Field, Tennessee, and the company's associated pipeline assets.
In addition, the Company recorded impairment of oil and gas property during 2008, 2015 and 2016 and recorded impairment of pipeline assets during 2010 and 2012, it also damaged its methane facility on 2014.
As of December 31, 2018, the company had accumulated a loss of $51. 5 million.
The company recorded a net loss of $2.
2009 was $0 M.
It was $7 million in 2010.
It was $1 million in 2012.
It was $8 million in 2014.
It was $7 million in 2015.
In 2016 it was $2 million.
2017 6 million.
If the company suffers losses in the future, these losses may limit the company's development and business activities.
The company's oil and gas operations involve significant costs and face various economic risks.
The company's oil and gas business faces economic risks typically associated with exploration, development and production activities, includes the need to make significant expenditures for finding or obtaining new production attributes or drilling wells and development wells.
When conducting exploration and development activities, there are unexpected pressures or irregularities, calculation errors and accidents in the formation, which may lead to unsuccessful exploration, development and production activities of the company.
This may result in a complete loss of the company's investment in such Wells (s)orproperty.
In addition, the cost of drilling, completion and operation of wells is often uncertain.
The company's failure to find or obtain additional reserves will result in a significant decline in the company's reserves from the current level.
With the reduction in reserves, production at the company's Kansas oil company generally declined.
Unless the company has acquired additional property containing proven reserves, successfully conducted exploration and development drilling, or successfully applied new technologies, or found additional backwardness --
As production of these properties continues, the company's proven reserves will decline significantly.
Therefore, the company's future oil and gas production depends to a large extent on the degree of success in obtaining or finding additional reserves or other alternative production sources.
Any decline in oil prices and any long-term decline in oil prices will adversely affect the company's future reserves, as it is unlikely that the company will acquire additional production property during these periods.
Lower oil prices may have a negative impact on new drilling and development, as these activities are far less likely to be profitable.
As a result, any acquisition of a new property will pose a greater risk to the company's financial position, as these acquisitions may be commercially unreasonable.
In addition, the company's oil and gas drilling may involve not only unprofitable efforts for dry wells, but also unprofitable efforts for wells with high production but insufficient production, in addition to drilling, operation and other expenses
In addition, a profitable well may not be able to achieve the target return rate.
The company relies on seismic data and other technologies in identifying prospects and conducting exploration activities.
Seismic data and other technologies used do not allow the company to finally know whether oil or natural gas exists or can be produced economically before drilling.
The final cost of drilling, completion and operation of wells may adversely affect the economy of the project.
Due to many factors, including unexpected drilling conditions, title problems, pressure or irregularities in the formation, equipment failure, accidents, bad weather conditions, further drilling operations may be cut, delayed or required by the environment and other governments, as well as costs, shortages or delays in the supply of rigs, equipment and services.
The company's reserves are estimated to be subject to other substantial downgrades.
The company's oil and gas reserves are estimated to be subject to significant downward revisions for other reasons, in addition to the factors mentioned in the previous risk factor, "The company's failure to find or obtain additional reserves", will result in a significant decline in the company's reserves from the current level.
"While the company's estimate of the future net cash flow and its present value of proven reserves is based on assumptions about future production levels, prices and costs, these assumptions may prove incorrect over time. the same assumptions, whether they prove correct or not, may result in the company making drilling or development decisions, resulting in some or all proven reserves of the company being removed from the proven reserves category previously reported by the Company from time to time.
This may be due to economic expectations or forecasts, coupled with limited resources of the company, which may result in the company's determination that drilling or development of certain of its properties may be delayed or unforeseen, as a result of these decisions, proven reserves of any category related to property that has not yet been drilled or developed may come from proven reserves reported by the company.
Therefore, the company's proven oil reserves may be significantly reduced from time to time.
In addition, in the course of the company's normal business, the company may choose to sell some or all of its oil or gas reserves.
Any such sale will result in all proven oil or gas reserves categories that the company no longer reports for sale.
It is possible for the company to be required to write down the book value of its natural gas and crude oil property.
The company accounts for its natural gas and crude oil business using the full cost method.
As a result, the company uses the company's funds to acquire, explore and develop natural gas and crude oil assets.
The net capitalized cost of natural gas and crude oil property and the associated Deferred income tax (if any) under the full cost accounting rule shall not exceed the "maximum limit ", the limit is based on a proven present value reserve of estimated net cash flows in the future, at a discount of 10%, plus unamortized property costs, and a reduction in the cost of unamortized property or estimated fair value.
If the net capitalization cost of natural gas and crude oil property exceeds the upper limit, the company must charge the excess amount to the income, deducting any tax impact.
This fee will not affect the cash flow of the operating activities, but will reduce the equity and income of the company's shareholders.
The risk that the company will be required to write-
When the price of natural gas and crude oil is low, the book value of natural gas and crude oil will increase.
Also, write-
If the company slashed its estimated proven reserves, it may fall.
Fees recorded for a period of time may not be reversed for a subsequent period of time, although higher natural and crude oil prices may raise the ceiling applicable for a subsequent period of time.
Due to the low oil prices experienced since the quarter ended September 30, 2014, during 2015, the company experienced a failed ceiling test, resulting in a record of non-
Cash impairment of $14. 5 million.
During the 2016 period, the company recorded the failure of the ceiling test, resulting in the recording of non-
$2 in cash impairment. 7 million.
If prices continue to be at a low level for a period of time to come, the company may need to record additional impairment of its oil property.
The use of the company's net operating loss carry-over may be limited.
As of December 31, 2018, based on the constraints discussed in this risk factor, the company paid a significant net operating loss for the US stock exchangeS.
Purpose of federal and state income tax.
If not utilized, the carry-over of these losses will eventually expire.
In addition, as for part of the United StatesS.
Net operating loss carry-over, the amount of carry-over that the company can use each year is limited below the United StatesS. tax laws.
Based on the existence of these loss carry-over, there is uncertainty in the calculation of appropriate Deferred tax assets, and the future use of operational loss carry-over in accordance with the standards set out in fasb asc 740 income tax.
In addition, if there is a change in the control of the company, there are restrictions on the use of these carry-over.
It is possible that the company will not be able to take advantage of the remaining partial or full carry-over, or that previously booked Deferred tax assets based on these carry-over may be written down or reversed based on future economic factors that the company may experience.
In the event of such a decrease or reversal, the impact may be substantial and, essentially, adverse.
As at December 31, 2018, the carry-over of the federal net operating loss was approximately $35.
6 million, of which $34.
The expenditure of 6 million is between 2019 and 2037, which can offset 100% of taxable income and $1 million of the indefinite settlement period, and can offset 80% of taxable income every year.
As at December 31, 2018, net deferred tax assets amounted to $130,000, $242 and 2017.
In 2018, due to the 2017 tax law, the company published a partial allowance in relation to MTC.
As at December 31, 2018, the company recorded allowances for the remaining Deferred tax assets, mainly due to the cumulative losses incurred during the three-year period ended December 31, 2018.
As of December 31, 2017, the company had fully subsidized the net deferred tax assets of AMT credit, mainly due to the cumulative losses incurred during the three years ended December 31.
The total valuation allowance for December 31, 2018 was $11.
$5 million and $12.
December 31, 2017 for 1 million.
The shortage of oilfield equipment, services or qualified personnel may adversely affect the Company's operating results.
The oil and gas industry's demand for well-drilling and on-site operations for combined and experienced field personnel, geologists, geophysical scientists, engineers and other professionals can fluctuate greatly, often associated with oil and gas prices, resulting in cyclical shortages.
The company does not own any rigs and relies on third parties to obtain and provide the equipment required for the company's drilling activities.
When oil prices rise, there is also a shortage of rigs and other equipment.
As prices rise, the demand for rigs and equipment increases with the increase in the number of wells.
These factors have also led to a significant increase in equipment, services and personnel costs.
These shortages or price increases may adversely affect the company's profit margin, cash flow and operating results, or limit the company's ability to drill and perform ordinary operations.
According to the government's regulation of the oil and gas industry, the company has a lot of costs.
The company's exploration, production and marketing operations are widely regulated at the federal, state and local levels.
The company is currently complying with these regulations.
To maintain its compliance, the company has and will continue to invest heavily in complying with the requirements of the environment and other regulations.
In addition, there may be changes in the regulatory environment for oil and gas, which may significantly increase these costs. Hydrocarbon-
Producers regulate the protection of practices and related rights.
These regulations affect the operation of the company and limit the number of hydrocarbons it may produce and sell.
Other regulated matters include marketing, pricing, transportation and valuation of royalties.
The company's environmental-related costs are high.
The company's operations are also subject to many frequently changing laws and regulations governing the discharge of substances into the environment or other aspects related to environmental protection.
Company owned or leased, owned or leased, property leased for the purpose of exploration and production of oil and gas and the waste on such property and these property may be subject to a Comprehensive Environmental Response, Compensation and Liability Act, the Oil Pollution Act of 1990, the resource protection and recovery act, the Federal Water Pollution Management Act, the federal Endangered Species Act and similar state laws.
Under these laws, companies may need to remove or remedy waste or property contamination.
Laws and regulations that protect the environment often become more stringent and, in some cases, may impose "strict liability" for environmental damage ".
Strict liability means that the company may take responsibility for the damage without regard to its negligence or other fault.
Environmental laws and regulations may make the company liable for the conduct of ofor conditions caused by others or for acts that comply with all applicable laws at the time of execution.
Failure to comply with these laws and regulations may result in administrative, civil and criminal penalties.
The ability of the company to operate continuously depends on meeting the applicable regulatory and licensing controls.
The company's current licensing and authorization and the ability to obtain future licensing and authorization may be subject to more scrutiny and more complex impacts in the future, resulting in increased or delayed costs of obtaining appropriate authorization.
Insurance does not cover all risks.
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