REPX(REPX) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents Tengasco, Inc.'s unaudited condensed consolidated financial statements for Q1 2019, encompassing Balance Sheets, Statements of Operations, and Cash Flows, along with explanatory notes Condensed Consolidated Balance Sheets Total assets increased slightly to $9.525 million as of March 31, 2019, while total liabilities rose to $2.850 million, and stockholders' equity decreased to $6.675 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Current Assets | $4,481 | $4,347 | | Oil and gas properties, net | $4,650 | $4,804 | | Total Assets | $9,525 | $9,484 | | Total Current Liabilities | $659 | $548 | | Total Liabilities | $2,850 | $2,717 | | Total Stockholders' Equity | $6,675 | $6,767 | | Total Liabilities and Stockholders' Equity | $9,525 | $9,484 | - The company adopted new lease accounting standards (ASU 2016-02), resulting in the recognition of a 'Right of use asset - operating leases' of $84,000 and corresponding current and noncurrent lease liabilities totaling $84,000 as of March 31, 2019[7][10][54] Condensed Consolidated Statements of Operations The company reported a net loss from continuing operations of $96,000 for Q1 2019, a decline from $133,000 net income in Q1 2018, primarily due to decreased oil and gas revenues Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Total Revenues | $1,171 | $1,367 | | Total Cost and Expenses | $1,309 | $1,249 | | Net Income (Loss) from Operations | $(138) | $118 | | Net Income (Loss) from Continuing Operations | $(96) | $133 | | Net Income from Discontinued Operations | $— | $1,110 | | Net Income (Loss) | $(96) | $1,243 | | EPS from Continuing Operations (Basic & Diluted) | $(0.01) | $0.01 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $18,000 for Q1 2019, while investing activities provided $139,000, leading to a $109,000 increase in cash and cash equivalents to $3.224 million Cash Flow Summary (in thousands) | Activity | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(18) | $138 | | Net cash provided by investing activities | $139 | $2,609 | | Net cash used in financing activities | $(12) | $(16) | | Net change in cash and cash equivalents | $109 | $2,731 | | Cash and cash equivalents, end of period | $3,224 | $2,916 | Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's oil and gas operations, significant accounting policies, the adoption of new lease standards, discontinued operations, and a shareholder rights agreement to protect net operating losses - The company's primary business is the exploration and production of oil and natural gas, with a focus on Kansas[18] - On January 26, 2018, the company sold its methane facility assets for $2.65 million, with the results now reported under discontinued operations[19][76] - The company adopted ASU 2016-02 Leases (Topic 842) on January 1, 2019, resulting in the recognition of right-of-use assets and lease liabilities of approximately $98,000 for operating leases[54] - A Rights Agreement is in place to protect the company's ability to use its net operating losses (NOLs) by discouraging any person or group from acquiring 4.95% or more of the company's stock[46] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management attributes the $229,000 decrease in net income to lower revenue from reduced oil prices and increased production costs, while maintaining liquidity with a $3 million credit facility Q1 2019 vs Q1 2018 Performance | Metric | Q1 2019 | Q1 2018 | Change | | :--- | :--- | :--- | :--- | | Net Oil Sales (MBbl) | 23.4 | 23.7 | (0.3) | | Average Oil Price/barrel | $49.88 | $57.36 | $(7.48) | | Net Revenue (millions) | $1.2 | $1.4 | $(0.2) | | Net Income (Loss) from Continuing Operations (thousands) | $(96) | $133 | $(229) | - The decrease in net revenue was primarily caused by a $175,000 impact from lower average oil prices and a $17,000 impact from a slight decrease in sales volumes[89][91] - Production costs increased by $49,000, mainly due to changes in oil inventory adjustments, higher pumping charges, and increased chemical costs[92] - As of March 31, 2019, the company had a $3 million borrowing base under its credit facility with no outstanding borrowings and was in compliance with all financial covenants[94] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's primary market risks stem from volatile crude oil prices impacting revenues and its borrowing base, with minimal interest rate risk due to no outstanding credit facility balance - The company's major market risk is the pricing of its oil production, which is volatile and driven by worldwide crude oil prices[104] - Reductions in oil and gas reserve estimates, potentially due to lower commodity prices, could lead to a reduction in the company's borrowing base, limiting financial resources[102] - As of March 31, 2019, the company had no outstanding balance on its variable-rate credit facility, minimizing immediate interest rate risk[106][107] ITEM 4. CONTROLS AND PROCEDURES The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting during Q1 2019 - The CEO and CFO evaluated the company's disclosure controls and procedures and found them to be adequate and effective as of March 31, 2019[111] - No changes were made during the quarter ended March 31, 2019, that materially affected, or are reasonably likely to materially affect, the company's internal controls over financial reporting[112] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is not currently involved in any pending material legal proceedings - There are no pending material legal proceedings involving the company[113] ITEM 1A. RISK FACTORS This section incorporates by reference the comprehensive risk factors detailed in the company's Annual Report on Form 10-K for FY2018 - The company refers to its Form 10-K filed on March 28, 2019 for a discussion of risk factors[114] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL interactive data files - Exhibits filed with the report include CEO/CFO certifications and XBRL data files[118] SIGNATURES - The report was signed on May 14, 2019, by Michael J. Rugen, the Chief Executive Officer and Chief Financial Officer[122][123]