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Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
February 12, 1998
Tengasco, Inc.
(Exact name of Registrant as specified in its charter)
Commission File Number 0-20975
Tennessee 87-0267438
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
603 Main Avenue, Suite 500, Knoxville, Tennessee 37902
(Address of Principal Executive Offices)
(423) 523-1124
(Registrant's Telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On February 12, 1998, Tengasco, Inc. (the "Company"), acquired all of
the assets (collectively the "Assets") of AFG Energy Inc. ("Seller"), with the
effective date of the transaction being December 31, 1997. The aggregate
purchase price paid by the Company to the Seller was $5.5 million (which is
subject to certain post-closing adjustments), payable $3 million in cash and
$2.5 million by delivery of a promissory note. The principal amount of the
note bears interest at the rate of nine (9%) percent per annum, and the
promissory note is payable in twenty-three (23) consecutive monthly
installments of $79,500, with a balloon payment equal to the balance of the
principal together with interest due on February 1, 2000. The promissory note
is secured by the Assets. The Assets principally consist of oil and gas
leases, oil and gas production equipment, pipelines, rolling stock, surface
leases, fixtures, furniture, office equipment and other personal property.
In addition, the Company has agreed to indemnify the Seller for any
liability arising from violations of environmental laws after the effective
date of the closing.
The cash portion of the consideration for the acquisition of Assets
came from private placement funding conducted by the Company in the last
quarter of calendar year 1997. The amount of the consideration was determined
in an arms' length negotiation among the parties, and the Company based its
determination of the amount of the consideration primarily upon an engineering
report which provided reserve estimates and a discounted present value
thereof.
There are no material relationships among the Seller, its affiliates
associates, officers and directors, and the Company and any of its affiliates,
associates, officers and directors.
The Seller used the Assets in the oil and gas business, and the
Company intends to continue use of the Assets in the same business.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The Company intends to file the required financial statements in an
amendment to this report on Form 8-K as soon as practicable, but not later
than sixty (60) days after this report.
(b) Pro forma financial information.
The Company intends to file the required pro forma financial
information in an amendment to this report on Form 8-K as soon as practicable,
but not later than sixty
(60) days after this report.
(c) Exhibits.
2.1 Plan of Acquisition. Agreement dated December 18, 1997 between
AFG Energy, Inc. and
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Tengasco, Inc. regarding sale of assets of AFG Energy, Inc. (The exhibit to the
agreement is to be filed in an amendment to this report on Form 8-K at the time
the financial information is filed).
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused and authorized this report to be signed
on its behalf by the undersigned.
Dated: February 27, 1998
Tengasco, Inc.
By: /s/ Robert M. Carter
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Robert M. Carter, Vice President
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December 18, 1997
TenGasCo, Inc.
Knoxville, TN
Attn: Mr. M.E. Ratliff
Re: Sale of Assets of AFG Energy Inc.
Dear Mr. Ratliff:
Pursuant to our discussions, AFG Energy Inc. ("AFG") hereby offers to
sell all of its assets, which consist of oil and gas leases and wells
(hereinafter referred to as "the Leases"), oil and gas production equipment,
pipelines, rolling stock, surface leases, fixtures, furniture, office equipment,
and other personal property, as described in general terms on Exhibit A attached
hereto (hereinafter referred to as "the Assets"), to TenGasCo, Inc.
("TGCI"), on the following terms:
1. Purchase Price. The purchase price shall be Five Million Five
Hundred Thousand Dollars ($5,500,000), to be paid to AFG by certified funds or
wire transfer at closing.
2. Property Sold. AFG shall transfer and assign to TGCI all its right,
title, and interest in and to the Assets, such transfers to be effective as of
11:59 p.m. on December 31, 1997 ("the Effective Date" ). AFG shall execute and
deliver to TGCI at closing such assignments, bills of sale, certificates of
title, and other instruments as are necessary to effect the transfer of the
Assets to TGCI.
3. Personal Property Taxes. All personal property taxes levied and
assessed against the Assets for the calendar year 1997
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shall be paid by AFG. All personal property taxes levied and assessed against
the Assets for 1998 and subsequent years shall be paid by TGCI.
4. Right to Production. All production from the Leases prior to the
Effective Date, and all proceeds from the sale of such production, including oil
in storage above the pipeline connection on the Effective Date, shall be the
property of AFG. All production from the Leases after the Effective Date, and
all proceeds from the sale of such production, shall be the property of TGCI.
Oil in the tanks shall be gauged as of 7:00 A.M. on the Effective Date; TGCI
shall pay to AFG at Closing for oil above the pipeline connection at the price
then being paid to AFG by the purchaser of production.
5. Plugging of Wells. TGCI hereby assumes the obligation to properly
plug and abandon all wells located on the Leases upon permanent cessation of
production, and indemnifies and holds AFG harmless from such plugging liability.
6. Well Files. At closing, AFG shall deliver to TGCI all well files,
logs, and other geological and engineering information in AFG's possession
pertaining to the development and operation of the Leases; provided, however,
that AFG may make and retain copies of any such information and documents for
their files.
7. Operations Prior to Closing. AFG shall continue to operate the
Leases on TGCI's behalf from the Effective Date until the closing of this
Agreement. As soon as is practicable after closing, AFG shall submit to TGCI a
bill for operating expenses for operation of the Leases from the Effective Date
to the date of closing, based on AFG's regular operating charges. TGCI shall pay
such bills within ten (10) days after receipt.
8. Environmental Representations and Indemnification. AFG represents to
TGCI that it is unaware of any matters concerning the Assets that could give
rise to any claims or liabilities arising from violation of any environmental
laws, including without limitation any clean-up obligations related to the
existence of any toxic or hazardous materials or waste. TGCI agrees to indemnify
and hold AFG harmless from any and all claims or liabilities of an environmental
nature arising from or related to the Assets from and after the Effective Date.
9. AFG's Warranties. AFG hereby represents and warrants that, as of the
date of closing:
a) All bills for labor or materials incurred prior to the
effective date for development and operation of the Leases
that could form the basis for mechanics' or other liens have
been paid.
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b) The Assets shall be free and clear of any liens and
encumbrances granted or allowed to attach by AFG.
c) All financial information furnished to TGCI prior to the date
of this Agreement, and from the date of this Agreement through
closing, is and shall be accurate, true, and correct to the
best of AFG's knowledge.
The sale of the Assets shall be without warranty of any kind, express or
implied, including warranty of title, except the special warranty provided for
in this paragraph. All personal property shall be sold as is, where is, and AFG
specifically disclaims any warranties as to condition, quality, fitness for a
particular purpose, or merchantability.
10. Closing. Closing of this Agreement shall take place at the offices
of Morris, Laing, Evans, Brock & Kennedy, Chartered in Wichita, Kansas, on
January 30, 1997, at 10:00 a.m., unless otherwise agreed by the parties.
By signing below, AFG binds itself to this Agreement upon receipt of
TGCI's signature below. If TGCI agrees to the terms set forth herein, please
sign below and return this Agreement to me.
Sincerely,
/s/ D. B. Clutterbuck
D. B. Clutterbuck, President
AFG Energy Inc.
ACCEPTED AND AGREED TO THIS 29th
DAY OF DECEMBER, 1997.
TenGasCo, Inc.
By /s/ M.E. Ratliff
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M.E. Ratliff, C.E.O.
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