ASSET PURCHASE AGREEMENT

        THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into, effective February 1, 2005 (the “Effective Date”), by and between BEAR PETROLEUM, INC., a Kansas corporation, hereafter called “Buyer,” and TENGASCO, INC., a Tennessee corporation, hereafter called “Seller.”

RECITALS

A.     Seller is the owner of oil and gas leases listed on attached Exhibit A (the Leases) and the property described in paragraph No. 1, all of which is hereafter called the Assets.

B.     Seller desires to sell all of its rights, title, and interest in and to the Assets to Buyer upon the terms and subject to the conditions contained herein.

C.     Buyer desires to purchase all of Seller’s rights, title, and interest in and to the Assets from Seller upon the terms and subject to the terms and conditions contained herein.

        NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties’ execution of this Agreement, the Parties hereby agree that:

AGREEMENT

      1. Purchase and Sale of Assets.

        1.1 Subject to the terms and conditions of this Agreement, Seller agrees to sell, and Buyer agrees to purchase, all of Seller’s rights, title, and interest in and to the Leases, together with the rights incident thereto and the personal property thereon, appurtenant thereto or used in connection therewith, including, without limitation, surface equipment such as, but not limited to, pump jacks and compressors; and also, all of Seller’s interests in and to a gathering system (the “Gathering System”) consisting of 7 miles of 10 inch line, 7.5 miles of 8 inch line, 69 miles of 4 inch line, 2 miles of 2 inch line, together with all surface leases, and rights of way, pipelines, and rolling stock related thereto.

        1.2 No other assets or liabilities, unless specifically stated above and/or set forth in Exhibit A will be acquired. All other assets and liabilities will remain in the sole ownership and under the sole responsibility of the Seller. Specifically, Buyer shall not assume any amounts owed by Seller to any creditor or lienholder, provided however, that Buyer will assume royalties, overriding royalties, bonus payments, production payments, taxes, and the like accruing or arising after the date of Closing relating to the Assets being purchased hereunder. Seller shall be responsible for all royalties, overriding royalties, bonus payments, production payments, taxes and the like relating to the Assets and accruing or attributable to the period of time prior to the Closing.

        1.3 The term Gas Well or Gas Wells shall be interpreted in its broadest meaning, including without limitation any natural gas well, all surface and other equipment related thereto, the leases relating to or associated with the natural gas well, and the acreage and gas reserves attributable thereto.

        1.4 Seller acknowledges that it or its predecessor in title originally had leases on an additional 10,245 acres in Rush County, Kansas (the “Expired Acreage”), but represents and warrants that it no longer has any rights in and to such leases, Gas Wells, or gas rights. It is the intent of the parties hereto that all gas interests of Seller within Rush County, Kansas are being purchased and sold.

     2.        Purchase Price . As full consideration of the sale and transfer, assignment and delivery of the Assets by Seller to Buyer, Buyer agrees to pay to Seller an amount of Two Million Four Hundred thousand dollars ($2,400,000) (the “Purchase Price”). The Purchase Price shall be payable at the Closing. The parties hereby acknowledge that the Purchase Price has been determined after fair arms’ length negotiations.

     3.         Sales and Use Tax . Buyer shall pay all sales and use taxes, if any, relating to the State of Kansas arising out of the transfer of the Assets. Buyer shall not be responsible for any business, occupation, withholding or similar tax or any taxes of any kind relating to any period before the closing. Seller shall pay all sales and use taxes, if any, applicable to the sale in the State of Tennessee or any state other than Kansas.

     4.        Existing Debts . All existing debts attributable to Assets remain the obligation and responsibility of the Seller and shall not be acquired or assumed by the Buyer. Surface damage relating to the Gathering System occurring prior to the Closing shall be the sole responsibility of Seller, together with temporary abandonment payments including shut-in, deferral payments, delay rental payments accruing or arising prior to the Closing. Seller hereby agrees to indemnify Buyer from and against all costs, claims, damages, or liability with respect to all debts of Seller not assumed by Buyer.

     5.        Title . Title to the assets shall be provided free and clear of any lien or encumbrance. Seller shall furnish to Buyer any and all title evidence in Seller’s possession as soon as is practicable after execution of this Agreement. In the event Buyer elects to obtain updated title opinions or other evidence of title, such title opinions or other evidence of title shall be at Buyer’s sole expense.

     6.        Representations and Warranties of Seller . Seller hereby represents, warrants, and agrees that:

    a.        Seller owns, is in possession of, and/or otherwise has the right to transfer to Buyer and has the authority to dispose of, sell to Buyer, and deliver its rights, title, and interest in and to the Assets, including without limitation its rights to all Gas, Processing Rights, Leases (including surface and sub-surface leases). Grants of Right of Way, the Wells, the Gathering System, and the Equipment. Each of the Leases is in full force and effect and enforceable in accordance with its terms.

    b.        To the best of Seller’s knowledge, none of the information provided by Seller to Buyer in connection with the Leases, the Gas, Processing Rights and Plant Products, any Well or this agreement contains any untrue statement of a material fact or omits any material fact necessary to make such information not misleading.

    c.        The execution and delivery of this Agreement and the performance of the transactions contemplated hereby will not result in a breach of or constitute a default under any lease, license or other agreement to which it is a party bound, or by which any of the Assets may be bound or affected, or violate any order, writ, injunction or decree of any court or administrative agency.

    d.        On and after the execution and closing, this Agreement will be a valid and binding obligation of the Seller enforceable in accordance with its terms.

    e.        Except for those obligations assumed by Buyer hereunder, and those ownership interests or rights disclosed in Exhibit “A” relating to the Assets, the Seller has good and marketable title to the Assets free and clear of all liens, claims, security interests, encumbrances, restrictions or other charges of any kind, and that the NRI figures shown on Exhibit A are correct. Except as stated above, no other person, firm, or corporation owns or has any interest in the said Assets, or any part thereof, and at the closing the Buyer will acquire good, valid, and marketable title to all of said assets free and clear of all liens, claims, security interests, encumbrances, restrictions, or other charges of any kind.

    f.        All persons, firms, corporations, material men, suppliers, and subcontractors who have furnished services, labor or materials, for the construction, repair or operation of the Property have been paid in full; no claims have been made, nor is any suit or claim now pending against the Assets on behalf of any contractor, subcontractor, laborer, supplier, or material man; and no security agreements, financing statements, leases, or installment sales contracts have been given or are now outstanding on or against any of the property comprising the Assets and any materials, fixtures, tools, equipment, furnishings, placed upon or installed property relating to the Assets.

    g.        With the exception of current ad valorem taxes not yet due and payable, all taxes and other assessments relating to the Assets have been paid.

    h.        To the Seller’s knowledge, there exists no violation of any law, rule, order, or regulation of any governmental body with jurisdiction over the Assets or Seller’s operations of the Assets.

    i.        That the purchasers of production from the Assets are paying to Seller, without suspense, not less than the Net Revenue Interest set forth in Exhibit A.

    j.        That the Seller is not a party to any agreement, whether written or oral, which in any manner restricts their right to enter into this Agreement and to carry out the terms and conditions hereof.

    k.        The Seller has in all material respects performed all obligations required to be performed by it under all leases, contracts, agreements, and other commitments to which it is a party and are not in material default of any of them.

    1.        That the Seller has no knowledge of any pending or threatened litigation against it or proceedings before any administrative or licensing authority which in any manner may materially affect the value or title to the Assets to be sold hereunder.

    m.        In the event any legal or monetary claims arise against the Assets purchased that allegedly arose or are attributable to the time prior to the Closing, the Seller will remain solely liable for such and Seller hereby agrees to indemnify, hold harmless, and defend Buyer, against all such claims and against all costs, damages, liability, and expense, including without limitation attorney’s fees and defense costs.

    n.        To Seller’s knowledge, they have complied and are in compliance with all laws, ordinances, requirements, regulations, decrees and orders applicable in any material respect to the Assets and have not received any notice of noncompliance.

    o.        All authorizations, approvals, consents, and waivers necessary to enable Seller to sell the Assets to Buyer have been obtained from the appropriate parties (including, but not limited to, governmental agencies) and Seller shall use its best efforts, and Buyer shall cooperate with Seller in its efforts and Seller will cooperate with Buyer, to obtain promptly such authorizations, approvals, consents, and waivers necessary or reasonably prudent to enable Buyer to operate the assets substantially similar to the manner in which they were operated prior to the Effective Date of this Agreement.

     7.        Seller’s Obligations Before Closing . Seller covenants that from the date of this Agreement until the Closing Date:

    a.        Access and Information . Buyer and its counsel, accountants and other representatives shall have full access during normal business hours to all properties, books, accounts, records and documents of or relating to the Assets. Seller shall furnish or cause to be furnished to Buyer and its representatives all data and information concerning the Assets, finances, and properties of Seller that may reasonably be requested. Buyer agrees that if for any reason the transaction contemplated hereby shall not he consummated, it will hold in confidence all information it may have learned or obtained concerning the Seller’s business and return to Seller all books, records, documents, and other written information obtained by it in the course of any investigation hereunder.

    b.        Normal Course of Business . Seller will carry on its business and activities related to the Assets diligently and in substantially the same manner as i