Immediately prior to the closing of the Merger on February 26, 2021, REP LLC converted all of the issued and outstanding Series A Preferred Units into common units of REP LLC. In connection with the Merger, holders of common units of REP LLC were entitled to receive, in exchange for each common unit, shares of common stock of Tengasco (which was renamed Riley Exploration Permian, Inc.), par value $0.001 per share (“Tengasco common stock”) based on the exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”), with cash paid in lieu of the issuance of any fractional shares. The Exchange Ratio was 97.796467 shares of Tengasco common stock for each common unit of REP LLC (as adjusted for the reverse stock split). Immediately prior to the closing of the Merger, Tengasco effected a 1-for-12 reverse stock split resulting in outstanding common stock of approximately 17.8 million shares including shares of Tengasco common stock issued in the Merger. See further discussion in Note 10 – Members'/Shareholders' Equity.

Pursuant to the Merger Agreement and on the Closing Date, each restricted share of common stock issued to holders of restricted common units in REP LLC in the Merger were issued under the 2021 Long Term Incentive Plan (the "2021 LTIP"). See further discussion in Note 10 – Members'/Shareholders' Equity.

The combination between REP LLC and Tengasco qualified as a business combination, with REP LLC being treated as the accounting acquirer. The assets acquired and liabilities assumed were recognized on the consolidated balance sheet at fair value as of the acquisition date. The Company acquired approximately 11,000 net acres (unaudited) located in central Kansas. The acquisition included the Kansas Properties which included 153 producing oil wells, 19 shut-in wells, 6 temporarily abandoned

wells, and 36 active disposal wells. The Company also acquired all onsite production management and field personnel as a result of the Merger. See further discussion in Note 13 - Discontinued Operations and Assets Held for Sale. The fair value measurements of the oil and natural gas properties acquired and asset retirement obligations assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs represent Level 3 measurements in the fair value hierarchy and include, but are not limited to, estimates of reserves, future commodity prices, future development, future operating costs, future cash flows and the use of weighted average cost of capital. These inputs required the use of significant judgments and estimates at the date of valuation.

The consideration paid in the Merger by REP LLC as the accounting acquirer totaled approximately $26.4 million and was determined based on the closing price of Tengasco’s common stock on February 26, 2021 and the total number of shares outstanding immediately prior to the Merger. The following table summarizes the purchase price or consideration for the Merger (presented in thousands, except per share amounts).

The Company incurred approximately $4.8 million of related costs to date for the Merger, of which $0.3 million and $3.4 million was expensed for the three and nine months ended June 30, 2021 as transaction costs on the condensed consolidated statement of operations. Included in the above costs, the Company incurred success fees of $1.75 million upon closing of the Merger which is included within transaction costs on the condensed consolidated statement of operations. The majority of these fees were paid at closing with approximately $0.3 million being paid 30 days after closing.

The Company believes it has completed the determination of the fair value attributable to the assets acquired and liabilities assumed. The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values on February 26, 2021:


	February 26, 2021
Assets
Cash and cash equivalents	$	860
Account receivable	325
Prepaid and other current assets	759
Total current assets	1,944
Oil and gas properties, net	4,525
Other property and equipment, net	91
Right of use assets	42
Other non-current assets	4
Deferred tax assets	2,943


Total assets acquired	$	9,549
Liabilities
Accounts payable	130
Accrued liabilities	409
Current lease liabilities, operating	42
Current lease liabilities, financing	68
Total current liabilities	649

Asset retirement obligations	1,565


Total liabilities assumed	2,214

Net identifiable assets acquired	7,335
Goodwill	19,057
Net assets acquired	$	26,392

The goodwill recognized was primarily attributable to a substantial increase in the stock price of Tengasco as of the date the Merger closed, which increased the amount of the consideration transferred. The Company did not integrate the acquisition and the acquisition met the assets held for sale criteria on the Closing Date. See further discussion in Note 13 - Discontinued Operations and Assets Held for Sale.

Net loss attributable to the operations of the assets and liabilities acquired in the Merger of $115 thousand was included in discontinued operations on the condensed consolidated statement of operations for the nine months ended June 30, 2021. On April 2, 2021, the Company closed on the sale of the Kansas Reporting Unit with an effective date of March 1, 2021. A net loss of $1.0 million and $19.6 million on discontinued operations, net of taxes, was included in the net loss attributable to discontinued operations for the three and nine months ended June 30, 2021.

The following pro forma combined results for the three and nine months ended June 30, 2021 and 2020 reflect the consolidated results of operations of the Company as if the Merger had occurred on October 1, 2019. The pro forma information includes adjustments for $3.4 million of transaction costs being reclassified to the first quarter of fiscal year 2020 instead of $0.2 million, $2.2 million, and $1.0 million of transaction costs recorded in the three months ended June 30, 2021, March 31, 2021 and December 31, 2020. Additionally, the Company adjusted for $0.9 million of oil and natural gas property impairment Tengasco recognized under the full-cost method of accounting, which would not have been recognized under the successful efforts method, during the three months ended December 31, 2020. Also, the pro forma information has been

effected for taxes with a 21% tax rate. The common stock was also adjusted for the conversion of the REP LLC preferred units into common units and retroactively adjusted for the Exchange Ratio and 1-for-12 reverse stock split.


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except per share/unit amounts)
Total Revenues	$	42,149	$	6,019	$	102,422	$	60,974
Pro Forma Net Income (Loss) from Continuing Operations	(16,968)		(27,650)		(40,500)		40,589
Pro Forma Net Income (Loss) from Discontinued Operations	(882)		(106)		(873)		(18,239)
Pro Forma Net Income (Loss) before Taxes	(17,850)		(27,756)		(41,373)		22,350
Pro forma income tax benefit (expense)	3,749		5,829		8,688		(4,694)
Pro Forma Net Income (Loss)	$	(14,101)	$	(21,927)	$	(32,685)	$	17,656
Net Income (Loss) per Share/Unit from Continuing Operations:
Basic	$	(0.95)	$	(1.94)	$	(2.51)	$	2.59
Diluted	$	(0.95)	$	(1.94)	$	(2.51)	$	2.16

Net Income (Loss) per Share/Unit from Discontinued Operations:
Basic	$	(0.05)	$	(0.01)	$	(0.05)	$	(1.24)
Diluted	$	(0.05)	$	(0.01)	$	(0.05)	$	(1.24)

The pro forma combined financial information is for informational purposes only and is not intended to represent or to be indicative of the combined results of operations that the Company would have reported had the Merger been completed as of October 1, 2019 and should not be taken as indicative of the Company's future combined results of operations. The actual results may differ significantly from that reflected in the pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the pro forma combined financial information and actual results.

On December 20, 2019, the Company acquired 1,237 net acres (unaudited) in Yoakum County, Texas. The acquisition included 17 total wells, with 11 producing and 6 salt water disposals, for a total purchase price of $3.3 million, as adjusted in accordance with the terms of a PSA with J. Cleo Thompson and James Cleo Thompson, Jr., L.P. The effective date of the transaction was August 1, 2019. The transaction was accounted for as an asset acquisition in accordance with ASU 2017-01 and was therefore recorded based on the total consideration paid, with value assigned to unproved oil and natural gas properties, capitalized asset retirement cost and ARO.

On March 10, 2021, the Company entered into a PSA to sell the Kansas Reporting Unit for an agreed upon purchase price of $3.5 million (subject to certain adjustments), contingent upon certain conditions to closing. The effective date of the sale was March 1, 2021. On April 2, 2021, the Company closed on the sale of the Kansas Reporting Unit for an agreed upon purchase price of $3.5 million, plus approximately $0.2 million of closing adjustments. See further discussion in Note 13 - Discontinued Operations and Assets Held for Sale.