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 one-for-twelve 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 conjunction with 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 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 Company incurred approximately $5.0 million of related costs to date for the Merger, of which $3.6 million and $1.4 million was expensed for the year ended September 30, 2021 and 2020, respectively, as transaction costs on the

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 consolidated statement of operations.

The Company has completed the determination of the fair value attributable to the assets acquired and liabilities assumed as of September 30, 2021. 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 (in thousands):



Assets
Cash and cash equivalents	$	860
Account receivable	325
Prepaid and other current assets	759
Total current assets	1,944

Oil and gas properties	4,525
Other property and equipment	91
Right of use assets	42
Other non-current assets	4
Deferred tax assets	2,987


Total assets acquired	$	9,593

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	7,379
Goodwill	19,013
Net assets acquired	$	26,392

The goodwill recognized was primarily attributable to a substantial increase in the stock price of Tengasco on the Closing Date, which increased the amount of the consideration transferred. The Company does not expect goodwill to be deductible for tax purposes. The Company did not integrate the acquired properties 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 loss from discontinued operations on the consolidated statement of operations for the year ended September 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 $18.8 million on discontinued operations, net of state and federal taxes, was included in loss on discontinued operations for the year ended September 30, 2021.

The following unaudited pro forma combined results for the years ended September 30, 2021 and 2020 reflect the consolidated results of operations of the Company as if the Merger had occurred on October 1, 2019. The unaudited pro forma information includes adjustments for $3.6 million of transaction costs being reclassified to the first quarter of fiscal year 2020 which were incurred during the year ended September 30, 2021. 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 unaudited pro forma information has been tax affected using 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 one-for-twelve reverse stock split.


	Year Ended September 30,
	2021		2020
	(In thousands, except per share/unit amounts)
	(Unaudited)
Total Revenues	$	151,036	$	76,933
Pro Forma Net Income (Loss) from Continuing Operations	(30,146)		33,075
Pro Forma Net Income (Loss) from Discontinued Operations	275		(18,203)
Pro Forma Net Income (Loss) before Taxes	(29,871)		14,872
Pro forma income tax benefit (expense)	6,273		(3,123)
Pro Forma Net Income (Loss)	$	(23,598)	$	11,749
Net Income (Loss) per Share/Unit from Continuing Operations:
Basic	$	(1.88)	$	0.66
Diluted	$	(1.88)	$	0.71

Net Income (Loss) per Share/Unit from Discontinued Operations:
Basic	$	0.02	$	(1.46)
Diluted	$	0.02	$	(1.46)

The unaudited 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 unaudited pro forma combined financial information for a number of reasons, including, but not limited to, differences in assumptions used to prepare the unaudited 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 for customary closing items. The transaction was accounted for as an asset acquisition 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.

During the years ended September 30, 2021 and 2020, the Company made several additional acquisitions in the ordinary course of business totaling $0.4 million and $0.8 million, respectively, for oil and natural gas properties, none of which individually were considered significant. These transactions were accounted for as asset acquisitions and was recorded based on the total consideration paid, with value assigned to unproved oil and natural gas properties.

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, less approximately $0.2 million of closing adjustments. See further discussion in Note 13 - Discontinued Operations and Assets Held for Sale.

Transaction costs consist of those costs associated with investment banking, accounting, legal and other diligence costs related to unsuccessful acquisitions or successful acquisitions accounted for as business combinations. The Company recognized acquisition costs related to the Merger for the years ended September 30, 2021 and 2020 included in the table below: