##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-33571
 DOUBLE EAGLE PETROLEUM CO.
  MARYLAND
(State or other jurisdiction of 
incorporation or organization)
    
    83-0214692
(I.R.S. employer
identification no.)
 1675 Broadway, Suite 2200, Denver, Colorado 80202
 303-794-8445
 None
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer  o
    
    Smaller reporting Company o(Do not check if a smaller reporting company)
 o þ
  Class 
Common stock, $.10 par value
    
    Outstanding as of July 15, 2009
9,244,239




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##### 



Page #PART I. Financial Information:Item 1. Financial StatementsConsolidated Balance Sheets as of June 30, 2009 (Unaudited)
and December 31, 2008
    
    
    3Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 2009 and 2008 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2009 and 2008 (Unaudited)
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28PART II. Other Information:Item 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 6. Exhibits
    
    
    28Signatures
    
    
    30Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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##### Table of Contents



ITEM 1.
    
    FINANCIAL STATEMENTS
 DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED BALANCE SHEETS
 (Amounts in thousands of dollars except share and per share data)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,898
    
    
    $
    Cash held in escrow
    
    
    608
    
    
    
    605Accounts receivable
    
    
    8,496
    
    
    
    21,381Assets from price risk management
    
    
    5,982
    
    
    
    14,290Other current assets
    
    
    3,045
    
    
    
    3,513Total current assets
    
    
    22,029
    
    
    
    39,789Oil and gas properties and equipment, successful efforts
method:Developed properties
    
    
    156,063
    
    
    
    133,516Wells in progress
    
    
    10,902
    
    
    
    18,518Gas transportation pipeline
    
    
    5,465
    
    
    
    5,465Undeveloped properties
    
    
    2,915
    
    
    
    2,907Corporate and other assets
    
    
    2,043
    
    
    
    1,920177,388
    
    
    
    162,326Less accumulated depreciation, depletion and amortization
    
    
    (44,350
    )
    
    
    (35,253
    )Net properties and equipment
    
    
    133,038
    
    
    
    127,073Assets from price risk management
    
    
    3,047
    
    
    
    5,029Other assets
    
    
    84
    
    
    
    98TOTAL ASSETS
    
    $
    158,198
    
    
    $
    171,989LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    9,251
    
    
    $
    35,488Accrued expenses
    
    
    4,891
    
    
    
    6,794Liabilities from price risk management
    
    
    974
    
    
    
    Term loan
    
    
    3,750
    
    
    
    Accrued production taxes
    
    
    3,851
    
    
    
    3,017Capital lease obligations, current portion
    
    
    528
    
    
    
    522Other current liabilities
    
    
    308
    
    
    
    282Total current liabilities
    
    
    23,553
    
    
    
    46,103Line of credit
    
    
    38,750
    
    
    
    24,639Asset retirement obligation
    
    
    4,194
    
    
    
    4,208Liabilities from price risk management
    
    
    2,203
    
    
    
    Deferred tax liability
    
    
    2,991
    
    
    
    2,470Capital lease obligations, long-term portion
    
    
    813
    
    
    
    1,078Other long-term liabilities
    
    
    436
    
    
    
    616Total liabilities
    
    
    72,940
    
    
    
    79,114Preferred stock, $0.10 par value; 10,000,000 shares authorized;
1,610,000 shares issued and outstanding as of
June 30, 2009 and December 31, 2008
    
    
    37,972
    
    
    
    37,972Stockholders equity:Common stock, $0.10 par value; 50,000,000 shares authorized;
9,233,756 and 9,192,356 shares issued and outstanding as of
June 30, 2009 and December 31, 2008, respectively
    
    
    924
    
    
    
    919Additional paid-in capital
    
    
    35,846
    
    
    
    35,122Retained earnings
    
    
    1,075
    
    
    
    2,172Accumulated other comprehensive income
    
    
    9,441
    
    
    
    16,690Total stockholders equity
    
    
    47,286
    
    
    
    54,903TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    158,198
    
    
    $
    171,989
   3




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##### Table of Contents



DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Amounts in thousands of dollars except share and per share data)
 Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesOil and gas sales
    
    $
    10,492
    
    
    $
    11,526
    
    
    
    20,992
    
    
    $
    17,777Transportation revenue
    
    
    1,583
    
    
    
    723
    
    
    
    3,170
    
    
    
    1,087Price risk management activities
    
    
    (2,152
    )
    
    
    1,370
    
    
    
    (3,292
    )
    
    
    2,022Other income, net
    
    
    117
    
    
    
    170
    
    
    
    210
    
    
    
    219Total revenues
    
    
    10,040
    
    
    
    13,789
    
    
    
    21,080
    
    
    
    21,105Costs and expensesProduction costs
    
    
    1,989
    
    
    
    2,076
    
    
    
    3,601
    
    
    
    3,092Production taxes
    
    
    753
    
    
    
    1,534
    
    
    
    1,642
    
    
    
    2,334Exploration expenses including dry hole
costs
    
    
    29
    
    
    
    50
    
    
    
    55
    
    
    
    531Pipeline operating costs
    
    
    1,087
    
    
    
    659
    
    
    
    1,654
    
    
    
    747General and administrative
    
    
    1,427
    
    
    
    1,302
    
    
    
    3,101
    
    
    
    2,209Depreciation, depletion and amortization
    
    
    4,715
    
    
    
    2,979
    
    
    
    9,097
    
    
    
    3,994Total costs and expenses
    
    
    10,000
    
    
    
    8,600
    
    
    
    19,150
    
    
    
    12,907Income from operations
    
    
    40
    
    
    
    5,189
    
    
    
    1,930
    
    
    
    8,198Interest expense, net
    
    
    (392
    )
    
    
    
    
    
    
    (644
    )
    
    
    (64
    )Income (loss) before income taxes
    
    
    (352
    )
    
    
    5,189
    
    
    
    1,286
    
    
    
    8,134Benefit (provision) for deferred income
taxes
    
    
    110
    
    
    
    (1,916
    )
    
    
    (521
    )
    
    
    (2,999
    )NET INCOME (LOSS)
    
    $
    (242
    )
    
    $
    3,273
    
    
    $
    765
    
    
    $
    5,135Preferred stock dividends
    
    
    931
    
    
    
    931
    
    
    
    1,862
    
    
    
    1,862Net income (loss) attributable to common
stock
    
    $
    (1,173
    )
    
    $
    2,342
    
    
    $
    (1,097
    )
    
    $
    3,273Net income (loss) per common share:Basic
    
    $
    (0.13
    )
    
    $
    0.26
    
    
    $
    (0.12
    )
    
    $
    0.36Diluted
    
    $
    (0.13
    )
    
    $
    0.26
    
    
    $
    (0.12
    )
    
    $
    0.36Weighted average shares outstanding:Basic
    
    
    9,233,725
    
    
    
    9,152,023
    
    
    
    9,217,902
    
    
    
    9,150,064Diluted
    
    
    9,233,725
    
    
    
    9,161,258
    
    
    
    9,217,902
    
    
    
    9,153,696
   4




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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands of dollars)
 Six months ended June 30,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    765
    
    
    $
    5,135Adjustments to reconcile net income to net cash from
operating activities:Depreciation, depletion, amortization and accretion
of asset retirement obligation
    
    
    9,147
    
    
    
    4,116Abandonment of non-producing properties
    
    
    6
    
    
    
    140Provision for deferred taxes
    
    
    521
    
    
    
    2,999Employee stock option expense
    
    
    693
    
    
    
    240Directors fees paid in stock
    
    
    77
    
    
    
    Change in fair value of derivative contracts
    
    
    6,218
    
    
    
    (2,022
    )Revenue from carried interest
    
    
    (954
    )
    
    
    Gain on sale of producing property
    
    
    (140
    )
    
    
    (66
    )Changes in current assets and liabilities:Decrease (Increase) in deposit held in escrow
    
    
    (3
    )
    
    
    106Decrease (Increase) in accounts receivable
    
    
    14,137
    
    
    
    (6,363
    )Decrease (Increase) in other current assets
    
    
    (99
    )
    
    
    (1,638
    )Increase (Decrease) in accounts payable
    
    
    (13,369
    )
    
    
    2,446Increase (Decrease) in accrued expenses
    
    
    (1,007
    )
    
    
    3,717Increase in accrued production taxes
    
    
    834
    
    
    
    1,660NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    16,826
    
    
    
    10,470Cash flows from investing activities:Additions of producing properties and equipment, net
    
    
    (28,315
    )
    
    
    (24,209
    )Additions of corporate and non-producing properties
    
    
    (15
    )
    
    
    (275
    )Payment of acquisition related costs
    
    
    (320
    )
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    (28,650
    )
    
    
    (24,484
    )Cash flows from financing activities:Principal payments on capital lease obligations
    
    
    (259
    )
    
    
    Exercise of stock options
    
    
    
    
    
    
    277Issuance of stock under Company stock plans
    
    
    5
    
    
    
    Tax withholdings related to net share settlement of
restricted stock awards
    
    
    (23
    )
    
    
    Preferred stock dividends
    
    
    (1,862
    )
    
    
    (1,862
    )Net borrowings (repayments) on credit facility
    
    
    17,861
    
    
    
    15,739NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    15,722
    
    
    
    14,154Change in cash and cash equivalents
    
    
    3,898
    
    
    
    140Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    125CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    3,898
    
    
    $
    265Supplemental disclosure of cash and non-cash transactions:Cash paid for interest
    
    $
    1,233
    
    
    $
    162Interest capitalized
    
    $
    643
    
    
    $
    293Adjustment to joint interest partners well costs
associated with unitization of Catalina
    
    $
    1,252
    
    
    $
    9,939Additions to developed properties included in current
liabilities
    
    $
    6,832
    
    
    $
    5,607Share-based compensation expense
    
    $
    770
    
    
    $
    240
   5




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##### Table of Contents



DOUBLE EAGLE PETROLEUM CO.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts in thousands of dollars except share and per share data)
  1.
    
    Summary of Significant Accounting Policies
 Basis of presentation
     Recently adopted accounting pronouncements
  , Determining Fair Value
when the Volume and Level of Activity for the Asset or Liability have Significantly Decreased
and Identifying Transactions that are not Orderly
   6




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Subsequent
Events
 Interim Disclosures about Fair Value
of Financial Instruments Disclosures about Fair Value of Financial
Instruments
 New accounting pronouncements
   2.
    
    Earnings per share
   7




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##### Table of Contents



For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    (242
    )
    
    $
    3,273
    
    
    $
    765
    
    
    $
    5,135Preferred stock dividends
    
    
    931
    
    
    
    931
    
    
    
    1,862
    
    
    
    1,862Income (loss) attributable to
common stock
    
    $
    (1,173
    )
    
    $
    2,342
    
    
    $
    (1,097
    )
    
    $
    3,273Weighted average shares:Weighted average shares  basic
    
    
    9,233,725
    
    
    
    9,152,023
    
    
    
    9,217,902
    
    
    
    9,150,064Dilution effect of stock options
outstanding at the end of period
    
    
    
    
    
    
    9,235
    
    
    
    
    
    
    
    3,632Weighted average shares  diluted
    
    
    9,233,725
    
    
    
    9,161,258
    
    
    
    9,217,902
    
    
    
    9,153,696Income (loss) per common share:Basic
    
    $
    (0.13
    )
    
    $
    0.26
    
    
    $
    (0.12
    )
    
    $
    0.36Diluted
    
    $
    (0.13
    )
    
    $
    0.26
    
    
    $
    (0.12
    )
    
    $
    0.36
  For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Anti-dilutive shares
    
    
    87,931
    
    
    
    35,560
    
    
    
    87,931
    
    
    
    15,586
 3.
    
    Derivative Instruments
       8




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Cash flow hedges
  Mark to market hedging instruments
   Contract Settlement Date2009
    
    
    2010
    
    
    2011Natural gas forward purchase contracts:Dollar value
    
    $
    11,691
    
    
    $
    18,834
    
    
    $
    20,644Average rate
    
    $
    7.19
    
    
    $
    4.30
    
    
    $
    7.07Volume (MMcf)
    
    
    1,626
    
    
    
    4,380
    
    
    
    2,920
   Derivatives designated as hedginginstruments under SFAS 133
    
    Balance Sheet Location
    
    Fair ValueAssetsCommodity derivatives
    
    Assets from price risk management  current
    
    $
    5,982Liabilities from price risk management  current
    
    
    411Assets from price risk management  long term
    
    
    3,047Total
    
    
    
    $
    9,440
 Derivatives not designated ashedging instruments under SFAS 133
    
    Balance Sheet Location
    
    Fair ValueLiabilitiesCommodity derivatives
    
    Liabilities from price risk management  current
    
    $
    (1,385
    )Liabilities from price risk management  long term
    
    
    (2,203
    )Total
    
    
    
    $
    (3,588
    )
  9




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Gain (Loss) Recognized inOCI1 on Derivative
    
    
    Gain Reclassified from
    
    
    Gain Recognized in Income (Effective Portion(effective portion)
    
    

Accumulated
OCI1 into Income
    
    
    and Amount excluded from Effectiveness Testing)Three months
    
    
    Six months
    
    
    
    
    
    
    Three months
    
    
    Six months
    
    
    
    
    
    
    Three months
    
    
    Six monthsended
    
    
    ended
    
    
    
    
    
    
    ended
    
    
    ended
    
    
    
    
    
    
    ended
    
    
    endedJune 30, 2009
    
    
    June 30, 2009
    
    
    Location

    
    June 30, 2009
    
    
    June 30, 2009
    
    
    Location
    
    June 30, 2009
    
    
    June 30, 2009Cash flow hedges:Commodity contracts
    
    $
    (1,268
    )
    
    $
    2,161
    
    
    Oil and gas sales
    
    $
    5,263
    
    
    $
    9,410
    
    
    Oil and gas sales
    
    $
    
    
    
    $
    
 1
  Loss Recognized in Income on DerivativeThree months
    
    
    Six monthsended
    
    
    endedLocation
    
    June 30, 2009
    
    
    June 30, 2009Price Risk Management Activites
    
    $
    (2,152
    )
    
    $
    (3,292
    )
 Normal purchases and normal sales
   4.
    
    Fair Value Measurements
  
    Level 1 
    Quoted prices (unadjusted) for identical assets or liabilities in active
markets.
 
    Level 2 
    Quoted prices for similar assets or liabilities in active markets; quoted
prices for identical or similar
assets or liabilities in markets that are not active; and model-derived valuations
whose inputs or significant value drivers are observable.
 
    Level 3 
    Unobservable inputs that reflect the Companys own assumptions.
  Cash and cash equivalents
   10




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Derivative instruments
    Credit facility
  Asset retirement obligations
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsDerivative instruments
    
    $
    
    
    
    $
    9,029
    
    
    $
    
    
    
    $
    9,029Total assets at fair value
    
    $
    
    
    
    $
    9,029
    
    
    $
    
    
    
    $
    9,029LiabilitiesDerivative instruments
    
    $
    
    
    
    $
    3,177
    
    
    $
    
    
    
    $
    3,177Asset retirement
obligation
    
    $
    
    
    
    $
    
    
    
    
    4,194
    
    
    $
    4,194Total liabilities at fair value
    
    $
    
    
    
    $
    3,177
    
    
    $
    4,194
    
    
    $
    7,371
  December 31, 2008 asset retirement obligation
    
    $
    4,208Liabilities incurred
    
    
    8Liabilities settled
    
    
    (256
    )Accretion expense, included in earnings (1)
    
    
    50Change in ownership interest
    
    
    184June 30, 2009 asset retirement obligation
    
    $
    4,194
 (1)
    
    The accretion expense recorded during the period is recorded in the production costs
line item on the consolidated statement of operations and totaled $26 and $50 in the three
and six months ended June 30, 2009, respectively.  11




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##### Table of Contents



Concentration of Credit Risk
   5.
    
    Impairment of Long-Lived Assets
  6.
    
    Stock-Based Compensation
    Weighted-AverageWeighted-
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateExercise
    
    
    Term (in
    
    
    IntrinsicShares
    
    
    Price
    
    
    years)
    
    
    ValueOptions:Outstanding at January 1,
2009
    
    
    626,897
    
    
    $
    15.68
    
    
    
    5.1Granted
    
    
    50,500
    
    
    $
    7.79Exercised
    
    
    Cancelled/expired
    
    
    (20,000
    )
    
    $
    15.75Outstanding at June 30, 2009
    
    
    657,397
    
    
    $
    15.07
    
    
    
    4.9
    
    
    $
    Exerciseable at June 30, 2009
    
    
    205,679
    
    
    $
    14.42
    
    
    
    3.1
    
    
    $
    
   12




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##### Table of Contents



Weighted-AverageGrantDateShares
    
    
    Fair ValueStock Awards:Outstanding at January 1, 2009
    
    
    94,762
    
    
    $
    14.70Granted
    
    
    37,572
    
    
    $
    3.48Vested
    
    
    (44,406
    )
    
    $
    5.03Forfeited/returned
    
    
    Nonvested at June 30, 2009
    
    
    87,928
    
    
    $
    14.79
 7.
    
    Income Taxes
   8.
    
    Credit Facility
      13




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##### Table of Contents



9.
    
    Series A Cumulative Preferred Stock
   Redemption Date on or Before
    
    Redemption PriceJune 30, 2010
    
    $
    25.50June 30, 2011
    
    $
    25.25June 30, 2012 or thereafter
    
    $
    25.00
  10.
    
    Comprehensive Income (Loss)
  For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss) attributable to common stock
    
    $
    (1,173
    )
    
    $
    2,342
    
    
    $
    (1,097
    )
    
    $
    3,273Change in derivative instrument fair value, net of tax benefit of $0
    
    
    (1,268
    )
    
    
    (2,366
    )
    
    
    2,161
    
    
    
    (6,391
    )Reclassification to earnings
    
    
    (5,263
    )
    
    
    930
    
    
    
    (9,410
    )
    
    
    1,475Comprehensive income (loss)
    
    $
    (7,704
    )
    
    $
    906
    
    
    $
    (8,346
    )
    
    $
    (1,643
    )
  June 30,
    
    
    December 31,2009
    
    
    2008Net change in derivative instrument fair value, net
of tax benefit of $0 and $0
    
    $
    9,441
    
    
    $
    16,690Total accumulated other comprehensive gain, net
    
    $
    9,441
    
    
    $
    16,690
  11.
    
    Cash Held in Escrow
   14




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##### Table of Contents



12.
    
    Intercompany Transactions
   13.
    
    Proposed Merger
   14.
    
    Contingencies
 Litigation
 Double Eagle Petroleum Co.; Antelope Energy Company LLC; E. Cecile Martin f/k/a Cecile Hurt;
Hurt Properties, L.P.; James R. Hurt; John D. Traut, LLC; and Newfield Exploration Company vs.
Burlington Resources Oil & Gas Company, LP, a division of ConocoPhillips Company (BR);
ConocoPhillips Company, a Delaware corporation.
 15.
    
    Subsequent Events
      15




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
 This Quarterly Report on Form 10-Q includes forward-looking statements as defined by the
Securities and Exchange Commission, or SEC. We make these forward-looking statements in reliance
on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, included in this Form 10-Q that address
activities, events or developments that we expect, believe or anticipate will or may occur in the
future are forward-looking statements. These forward-looking statements are based on assumptions
which we believe are reasonable based on current expectations and projections about future events
and industry conditions and trends affecting our business. However, whether actual results and
developments will conform to our expectations and predictions is subject to a number of risks and
uncertainties that, among other things, could cause actual results to differ materially from those
contained in the forward-looking statements, including without limitation the Risk Factors set
forth in our Annual Report on Form 10-K for the year ended December 31, 2008, including the
following:
 
    
    Our ability to continue to develop our Atlantic Rim project;
 
    
    Our ability to obtain, or a decline in, oil or gas production, or a decline in oil or
gas prices;
 
    
    Our ability to maintain adequate liquidity;
 
    
    The changing political environment in which we operate
 
    
    Incorrect estimates of required capital expenditures;
 
    
    Increases in the cost of drilling, completion and gas collection or other costs of
production and operations;
 
    
    Our ability to increase our natural gas and oil reserves;
 
    
    Our ability to successfully integrate and profitably operate any future acquisitions;
 
    
    The amount and timing of capital deployment in new investment opportunities;
 
    
    The volumes of production from our oil and gas development properties, which may be
dependent upon issuance by federal, state, and tribal governments, or agencies thereof, of
drilling, environmental and other permits, and the availability of specialized
contractors, work force, and equipment;
 
    
    Our future capital requirements and availability of capital resources to fund capital
expenditures;
 
    
    The possibility that we may be required to take impairment charges to reduce the
carrying value of some of our long-lived assets when indicators of impairment emerge;
 
    
    Numerous uncertainties inherent in estimating quantities of proved oil and gas reserves
and actual future production rates and associated costs;
 
    
    Our ability to remedy any deficiencies that may be identified in the review of our
internal controls;
 
    
    The credit worthiness of third parties with which we enter into business agreements;
 
    
    General economic conditions, including the current financial crisis, tax rates or
policies and inflation rates;
 
    
    Changes in or compliance with laws and regulations, particularly those relating to
taxation, safety and protection of the environment;
 
    
    Weather and other natural phenomena;
 
    
    Industry and market changes, including the impact of consolidations and changes in
competition;
 
    
    The effect of accounting policies issued periodically by accounting standard-setting
bodies;
 
    
    The actions of third-party co-owners of interests in properties in which we also own an
interest;
 
    
    The cost and effects on our business, including insurance, resulting from terrorist
actions or natural disasters and responses to such actions or events;
 
    
    The volatility of our stock price; and
 
    
    The outcome of any future litigation or similar disputes and the impact on any such
outcome or related settlements.
  16




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##### Table of Contents



Business Overview and Strategy
 www.dble.us
  (Amounts in thousands of dollars, except amounts per unit of
production):
 
    
    Average Daily ProductionDuring the three months ended June 30, 2009, our total average daily net production
increased 60% to 26,209 Mcfe as compared to average daily production of 16,419 Mcfe
during the same prior-year period. Total average daily net production increased 96% to
25,777 in the first six months of 2009, as compared to 13,148 Mcfe in the first half of
2008. The changes in production by major operating area are discussed below.Atlantic Rim.During the three months ended June 30, 2009, average daily net
production at the Atlantic Rim increased 78% to 19,724 Mcfe, as compared to 11,109 Mcfe
during the three months ended June 30, 2008. This increase was primarily the result of
the production from a total of 30 new wells at the Catalina Unit; 10 of which were
drilled in 2007 and came on-line for production in the third quarter of 2008, and the
remaining 20 wells were drilled in 2008 and were brought on-line during the fourth
quarter of 2008 and the first quarter of 2009. During the three months ended June 30,
2009, average daily net production at our Catalina Unit increased 73% to 17,283 Mcfe,
as compared to 10,002 Mcfe during the same prior-year period. The increase in
production from the new wells in the Catalina Unit was partially offset by reduced
production from certain existing wells due to workovers performed in the second
quarter. Average daily production, net to our interest, at the Sun Dog and Doty
Mountain units increased 121% to 2,441 Mcfe, as compared to average daily production of
1,107 Mcfe in the same period of 2008. The increase was due primarily to production
from approximately 50 Sun Dog Unit wells which were drilled as part of the 2007 and
2008 drilling programs, and nine new wells drilled at the Doty Mountain Unit during the
2008 drilling program.Average daily net production at the Atlantic Rim increased 130% to 18,766 Mcfe in the
six months ended June 30, 2009, as compared to 8,165 Mcfe during the same prior-year
period. The increase was primarily the result of the production from a total of 43 new
wells at the Catalina Unit; 23 of which were drilled in 2007 and came on-line for
production in the second and third quarter of 2008, and the remaining 20 wells were
drilled in 2008 and were brought on-line during the fourth quarter of 2008 and the
first quarter of 2009. During the six months ended June 30, 2009, average daily net
production at our Catalina Unit increased 130% to 16,935 Mcfe, as compared to 7,359
Mcfe during the same prior-year period. Average daily production at the Sun Dog and
Doty Mountain units increased 127% to 1,831 Mcfe as compared to 806 Mcfe in the six
months ended June 30, 2008.
  17




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##### Table of Contents



Pinedale Anticline. Average daily production at the Pinedale Anticline
increased 30% to 5,153 Mcfe for the three months ended June 30, 2009, as compared to
3,961 Mcfe in the same 2008 period. The increase in
production is due to volume added from 12 new wells in the third quarter of 2008 and
eight new wells in the second quarter of 2009. The operator expects to bring an
additional eight wells on-line for production in the third and fourth quarters of 2009.During the six months ended June 30, 2009, average daily production at the Pinedale
Anticline increased 54% to 5,648 Mcfe as compared to 3,661 Mcfe in the six months ended
June 30, 2008, due to the added production from the wells brought on-line in the third
quarter of 2008 and second quarter of 2009 as discussed above.Madden Deep Unit. During the three and six months ended June 30, 2009, our
average daily net production at the Madden Deep Unit was 513 Mcfe and 451 Mcfe,
respectively, as compared to 455 Mcfe and 328 Mcfe in the three and six months ended
June 30, 2008, respectively. The sour gas plant experienced operational issues during
the first quarter of 2008, which resulted in lower production. The sour gas plant was
fully operational during the first half of 2009.
    
    Oil and Gas SalesDuring the three months ended June 30, 2009, oil and gas sales decreased 9% to $10,492,
as compared to $11,526 during the same 2008 period. Although net production volumes
increased at all significant properties, as discussed above, oil and gas sales was
negatively impacted by lower realized average gas prices. During the three months
ended June 30, 2009, the average CIG price decreased 70% as compared to the same
prior-year period. In comparison, our average gas price received decreased 42%, to
$4.34 from $7.54 for the same period. The overall average decrease in the gas price
that we experienced was less than the average CIG price decrease due primarily to the
hedging instruments we had in place during the period. See additional comments in
Contracted Volumes below.Oil and gas sales increased 18% to $20,992 for the six months ended June 30, 2009, as
compared to $17,777 during the same prior year period. The increase in oil and gas
sales was attributed to higher production volumes at each of our significant
properties, as discussed above. Although production volumes increased 60% over the
first half of 2008, our total oil and gas sales was negatively impacted by lower
realized average gas prices. During the six months ended June 30, 2009, the average
CIG gas price decreased 65% as compared to the same 2008 period. In comparison, the
average gas price we received decreased 29%, to $5.10 from $7.23 as compared to the
same prior-year period. The overall average decrease in price that we experienced was
less than the average CIG price decrease due primarily to the hedging instruments we
had in place during the period.
 OVERVIEW OF FINANCIAL CONDITION AND LIQUIDITY
 Liquidity and Capital Resources
  Credit Facility
   18




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##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008Financial Position SummaryCash and cash equivalents
    
    $
    3,898
    
    
    $
    Working capital
    
    $
    (1,524
    )
    
    $
    (6,314
    )Balance outstanding on credit facility
    
    $
    42,500
    
    
    $
    24,639Stockholders equity and preferred
stock
    
    $
    85,258
    
    
    $
    92,875RatiosDebt to total capital ratio
    
    
    33.3
    %
    
    
    21.0
    %Total debt to equity ratio
    
    
    49.8
    %
    
    
    26.5
    %
   19




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##### Table of Contents



Cash flow activities
  Six Months Ended June 30,2009
    
    
    2008Cash provided by (used in):Operating Activities
    
    $
    16,826
    
    
    $
    10,470Investing Activities
    
    
    (28,650
    )
    
    
    (24,484
    )Financing Activities
    
    
    15,722
    
    
    
    14,154Net change in cash
    
    $
    3,898
    
    
    $
    140
    Off-Balance Sheet Arrangements
   Capital Requirements
   20




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##### Table of Contents



Contractual Obligations
  Payments due by periodOne year
    
    
    2  3
    
    
    4  5
    
    
    More thanTotal
    
    
    or less
    
    
    Years
    
    
    Years
    
    
    5 YearsCredit facility (a)
    
    $
    42,500
    
    
    $
    3,750
    
    
    $
    38,750
    
    
    $
    
    
    
    $
    Interest on credit facility (b)
    
    
    1,940
    
    
    
    1,790
    
    
    
    150
    
    
    
    
    
    
    
    Capital lease commitments
    
    
    1,882
    
    
    
    753
    
    
    
    1,129
    
    
    
    
    
    
    
    Operating lease commitments
    
    
    6,647
    
    
    
    1,567
    
    
    
    3,137
    
    
    
    1,943
    
    
    
    Total contractual cash
commitments
    
    $
    52,969
    
    
    $
    7,860
    
    
    $
    43,166
    
    
    $
    1,943
    
    
    $
    
 (a)
    
    Effective July 22, 2009, we amended our credit facility to terminate the $5 million term
loan and to increase the revolving line of credit from $40 million to $45 million. As a
result of the amendment, the $3.75 million outstanding under the term loan was rolled into
the revolving line of credit and is not longer due July 31, 2009. Under the amended
agreement, any balance outstanding on our revolving line of credit at July 31, 2010, will
be due at that time.(b)
    
    Assumes the interest rate on our revolving line of credit is consistent with that of
June 30, 2009. RESULTS OF OPERATIONS
 Three months ended June 30, 2009 compared to the three months ended June 30, 2008
 Oil and gas sales volume and price comparisons
 Three Months Ended June 30,
    
    
    Percent
    
    
    Percent2009
    
    
    2008
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    2,342,787
    
    
    $
    4.34
    
    
    
    1,472,469
    
    
    $
    7.54
    
    
    
    59
    %
    
    
    -42
    %Oil (Bbls)
    
    
    7,039
    
    
    $
    46.03
    
    
    
    3,613
    
    
    $
    116.15
    
    
    
    95
    %
    
    
    -60
    %Mcfe
    
    
    2,385,021
    
    
    $
    4.40
    
    
    
    1,494,147
    
    
    $
    7.71
    
    
    
    60
    %
    
    
    -43
    %
     21




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##### Table of Contents



Transportation and gathering revenue
  Price risk management activities
  Oil and gas production expenses, production taxes, depreciation, depletion and amortization
 Three Months Ended June 30,2009
    
    
    2008(in dollars per Mcfe)Average price
    
    $
    4.40
    
    
    $
    7.71Production costs
    
    
    0.83
    
    
    
    1.39Production taxes
    
    
    0.32
    
    
    
    1.03Depletion and amortization
    
    
    1.93
    
    
    
    1.93Total operating costs
    
    
    3.08
    
    
    
    4.35Gross margin
    
    $
    1.32
    
    
    $
    3.36Gross margin percentage
    
    
    30
    %
    
    
    44
    %
  22




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##### Table of Contents



Pipeline operating costs
  General and administrative expenses
  Income taxes
   23




---



##### Table of Contents



Six months ended June 30, 2009 compared to the six months ended June 30, 2008
 Oil and gas sales volume and price comparisons
 Six Months Ended June 30,
    
    
    Percent
    
    
    Percent2009
    
    
    2008
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    4,577,202
    
    
    $
    5.10
    
    
    
    2,338,457
    
    
    $
    7.23
    
    
    
    96
    %
    
    
    -29
    %Oil (Bbls)
    
    
    14,736
    
    
    $
    38.25
    
    
    
    9,077
    
    
    $
    96.40
    
    
    
    62
    %
    
    
    -60
    %Mcfe
    
    
    4,665,618
    
    
    $
    5.12
    
    
    
    2,392,919
    
    
    $
    7.43
    
    
    
    95
    %
    
    
    -31
    %
        24




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##### Table of Contents



Transportation and gathering revenue
  Price risk management activities
  Oil and gas production expenses, production taxes, depreciation, depletion and amortization
 Six Months Ended June 30,2009
    
    
    2008(in dollars per Mcfe)Average price
    
    $
    5.12
    
    
    $
    7.43Production costs
    
    
    0.77
    
    
    
    1.29Production taxes
    
    
    0.35
    
    
    
    0.98Depletion and amortization
    
    
    1.90
    
    
    
    1.59Total operating costs
    
    
    3.02
    
    
    
    3.86Gross margin
    
    $
    2.10
    
    
    $
    3.57Gross margin percentage
    
    
    41
    %
    
    
    48
    %
     25




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##### Table of Contents



Pipeline operating costs
  General and administrative expenses
  Income taxes
  CONTRACTED VOLUMES
   FORWARD SALES CONTRACTS
 RemainingContractual
    
    
    DailyProperty
    
    Volume
    
    
    Production
    
    
    Term
    
    
    PriceCatalina
    
    
    123,000
    
    
    
    1,000
    
    
    
    11/07-10/09
    
    
    $
    5.66Atlantic Rim
    
    
    31,000
    
    
    
    1,000
    
    
    
    08/07-07/09
    
    
    $
    6.15Company Total
    
    
    154,000
  26




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##### Table of Contents



RemainingContractual
    
    
    DailyType of Contract
    
    Volume
    
    
    Production
    
    
    Term
    
    
    PriceFixed Price Swap
    
    
    1,472,000
    
    
    
    8,000
    
    
    
    1/09-12/09
    
    
    $
    7.34Fixed Price Swap
    
    
    4,380,000
    
    
    
    12,000
    
    
    
    1/10-12/10
    
    
    $
    4.30Fixed Price Swap
    
    
    2,920,000
    
    
    
    8,000
    
    
    
    1/11-12/11
    
    
    $
    7.07Total
    
    
    8,772,000
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price Risks
   Interest Rate Risks
   27




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##### Table of Contents



ITEM 4.
    
    CONTROLS AND PROCEDURES
   
  
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 6.
    
    EXHIBITS
  Exhibit
    
    Description:2.1
    
    
    Agreement and Plan of Merger dated March 30, 2009 by and among Double Eagle Petroleum Co.,
DBLE Acquisition Corporation, and Petrosearch Energy Corporation and Form of Voting
Agreement (incorporated by reference from Exhibit 2.1 and 2.2 of the Companys Current
Report of Form 8-K dated March 31, 2009).3.1
    (a)
    
    Articles of Incorporation filed with the Maryland Secretary of State on January 23, 2001
(incorporated by reference from Exhibit 3.1(a) of the Companys Annual Report on Form
10-KSB for the year ended August 31, 2001).3.1
    (b)
    
    Certificate of Correction filed with the Maryland Secretary of State on February 15, 2001
concerning the Articles of Incorporation (incorporated by reference from Exhibit 3.1(b) of
the Companys Annual Report on Form 10-KSB for the year ended August 31, 2001).
  28




---



##### Table of Contents



Exhibit
    
    Description:3.1
    (c)
    
    Articles of Merger filed with the Maryland Secretary of State on February 15, 2001
(incorporated by reference from Exhibit 3.1(c) of the Companys Annual Report on Form
10-KSB for the year ended August 31, 2001).3.1
    (d)
    
    Certificate of Correction filed with the Maryland Secretary of State (incorporated by
reference from Exhibit 3 of the Companys Quarterly Report on Form 10-QSB for the quarter
ended November 30, 2001).3.1
    (e)
    
    Certificate of Correction to the Articles of Incorporation, filed with the Maryland
Department of Assessments and Taxation on June 1, 2007 (incorporated by reference from
Exhibit 3.3 of the Companys Current Report of Form 8-K dated June 29, 2007).3.1
    (f)
    
    Articles of Amendment, filed with the Maryland Department of Assessments and Taxation on
June 26, 2007 (incorporated by reference from Exhibit 3.1 of the companys Current report
on Form 8-K dated June 29, 2007).3.1
    (g)
    
    Articles Supplementary, filed with the Maryland Department of Assessments and Taxation on
June 29, 2007 (incorporated by reference from Exhibit 3.2 of the Companys Current report
of Form 8-K dated June 29, 2007).3.1
    (h)
    
    Articles Supplementary of Junior Participating Preferred Stock, Series B, dated as of
August 21, 2007 (incorporated by reference from Exhibit 3.1 of the Companys Current report
of Form 8-K dated August 28, 2007).3.2
    (a)
    
    Bylaws of the Company (incorporated by reference from Exhibit 3.2 of the Companys Annual
Report on Form 10-KSB, filed for the year ended August 31, 2001).3.2
    (b)
    
    Bylaws of the Company, as amended and restated on March 14, 2007 (incorporated by
reference from Exhibit 3.2 of the Companys Current report on Form 8-K, filed on March 14,
2007).3.2
    (c)
    
    Second Amendment and Restated Bylaws of the Company (incorporated by reference from
Exhibit 3.2 of the Companys Current report on Form 8-K dated June 11, 2007).4.1
    (a)
    
    Form of Warrant Agreement concerning Common Stock Purchase Warrants (incorporated by
reference from Exhibit 4.3 of the Amendment No. 1 to the Companys Registration Statement
on Form SB-2 filed on November 27, 1996, SEC Registration No. 333-14011).4.1
    (b)
    
    Shareholder Rights Agreement, dated as of August 24, 2007 (incorporated herein by
reference to the Companys Current report on Form 8-A filed on August 24, 2007).4.1
    (c)
    
    Articles Supplementary, filed with the Maryland Department of Assessments and Taxation on
June 29, 2007 (incorporated by reference from Exhibit 3.2 of the Companys Current report
on Form 8-K dated June 29, 2007).4.1
    (d)
    
    Articles Supplementary of Junior Participating Preferred Stock, Series B, dated as of
August 21, 2007 (incorporated by reference from Exhibit 3.1 of the Companys Current report
of Form 8-K dated August 28, 2007).31.1
    
    
    Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a 
14(a) and Rule 15a 14(a) of the Securities Exchange Act, as amended.31.2
    
    
    Certification of Chief Financial Officer (Principal Accounting Officer) pursuant to Rule 13a
 14(a) and Rule 15a  14(a) of the Securities Exchange Act, as amended.32
    
    
    Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial
Officer (Principal Accounting Officer) pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes  Oxley Act of 2002.
  29




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##### Table of Contents



SIGNATURES
  DOUBLE EAGLE PETROLEUM CO.(Registrant)Date:  July 30, 2009
    By:
    /s/ Richard D. DoleRichard D. DoleChief Executive Officer
(Principal Executive Officer)Date:  July 30, 2009
    By:
    /s/   Kurtis S. HooleyKurtis S. HooleyChief Financial Officer
(Principal Accounting Officer)  30




---



##### Table of Contents



Exhibit Number
    
    Description2.1
    
    
    Agreement and Plan of Merger dated March 30, 2009 by and
among Double Eagle Petroleum Co., DBLE Acquisition
Corporation, and Petrosearch Energy Corporation and Form of
Voting Agreement (incorporated by reference from Exhibit
2.1 and 2.2 of the Companys Current Report of Form 8-K
dated March 31, 2009).3.1
    (a)
    
    Articles of Incorporation filed with the Maryland Secretary
of State on January 23, 2001 (incorporated by reference
from Exhibit 3.1(a) of the Companys Annual Report on Form
10-KSB for the year ended August 31, 2001).3.1
    (b)
    
    Certificate of Correction filed with the Maryland Secretary
of State on February 15, 2001 concerning the Articles of
Incorporation (incorporated by reference from Exhibit
3.1(b) of the Companys Annual Report on Form 10-KSB for
the year ended August 31, 2001).3.1
    (c)
    
    Articles of Merger filed with the Maryland Secretary of
State on February 15, 2001 (incorporated by reference from
Exhibit 3.1(c) of the Companys Annual Report on Form
10-KSB for the year ended August 31, 2001).3.1
    (d)
    
    Certificate of Correction filed with the Maryland Secretary
of State (incorporated by reference from Exhibit 3 of the
Companys Quarterly Report on Form 10-QSB for the quarter
ended November 30, 2001).3.1
    (e)
    
    Certificate of Correction to the Articles of Incorporation,
filed with the Maryland Department of Assessments and
Taxation on June 1, 2007 (incorporated by reference from
Exhibit 3.3 of the Companys Current Report of Form 8-K
dated June 29, 2007).3.1
    (f)
    
    Articles of Amendment, filed with the Maryland Department
of Assessments and Taxation on June 26, 2007 (incorporated
by reference from Exhibit 3.1 of the companys Current
report on Form 8-K dated June 29, 2007).3.1
    (g)
    
    Articles Supplementary, filed with the Maryland Department
of Assessments and Taxation on June 29, 2007 (incorporated
by reference from Exhibit 3.2 of the Companys Current
report of Form 8-K dated June 29, 2007).3.1
    (h)
    
    Articles Supplementary of Junior Participating Preferred
Stock, Series B, dated as of August 21, 2007 (incorporated
by reference from Exhibit 3.1 of the Companys Current
report of Form 8-K dated August 28, 2007).3.2
    (a)
    
    Bylaws of the Company (incorporated by reference from
Exhibit 3.2 of the Companys Annual Report on Form 10-KSB,
filed for the year ended August 31, 2001).3.2
    (b)
    
    Bylaws of the Company, as amended and restated on March 14,
2007 (incorporated by reference from Exhibit 3.2 of the
Companys Current report on Form 8-K, filed on March 14,
2007).3.2
    (c)
    
    Second Amendment and Restated Bylaws of the Company
(incorporated by reference from Exhibit 3.2 of the
Companys Current report on Form 8-K dated June 11, 2007).4.1
    (a)
    
    Form of Warrant Agreement concerning Common Stock Purchase
Warrants (incorporated by reference from Exhibit 4.3 of the
Amendment No. 1 to the Companys Registration Statement on
Form SB-2 filed on November 27, 1996, SEC Registration No.
333-14011).
  31




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##### Table of Contents



Exhibit Number
    
    Description4.1
    (b)
    
    Shareholder Rights Agreement, dated as of August 24, 2007
(incorporated herein by reference to the Companys Current
report on Form 8-A filed on August 24, 2007)4.1
    (c)
    
    Articles Supplementary, filed with the Maryland Department
of Assessments and Taxation on June 29, 2007 (incorporated
by reference from Exhibit 3.2 of the Companys Current
report on Form 8-K dated June 29, 2007).4.1
    (d)
    
    Articles Supplementary of Junior Participating Preferred
Stock, Series B, dated as of August 21, 2007 (incorporated
by reference from Exhibit 3.1 of the Companys Current
report of Form 8-K dated August 28, 2007).31.1
    
    
    Certification of Chief Executive Officer (Principal
Executive Officer) pursuant to Rule 13a  14(a) and
Rule 15a  14(a) of the Securities Exchange Act, as
amended.31.2
    
    
    Certification of Chief Financial Officer (Principal
Accounting Officer) pursuant to Rule 13a  14(a) and
Rule 15a  14(a) of the Securities Exchange Act, as
amended.32
    
    
    Certification of Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal
Accounting Officer) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes  Oxley Act
of 2002.
  32