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U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 For Quarterly period ended
    
    Commission FileMarch 31, 2005
    
    Number 0-6529
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 
 DOUBLE EAGLE PETROLEUM CO.   MARYLAND
    
    83-0214692(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 777 Overland Trail, P.O. Box 766
Casper, Wyoming 82602
(Address of principal executive offices) 307-237-9330
(Issuers telephone number) NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed
since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by checkmark whether
the registrant is an accelerated filer (as determined in
Rule 12b-2 of the Exchange Act). Yes o No þ Common stock, 8,559,004
shares having a par value of $.10 per share were, outstanding as of
May 11, 2005.




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DOUBLE EAGLE PETROLEUM CO. TABLE OF CONTENTS PagePART I. FINANCIAL INFORMATION:Item 1. Financial StatementsBalance Sheets as of March 31, 2005 (Unaudited)
and December 31, 2004
    
    
    4Statements of Operations for the three months
ended March 31, 2005 and 2004 (Unaudited)
    
    
    5Statements of Cash Flows for the three months
ended March 31, 2005 and 2004 (Unaudited)
    
    
    6Notes to Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Conditions
and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures about market risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART II. OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-K
    
    
    16Signatures
    
    
    17Exhibit 31.1: Rule 13a-14(a)/15a-14(a) Certification of Chief
Executive OfficerExhibit 31.2: Rule 13a-14(a)/15a-14(a) Certification of Chief
Financial OfficerExhibit 32: Certification of Chief Executive Officer and Chief
Financial Officer, Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Rule 13a-14(a)/15a-14(a) Certification of CEORule 13a-14(a)/15a-14(a) Certification of CFOCertification of CEO & CFO Pursuant to Section 906
 2




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PART I. FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS 3




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DOUBLE EAGLE PETROLEUM CO. 
   March 31,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    3,003,796
    
    
    $
    3,669,950Accounts receivable
    
    
    2,149,646
    
    
    
    2,171,102Other current assets
    
    
    366,698
    
    
    
    328,677Total current assets
    
    
    5,520,140
    
    
    
    6,169,729Properties and equipmentDeveloped properties
    
    
    34,992,787
    
    
    
    32,293,958Undeveloped properties
    
    
    3,159,387
    
    
    
    3,026,168Corporate and other
    
    
    687,754
    
    
    
    624,15338,839,928
    
    
    
    35,944,279Less accumulated depreciation, depletion and impairment
    
    
    (12,508,439
    )
    
    
    (11,185,792
    )Net properties and equipment
    
    
    26,331,489
    
    
    
    24,758,487Other assets
    
    
    66,125
    
    
    
    41,125Total assets
    
    $
    31,917,754
    
    
    $
    30,969,341LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    643,419
    
    
    $
    1,597,224Accrued expenses
    
    
    3,102,543
    
    
    
    2,890,630Accrued production taxes
    
    
    1,028,703
    
    
    
    971,710Total current liabilities
    
    
    4,774,665
    
    
    
    5,459,564Non current liabilitiesAsset retirement obligation
    
    
    410,615
    
    
    
    406,865Deferred tax liability
    
    
    601,000
    
    
    
    176,000Total non current liabilities
    
    
    1,011,615
    
    
    
    582,865Total liabilities
    
    
    5,786,280
    
    
    
    6,042,429Stockholders equityCommon stock, $.10 par value; 10,000,000 shares authorized; issued
and outstanding 8,558,404 shares in 2005 and 8,488,404 in 2004
    
    
    855,840
    
    
    
    848,840Capital in excess of par value
    
    
    21,597,441
    
    
    
    21,224,393Retained earnings
    
    
    3,678,193
    
    
    
    2,853,679Total stockholders equity
    
    
    26,131,474
    
    
    
    24,926,912Total liabilities and stockholders equity
    
    $
    31,917,754
    
    
    $
    30,969,341
 See accompanying notes to financial statements. 4




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DOUBLE EAGLE PETROLEUM CO. 
    Three Months Ended March 31,2005
    
    
    2004RevenuesOil and gas sales
    
    $
    4,563,950
    
    
    $
    2,165,264Other income
    
    
    11,188
    
    
    
    21,994Total revenues
    
    
    4,575,138
    
    
    
    2,187,258Costs and ExpensesProduction costs
    
    
    830,662
    
    
    
    284,479Production taxes
    
    
    491,044
    
    
    
    268,366Exploration expenses, including dry holes
    
    
    77,734
    
    
    
    24,908General and administrative
    
    
    589,432
    
    
    
    310,581Depreciation, depletion, and amortization of
oil and gas properties
    
    
    983,344
    
    
    
    496,419Impairment of equipment
    
    
    357,000
    
    
    
    Total costs and expenses
    
    
    3,329,216
    
    
    
    1,384,753Income from operations
    
    
    1,245,922
    
    
    
    802,505Loss on sale of assets
    
    
    (6,854
    )
    
    
    Interest income, net
    
    
    10,446
    
    
    
    5,818Income before income taxes
    
    
    1,249,514
    
    
    
    808,323Provision for deferred taxes
    
    
    (425,000
    )
    
    
    Net income
    
    $
    824,514
    
    
    $
    808,323Net income per common share  basic
    
    $
    .10
    
    
    $
    .10Net income per common share  diluted
    
    $
    .09
    
    
    $
    .09Weighted average shares outstanding  basic
    
    
    8,534,682
    
    
    
    8,440,008Weighted average shares outstanding  diluted
    
    
    8,755,847
    
    
    
    8,595,890
 See accompanying notes to financial statements 5




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DOUBLE EAGLE PETROLEUM CO. 
    Three Months Ended March 31,2005
    
    
    2004Cash Flows from Operating ActivitiesNet income
    
    $
    824,514
    
    
    $
    808,323Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation, depletion, amortization and accretion of
asset retirement obligation
    
    
    987,095
    
    
    
    501,269Abandonments of non-producing properties
    
    
    17,176
    
    
    
    10,918Impairment of equipment
    
    
    357,000
    
    
    
    Deferred income taxes
    
    
    425,000
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    21,456
    
    
    
    (45,651
    )Prepaid expenses
    
    
    (38,021
    )
    
    
    676Accounts payable and accrued expenses
    
    
    (165,891
    )
    
    
    (416,056
    )Accrued production taxes
    
    
    56,993
    
    
    
    149,625Net cash provided by operating activities
    
    
    2,485,322
    
    
    
    1,009,104Cash Flows from investing activitiesProceeds from sales of properties and assets
    
    
    10,934
    
    
    
    Other asset
    
    
    (25,000
    )
    
    
    (299,980
    )Additions of producing properties and equipment
    
    
    (3,292,527
    )
    
    
    (2,680,527
    )Additions of corporate and non-producing properties
    
    
    (224,931
    )
    
    
    (5,475
    )Net cash used in investing activities
    
    
    (3,531,524
    )
    
    
    (2,985,982
    )Cash flows from financing activitiesExercise of options and warrants
    
    
    380,048
    
    
    
    595,462Net cash provided by financing activities
    
    
    380,048
    
    
    
    595,462Decrease in cash and cash equivalents
    
    
    (666,154
    )
    
    
    (1,381,416
    )Cash and cash equivalents at beginning of period
    
    
    3,669,950
    
    
    
    2,920,846Cash and cash equivalents at end of period
    
    $
    3,003,796
    
    
    $
    1,539,430Supplemental disclosures of cash and non-cash transactionsAdditions to developed properties included in accounts payable
and accrued liabilities
    
    $
    2,474,000
    
    
    $
    846,800Additions to other assets included in accounts payable
    
    $
    
    
    
    $
    280,062Equity contribution related to exercise of non-qualified options
    
    $
    71,000
    
    
    
    
 See accompanying notes to financial statements 6




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DOUBLE EAGLE PETROLEUM CO. 
   1.
    Summary of Significant Accounting PoliciesThe financial statements have been prepared by the Company without audit pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted as allowed by such rules and
regulations, and management believes that the disclosures are adequate to make the information
presented not misleading. These financial statements include all of the adjustments, which, in
the opinion of management, are necessary to a fair presentation of financial position and
results of operations. All such adjustments are of a normal and recurring nature only. The
results of operations for the interim periods are not necessarily indicative of the results to
be expected for the full fiscal year. These financial statements should be read in conjunction
with the audited financial statements at December 31, 2004 included in the Companys Annual
Report on Form 10-KSB.Stock-Based CompensationThe Company has elected to follow APB Opinion No. 25 and related interpretations in accounting
for its stock options and grants to employees and directors since the alternative fair market
value accounting provided under Statement of Financial Accounting Standards (SFAS) No. 123
requires use of grant valuation models that were not developed for use in valuing employee stock
options and grants. Under APB Opinion No. 25, if the exercise price of the Companys stock
grants and options equal the fair value of the underlying stock on the date of grant, no
compensation expenses are recognized.If compensation cost for the Companys stock-based compensation plans had been determined based
on the fair value at the grant dates for awards under those plans consistent with the method of
SFAS No. 123, then the Companys net income per share would have been adjusted to the pro forma
amounts indicated below: March 31,
    
    
    March 31,2005
    
    
    2004Net income as reported
    
    $
    824,514
    
    
    $
    808,323Add: stock-based compensation
Included in reported net income
    
    
    6,400
    
    
    
    6,400Deduct: stock-based compensation
Cost under SFAS 123
    
    
    (189,000
    )
    
    
    (14,100
    )Pro forma net income
    
    $
    641,914
    
    
    $
    800,623Pro form basic and diluted net income per share:Reported net income per common share  basic
    
    $
    .10
    
    
    $
    .10Reported net income per common share  diluted
    
    $
    .09
    
    
    $
    .09Pro forma net income per common share  basic
    
    $
    .08
    
    
    $
    .10Pro forma net income per common share  diluted
    
    $
    .07
    
    
    $
    .09
 7




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DOUBLE EAGLE PETROLEUM CO.
NOTES TO FINANCIAL STATEMENTS Continued Pro forma information regarding net income is required by SFAS 123. Options granted were
estimated using the Black-Scholes valuation model. The following weighted average assumptions
were used for the three months ended March 31, 2005. Volatility
    
    
    71
    %Expected life of options (in years)
    
    
    8Dividend Yield
    
    
    0.00
    %Risk free interest rate
    
    
    3.0
    %
  2.
    Impairment of Long-Lived AssetsSFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, requires that an asset
be evaluated for impairment when the carrying amount of an asset exceeds the sum of the
undiscounted estimated future cash flows of the asset. In accordance with the provisions of
SFAS 144, the Company reviews the carrying values of its long-lived assets whenever events or
changes in circumstances indicate that such carrying values may not be recoverable. If, upon
review, the sum of the undiscounted pretax cash flows is less than the carrying value of the
asset group, the carrying value is written down to estimated fair value.Individual assets are grouped for impairment purposes at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of other groups of
assets, generally on a field-by-field basis. The fair value of impaired assets is determined
based on quoted market prices in active markets, if available, or upon the present values of
expected future cash flows using discount rates commensurate with the risks involved in the
asset group. The long-lived assets of the Company, which are subject to evaluation, consist
primarily of oil and gas properties. The Company recognized a non-cash charge of $357,000 on
electrical generating equipment at Cow Creek that will be replaced in the second quarter 2005.3.
    Income TaxesAt December 31, 2004, the Company had a net operating loss carry forward for regular income
tax reporting purposes of approximately $5 million, which will begin expiring in 2007.Reconciliation of the Companys effective tax rate to the expected federal tax rate is as
follows: Quarter EndedMarch 31,
    
    
    March 31,2005
    
    
    2004Expected federal tax rate
    
    
    34
    %
    
    
    34
    %Permanent differences  change in
valuation allowance
    
    
    
    
    
    
    (34
    %)Effective tax rate
    
    
    34
    %
    
    
    0
    %
 8




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DOUBLE EAGLE PETROLEUM CO. 
   OVERVIEW Double Eagle Petroleum Co. (Double Eagle or the Company) is an independent energy company
engaged in the exploration, development, and production of natural gas and crude oil in the Rocky
Mountain Basins of Western United States. The Companys principal properties are located in
Southwestern Wyoming. We have tight gas reserves and production from the Pinedale Anticline and
coal bed methane reserves and production in the Eastern Washakie Basin. The Company seeks to increase its reserves, production, revenues, and cash flow by focusing on: (i)
new coal bed methane development and enhancement of our field facilities in the Eastern Washakie
Basin, (ii) continued participation in the development of the Mesa Field on the Pinedale Anticline,
and (iii) selective pursuit of high potential exploration projects where we have accumulated
detailed geological knowledge and developed significant management expertise. Following are highlights of the Companys performance in several key areas during the three months
ended March 31, 2005:  
    Daily production increased 80% in 2005, from 4,989 Mcfe per day in the first quarter 2004
to 8,970 Mcfe per day in 2005. The increase in production is attributed to higher gas flow
rates
on older wells and new production from wells completed in 2004 at our
Cow Creek field and increased production at the Mesa field.
    Revenues increased 109% from $2.2 million during the first quarter of 2004 to $4.6
million
during the same period in 2005 as a result of an 87% increase in gas volumes and an 18%
increase in gas prices.
    Net cash provided by operating activities increased 147%, from $1.01 million in the first
three
months of 2004 to $2.49 million in 2005.
    The Company incurred $2.70 million in development costs during the first
quarter of 2005. The development spending related primarily to our coal bed methane
locations in the Eastern Washakie Basin and to our participation in the development
drilling on the Pinedale Anticline. FACTORS AFFECTING FINANCIAL CONDITION AND LIQUIDITY Liquidity and Capital Resources During the first quarter of 2005, our working capital remained comparable, increasing slightly from
$710,000 at March 31, 2004 to $745,000 at March 31, 2005. The Company has no long term debt at
March 31, 2005. We anticipate that we will maintain adequate resources to continue our strategic
plan, including continued development of our major natural gas projects in the Eastern Washakie
Basin and the Pinedale Anticline, as well as pursuit of certain exploratory projects. Capital
resources to fund this activity will be available through future operating cash flow and the
availability of a bank line of credit. (See below) 9




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At March 31, 2005, the Company had $31.9 million of assets. Total capitalization of the Company was
$26.1 million, of which 100% was represented by stockholders' equity. During the first quarter of
2005,
net cash flow provided by operating activities was $2,485,000, which represents a 146% increase
over the $1,009,000 net cash flow provided by operating activities in the first quarter of 2004.
The cash flow increase in 2005 is attributed primarily to a 109% increase in oil and gas revenues,
partially offset by higher operating costs. During the first three months of 2005, the Company
incurred $2,700,000 on development projects. In addition, the Company
funded $1,631,000 of
development project costs incurred in 2004 that were included in accounts payable at December 31,
2004. The new development spending and the reduction in year end payables attributed to capital
spending in the fourth quarter of 2004 were provided by cash flow from operations and existing cash
reserves. During the first quarter, we incurred $1,200,000 to participate in new development drilling in the
Mesa B and C fields in the Pinedale Anticline which increased our reserves and maintained
production levels achieved in 2004. We also spent $1,078,000 at our Cow Creek field in Carbon
County, Wyoming which included the drilling of the 13-7A well to test the Deep Creek and Cow Creek
Sandstone. We anticipate completing the well later this year. Other spending was undertaken to
improve our gathering system and power generation facilities at Cow Creek. We spent an additional
$332,000 for our share of costs incurred by Anadarko at Doty Mountain
for the drilling project, as operator,  which began in 2004. Nominal levels of production are being realized as the
dewatering of the coal bed methane wells continues. Capital Requirements Our budgeted capital expenditures for the remainder of 2005 are expected to aggregate between $7
million and $15 million. The projected spending will continue to focus on three areas: (i) new
development drilling in the Mesa B and C Units on the Pinedale Anticline, (ii) further spending to
improve facilities and transportation at Cow Creek and (iii) selected new development and
exploration projects pursuing both unconventional and conventional gas accumulation. Line of Credit The Company maintains a line of credit with its banking affiliate secured by its oil and gas
properties. Currently the Company has $9 million of availability on the line of credit, which may
be adjusted annually for changes in reserves and production pricing. Interest on future borrowings
against the line of credit would be assessed at the banks prime rate. The line has been inactive
since the last quarter of 2003. 10




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RESULTS OF OPERATIONS Three months ended March 31, 2005 compared to three months ended March 31, 2004 Oil and gas sales volume and price comparisons for the indicated periods are set forth below. Three Months Ended
    
    
    Three Months Ended
    
    
    Percent
    
    
    PercentMarch 31, 2005
    
    
    March 31, 2004
    
    
    Volume
    
    
    PriceProduct
    
    Volume
    
    
    Price
    
    
    Volume
    
    
    Price
    
    
    Change
    
    
    ChangeGas (mcf)
    
    
    781,765
    
    
    $
    5.61
    
    
    
    417,994
    
    
    $
    4.75
    
    
    
    +87
    %
    
    
    +18
    %Oil (bbls)
    
    
    4,262
    
    
    $
    41.65
    
    
    
    5,998
    
    
    $
    30.32
    
    
    
    -29
    %
    
    
    +37
    %Mcfe
    
    
    807,336
    
    
    $
    5.65
    
    
    
    453,983
    
    
    $
    4.77
    
    
    
    +78
    %
    
    
    +18
    %
 Oil and gas sales increased 111% in the first three months of 2005, compared to the same period in
2004, to $4,564,000 from $2,165,000. The increase is due primarily to a 78% increase in gas and oil
production. 60% of the increased production occurred at Cow Creek, our coal bed methane development
project in the Eastern Washakie Basin in South Central Wyoming. The remainder of the increase was
attributed to the Mesa B and Mesa C field in western Wyoming. Total Company average daily
production increased to 8,970 mcfe in the first quarter of 2005 compared with average daily
production of 4,989 mcfe during the same period in the previous year. Gas prices continue to remain
firm during the first quarter of 2005. Our average gas price realized
during the first quarter of 2005 was $5.65 per mcfe. In March 2005,
the average gas price was $5.78 per mcfe. The increased revenues associated with increased production also brought about a corresponding
increase in total operating costs and depletion expense. However, the gross margin per mcfe
increased significantly during the first quarter of 2005 compared to the first quarter of 2004 as
shown below: $ Per Mcfe2005
    
    
    
    
    
    
    2004Average price
    
    
    5.65
    
    
    
    
    
    
    
    4.77Production costs
    
    
    1.03
    
    
    
    
    
    
    
    .63Production taxes
    
    
    .61
    
    
    
    
    
    
    
    .59Depletion
    
    
    1.22
    
    
    
    
    
    
    
    1.09Total operating costs
    
    
    2.86
    
    
    
    
    
    
    
    2.31Gross margin
    
    
    2.79
    49%
    
    
    
    
    
    
    2.46
    52%
 11




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While the Company does not currently hedge its production prices, we have entered into fixed
delivery contracts for approximately 46% of the current daily production at March 31, 2005. As of
April 1, 2004, the Company had the following sales delivery contracts in effect on its production:
(Volume and Daily Production are expressed in mcfs) Daily
    
    
    
    
    AverageProperty
    
    Volume
    
    
    Production
    
    
    Term
    
    Price ($)Cow Creek
    
    
    31,000
    
    
    
    1,000
    
    
    4/05
    
    
    5.31580,000
    
    
    
    1,000
    
    
    11/04-10/06
    
    
    5.50153,500
    
    
    
    500
    
    
    2/05-1/06
    
    
    5.30730,000
    
    
    
    1,000
    
    
    4/05-3/07
    
    
    6.00Total
    
    
    1,494,500Mesa
    
    
    138,000
    
    
    
    500
    
    
    1/05-12/05
    
    
    5.30214,000
    
    
    
    1,000
    
    
    11/04-12/05
    
    
    5.80Total
    
    
    352,000Company Total
    
    
    1,846,500
 The Companys carried working interest in Participating Area C in the Mesa Unit of the Pinedale
Anticline was determined to have paid out in April 2004 by the operator, Wexpro Company. Since the
payout, we have recognized monthly production from the participating area of approximately 28,000
mcf per month. General and administrative expenses increased by 90% to $589,000 in the first quarter of 2005
compared to $311,000 in the first quarter of 2004. The increase in costs in 2005 is associated with
the costs of a new office lease in the Denver downtown business district, as well as increases in salaries,
consultants, professional fees, and shareholder expense in association with the increased
activities of the Company in 2005. However, general and administrative expense as a percentage of
revenue, decreased in the first quarter of 2005 to 13% compared to 14% in the first quarter of
2004. Production costs increased 63% per mcfe to $ 1.03 per mcfe in the first quarter of 2005 compared to
$.63 per mcfe during the same period one year ago. The increase was attributed in part to several
workovers totalling $141,000, or $.17 per mcfe. In addition, costs
associated with the leasing of compressors and power generating
equipment aggregated $161,000, or $.20 per mcfe during the quarter.
The Company has purchased and installed new compression and power
generating equipment during the second quarter of 2005 and
anticipates a corresponding decrease in production costs during the
second half of the year. The Company has impaired the value of certain power generation equipment in the Cow Creek field.
The power generation equipment has subsequently been replaced by more reliable and more efficient
equipment. We have entered into a sales contract to sell the equipment that is being replaced. The
sale
is expected to be consummated before the end of the second quarter. Until then, the equipment has 12




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been written down to its net
realizable value causing the Company to recognize a one-time loss of
$357,000. No further loss on the equipment is expected. During the period ended March 31, 2005, the Company recorded an income tax expense of $425,000 as
compared to no tax expense in the first quarter of 2004. The income tax expense has been recognized
because the Company fully offset its net deferred tax asset of $815,000 as of December 31, 2003
during 2004. Although the Company expects to continue to generate losses for tax purposes, the
Companys sustained net operating income has resulted in a
deferred tax position as required under
generally accepted accounting principles. While the Company expects continued operating net income
throughout 2005 and anticipates that it will recognize tax expense on such income at an effective rate of
approximately 34%, the Company does not anticipate any required payments against the deferred
liability in the near future. Despite the recognition of an
unusual operating expense associated with an equipment write-down of
$357,000 during the first quarter of 2005, income from operations increased by 55% to $1,246,000 in
the first quarter of 2005 as compared with $803,000 during the first quarter of 2004. The Company
also recognized a provision for deferred tax of $425,000 in the first quarter of 2005 compared to
no provision for tax in 2004 during the same period. As a result of
these non-cash expenses recorded for the equipment write-down and for
deferred taxes, net income was approximately the same for the first
quarter of 2005 and the first quarter of 2004. New Accounting
Pronouncements The Company intends to adopt
SFAS 123R issued in December 2004. The effective date of SFAS
123R for public companies is for interim or annual periods
beginning after January 1, 2006. The pronouncement addresses the
accounting for transactions in which an entity exchanges its equity
instruments for goods or services. CRITICAL ACCOUNTING POLICIES AND ESTIMATES We believe the following critical accounting policies affect our more significant judgments and
estimates used in the preparation of our Financial Statements. Reserve Estimates Our estimates of oil and natural gas reserves, by necessity, are projections based on geological
and engineering data, and there are uncertainties inherent in the interpretation of such data as
well as the projection of future rates of production and the timing of development expenditures.
Reserve engineering is a subjective process of estimating underground accumulations of oil and
natural gas that are difficult to measure. The accuracy of any reserve estimate is a function of
the quality of available data, engineering and geological interpretation and judgment. Estimates
of economically recoverable oil and natural gas reserves and future net cash flows necessarily
depend upon a number of variable factors and assumptions, such as historical production from the
area compared with production from other producing areas, the assumed effects of regulations by
governmental agencies and assumptions governing future oil and natural gas prices, future
operating costs, severance and excise taxes, development costs and workover and remedial costs,
all of which may in fact vary considerably from actual results. For these reasons, estimates of
the economically recoverable quantities of oil and natural gas attributable to any particular
group of properties, classifications of such reserves based on risk of recovery, and estimates
of the future net cash flows expected there from may vary substantially. Any significant
variance in the assumptions could materially affect the estimated quantity and value of the
reserves, which could affect the carrying value of our oil and gas properties and/or the rate of
depletion of the oil and gas properties. Actual production, revenues and expenditures with
respect to our reserves will likely vary from estimates, and such variances may be material. 13




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Many factors will affect actual net cash flows, including:  
    the amount and timing of actual production;
    supply and demand for natural gas;
    curtailments or increases in consumption by natural gas purchasers; and
    changes in governmental regulations or taxation 14




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Oil and Gas Properties Double Eagle uses the successful efforts method of accounting for oil and gas producing activities.
Under this method, acquisition costs for proved and unproved properties are capitalized when
incurred. Exploration costs, including geological and geophysical costs, the costs of carrying and
retaining unproved properties and exploratory dry hole drilling costs, are expensed. Development
costs, including the costs, including the costs to drill and equip development wells, and
successful exploratory drilling costs that locate proved reserves, are capitalized. In addition,
the Company limits the total amount of unamortized capitalized costs for each property to the value
of future net revenues, based on current prices and costs. Depreciation, depletion and
amortization of the capitalized costs for producing oil and gas properties are computed on the
units-of-production method based on proved oil and gas reserves. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK Interest Rate Risks At March 31, 2005, we
had no outstanding debt. Amounts drawn against our $9 million
line of credit would bear interest at the prime rate of the lending
bank. Commodity Price Risks Our major market risk
exposure is in the pricing applicable to our natural gas and oil
production. Pricing is primarily driven by the prevailing worldwide
price for crude oil and spot market prices applicable to our
U.S. natural gas production. Pricing for natural gas and oil
production has been volatile and unpredictable for several years. The
prices we receive for production depend on many factors outside of
our control. For the three months ended March 31, 2005, our
income before income taxes would have changed by $78,000 for each
$0.10 change in natural gas prices and $4,000 for each $1.00 change
in crude oil prices. The Company does not
currently enter into hedging of our production prices. However, we
have entered into fixed delivery contracts for approximately 46% of
the current daily production as of March 31, 2005. These fixed
delivery contracts, which have differing expiration dates, are
summarized in the table presented above under Item 2.
Managements Discussion and Analysis of Financial Condition and
Results of Operations  Results of Operations. 
 ITEM 4. CONTROLS AND PROCEDURES As of the end of the period covered by this report, the Company conducted an evaluation under
the supervision and with the participation of the principal executive officer and principal
financial officer of the Companys disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d- 15(e) under the Securities Exchange Act of 1934 (the Exchange Act). Based
on this evaluation, the principal executive officer and principal financial officer concluded
that the Companys disclosure controls and procedures are effective. To ensure that information
required to be disclosed by the Company in reports that it files or submits under the Exchange
Act, is recorded, processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. There was no change in the Companys
internal control over financial reporting during the Companys most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially affect the Companys
internal control over financial reporting. 15




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PART II. OTHER INFORMATION 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Exhibit No.31.1
    
    Rule 13a-14(a)/15a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15a-14(a) Certification of Chief Financial Officer32
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DOUBLE EAGLE PETROLEUM CO.(Registrant)By:
    
    /s/ David C. MilholmDavid C. MilholmVice President of Finance andChief Financial Officer(Principal Financial Officer)Date: May 14, 2005
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INDEX TO EXHIBITS 
 Exhibit No.31.1
    
    Rule 13a-14(a)/15a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15a-14(a) Certification of Chief Financial Officer32
    
    Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 18