##### 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 September 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
(Do not check if a small reporting company)
    
    Small reporting Company o
 o þ
  Class
    
    Outstanding as of October 15, 2009Common stock, $.10 par value
    
    11,046,455




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##### 



Page #PART I. Financial Information:Item 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2009 (Unaudited) and December 31, 2008
    
    
    3Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2008 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Nine Months Ended September 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
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    29PART II. Other Information:Item 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    29Signatures
    
    
    31Exhibit 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)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,075
    
    
    $
    Cash held in escrow
    
    
    610
    
    
    
    605Accounts receivable
    
    
    7,330
    
    
    
    21,381Assets from price risk management
    
    
    2,174
    
    
    
    14,290Other current assets
    
    
    3,467
    
    
    
    3,513Total current assets
    
    
    16,656
    
    
    
    39,789Oil and gas properties and equipment, successful efforts method:Developed properties
    
    
    160,368
    
    
    
    133,516Wells in progress
    
    
    8,797
    
    
    
    18,518Gas transportation pipeline
    
    
    5,465
    
    
    
    5,465Undeveloped properties
    
    
    2,838
    
    
    
    2,907Corporate and other assets
    
    
    1,914
    
    
    
    1,920179,382
    
    
    
    162,326Less accumulated depreciation, depletion and amortization
    
    
    (48,898
    )
    
    
    (35,253
    )Net properties and equipment
    
    
    130,484
    
    
    
    127,073Assets from price risk management
    
    
    2,599
    
    
    
    5,029Other assets
    
    
    134
    
    
    
    98TOTAL ASSETS
    
    $
    149,873
    
    
    $
    171,989LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    5,065
    
    
    $
    35,488Accrued expenses
    
    
    5,222
    
    
    
    6,794Liabilities from price risk management
    
    
    3,833
    
    
    
    Line of credit  current
    
    
    34,000
    
    
    
    Accrued production taxes
    
    
    3,843
    
    
    
    3,017Capital lease obligations, current portion
    
    
    530
    
    
    
    522Other current liabilities
    
    
    308
    
    
    
    282Total current liabilities
    
    
    52,801
    
    
    
    46,103Line of credit
    
    
    
    
    
    
    24,639Asset retirement obligation
    
    
    4,866
    
    
    
    4,208Liabilities from price risk management
    
    
    469
    
    
    
    Deferred tax liability
    
    
    2,951
    
    
    
    2,470Capital lease obligations, long-term portion
    
    
    679
    
    
    
    1,078Other long-term liabilities
    
    
    359
    
    
    
    616Total liabilities
    
    
    62,125
    
    
    
    79,114Preferred stock, $0.10 par value; 10,000,000 shares authorized; 1,610,000 shares
issued and outstanding as of September 30, 2009 and December 31, 2008
    
    
    37,972
    
    
    
    37,972Stockholders equity:Common stock, $0.10 par value; 50,000,000 shares authorized; 11,035,972
and 9,192,356 shares issued and outstanding as of September 30, 2009 and
December 31, 2008, respectively
    
    
    1,104
    
    
    
    919Additional paid-in capital
    
    
    43,250
    
    
    
    35,122Retained earnings
    
    
    561
    
    
    
    2,172Accumulated other comprehensive income
    
    
    4,861
    
    
    
    16,690Total stockholders equity
    
    
    49,776
    
    
    
    54,903TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    149,873
    
    
    $
    171,989
   3




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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Amounts in thousands of dollars except share and per share data)
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesOil and gas sales
    
    $
    9,669
    
    
    $
    11,662
    
    
    $
    30,661
    
    
    $
    29,439Transportation revenue
    
    
    1,489
    
    
    
    1,283
    
    
    
    4,659
    
    
    
    2,370Price risk management activities
    
    
    (378
    )
    
    
    1,020
    
    
    
    (3,670
    )
    
    
    3,042Other income, net
    
    
    86
    
    
    
    41
    
    
    
    296
    
    
    
    258Total revenues
    
    
    10,866
    
    
    
    14,006
    
    
    
    31,946
    
    
    
    35,109Costs and expensesProduction costs
    
    
    1,934
    
    
    
    1,722
    
    
    
    5,535
    
    
    
    4,814Production taxes
    
    
    879
    
    
    
    1,419
    
    
    
    2,521
    
    
    
    3,753Exploration expenses including dry hole costs
    
    
    38
    
    
    
    391
    
    
    
    93
    
    
    
    922Pipeline operating costs
    
    
    1,032
    
    
    
    896
    
    
    
    2,686
    
    
    
    1,643General and administrative
    
    
    1,579
    
    
    
    1,652
    
    
    
    4,680
    
    
    
    3,861Impairment of properties and surrendered leases
    
    
    82
    
    
    
    
    
    
    
    82
    
    
    
    Depreciation, depletion and amortization
    
    
    4,681
    
    
    
    3,462
    
    
    
    13,778
    
    
    
    7,456Total costs and expenses
    
    
    10,225
    
    
    
    9,542
    
    
    
    29,375
    
    
    
    22,449Income from operations
    
    
    641
    
    
    
    4,464
    
    
    
    2,571
    
    
    
    12,660Interest expense, net
    
    
    (265
    )
    
    
    
    
    
    
    (909
    )
    
    
    (64
    )Income before income taxes
    
    
    376
    
    
    
    4,464
    
    
    
    1,662
    
    
    
    12,596Benefit (provision) for deferred income taxes
    
    
    40
    
    
    
    (1,557
    )
    
    
    (481
    )
    
    
    (4,554
    )NET INCOME
    
    $
    416
    
    
    $
    2,907
    
    
    $
    1,181
    
    
    $
    8,042Preferred stock dividends
    
    
    930
    
    
    
    930
    
    
    
    2,792
    
    
    
    2,792Net income (loss) attributable to common stock
    
    $
    (514
    )
    
    $
    1,977
    
    
    $
    (1,611
    )
    
    $
    5,250Net income (loss) per common share:Basic
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    (0.17
    )
    
    $
    0.57Diluted
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    (0.17
    )
    
    $
    0.57Weighted average shares outstanding:Basic
    
    
    10,315,270
    
    
    
    9,167,977
    
    
    
    9,587,711
    
    
    
    9,156,079Diluted
    
    
    10,315,270
    
    
    
    9,167,977
    
    
    
    9,587,711
    
    
    
    9,156,215
   4




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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands of dollars)
  Nine months ended September 30,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    1,181
    
    
    $
    8,042Adjustments to reconcile net income to net cash from operating activities:Depreciation, depletion, amortization and accretion of asset retirement obligation
    
    
    13,855
    
    
    
    7,998Abandonment of non-producing properties
    
    
    82
    
    
    
    188Provision for deferred taxes
    
    
    481
    
    
    
    4,554Employee stock option expense
    
    
    945
    
    
    
    464Directors fees paid in stock
    
    
    126
    
    
    
    90Change in fair value of derivative contracts
    
    
    7,018
    
    
    
    (2,384
    )Revenue from carried interest
    
    
    (1,351
    )
    
    
    Gain on sale of producing property
    
    
    (211
    )
    
    
    (66
    )Changes in current assets and liabilities:Decrease (Increase) in deposit held in escrow
    
    
    (5
    )
    
    
    104Decrease (Increase) in accounts receivable
    
    
    15,219
    
    
    
    (11,832
    )Decrease (Increase) in other current assets
    
    
    (131
    )
    
    
    (1,361
    )Increase (Decrease) in accounts payable
    
    
    (15,356
    )
    
    
    6,610Increase (Decrease) in accrued expenses
    
    
    (3,205
    )
    
    
    829Increase in accrued production taxes
    
    
    826
    
    
    
    1,864NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    19,474
    
    
    
    15,100Cash flows from investing activities:Sale of producing property and equipment
    
    
    
    
    
    
    747Additions of producing properties and equipment, net
    
    
    (29,640
    )
    
    
    (26,904
    )Additions of corporate and non-producing properties
    
    
    (140
    )
    
    
    (392
    )Net cash received from Petrosearch acquisition
    
    
    7,733
    
    
    
    Payment of Petrosearch transaction costs
    
    
    (513
    )
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    (22,560
    )
    
    
    (26,549
    )Cash flows from financing activities:Principal payments on capital lease obligations
    
    
    (391
    )
    
    
    Exercise of stock options
    
    
    
    
    
    
    279Issuance of stock under Company stock plans
    
    
    6
    
    
    
    Tax withholdings related to net share settlement of restricted stock awards
    
    
    (23
    )
    
    
    Preferred stock dividends
    
    
    (2,792
    )
    
    
    (2,792
    )Net borrowings (repayments) on credit facility
    
    
    9,361
    
    
    
    14,521NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    6,161
    
    
    
    12,008Change in cash and cash equivalents
    
    
    3,075
    
    
    
    559Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    125CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    3,075
    
    
    $
    684Supplemental disclosure of cash and non-cash transactions:Cash paid for interest
    
    $
    1,761
    
    
    $
    390Interest capitalized
    
    $
    903
    
    
    $
    515Adjustment to joint interest partners well costs associated with unitization of
Catalina
    
    $
    1,162
    
    
    $
    2,447Additions to developed properties included in current liabilities
    
    $
    4,962
    
    
    $
    16,511Share-based compensation expense
    
    $
    1,071
    
    
    $
    554Issuance of common stock in connection with the acquisition of Petrosearch
    
    $
    7,260
    
    
    $
    Fair value of asset received in connection with the acquisition of Petrosearch
    
    $
    9,151
    
    
    $
    Fair value of liabilities assumed in connection with the acquisition of Petrosearch
    
    $
    1,018
    
    
    $
    
   5




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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
 The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles
 New accounting pronouncements
 Fair Value Measurements and Disclosures.
   6




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##### Table of Contents



2.
    
    Earnings per share
   For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    416
    
    
    $
    2,907
    
    
    $
    1,181
    
    
    $
    8,042Preferred stock dividends
    
    
    930
    
    
    
    930
    
    
    
    2,792
    
    
    
    2,792Income (loss) attributable to
common stock
    
    $
    (514
    )
    
    $
    1,977
    
    
    $
    (1,611
    )
    
    $
    5,250Weighted average shares:Weighted average shares  basic
    
    
    10,315,270
    
    
    
    9,167,977
    
    
    
    9,587,711
    
    
    
    9,156,079Dilution effect of stock options
outstanding at the end of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136Weighted average shares  diluted
    
    
    10,315,270
    
    
    
    9,167,977
    
    
    
    9,587,711
    
    
    
    9,156,215Income (loss) per common share:Basic
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    (0.17
    )
    
    $
    0.57Diluted
    
    $
    (0.05
    )
    
    $
    0.22
    
    
    $
    (0.17
    )
    
    $
    0.57
  For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Anti-dilutive shares
    
    
    107,800
    
    
    
    151,702
    
    
    
    103,771
    
    
    
    124,245
 3.
    
    Acquisition of Petrosearch Energy Corporation
    7




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Aggregrate value of Double Eagle common stock issued
    
    $
    7,260Cash consideration given to Petrosearch shareholders
    
    
    873Purchase Price
    
    $
    8,133
  Cash and cash equivalents
    
    $
    8,606Accounts receivables, net of allowance
    
    
    5Prepaid expense & other current assets
    
    
    134Oil and gas properties
    
    
    350Goodwill
    
    
    56Accounts payable and other current liabilities
    
    
    (378
    )Asset retirement obligation
    
    
    (640
    )$
    8,133
    Supplemental Pro Forma Results
  For the nine months ended September 30,2009
    
    
    2008Net revenues
    
    $
    32,014
    
    
    $
    36,467Operating income (loss)
    
    $
    (1,200
    )
    
    $
    8,567Net income (loss) attributable to common
shareholders
    
    $
    (4,071
    )
    
    $
    11,242Basic and diluted net income (loss) per share
    
    $
    (0.37
    )
    
    $
    1.03
  8




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##### Table of Contents



4.
    
    Derivative Instruments
     Cash flow hedges
  Mark to market hedging instruments
   Contract Settlement Date2009
    
    
    2010
    
    
    2011Natural gas forward purchase contracts:Volume (MMcf)
    
    
    1,382
    
    
    
    8,030
    
    
    
    5,650
  9




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##### Table of Contents



Derivatives designated as hedginginstruments under ASC 815
    
    Balance Sheet Location
    
    Fair ValueAssetsCommodity derivatives
    
    Assets from price risk management  current
    
    $
    2,174Liabilities from price risk management  current
    
    
    87Assets from price risk management  long term
    
    
    2,599Liabilities from price risk management  long term
    
    
    1,472Total
    
    
    
    $
    6,332
 Derivatives not designated as hedginginstruments under ASC 815
    
    Balance Sheet Location
    
    Fair ValueLiabilitiesCommodity derivatives
    
    Liabilities from price risk management  current
    
    $
    (3,920
    )Liabilities from price risk management  long term
    
    
    (1,941
    )Total
    
    
    
    $
    (5,861
    )
  Gain (Loss) Recognized inOCI1 on Derivative
    
    
    Gain Reclassified from(effective portion)
    
    
    Accumulated OCI1 into IncomeThree months
    
    
    Nine months
    
    
    
    
    
    
    Three months
    
    
    Nine monthsended
    
    
    ended
    
    
    
    
    
    
    ended
    
    
    endedSep-09
    
    
    Sep-09
    
    
    Location
    
    
    Sep-09
    
    
    Sep-09Cash flow hedges:Commodity contracts
    
    $
    (826
    )
    
    $
    1,335
    
    
    Oil and gas sales
    
    $
    3,754
    
    
    $
    13,164
 Gain Recognized in Income (Effective Portionand Amount excluded from Effectiveness Testing)Three months
    
    
    Nine monthsended
    
    
    endedLocation
    
    Sep-09
    
    
    Sep-09Oil and gas sales
    
    $
    
    
    
    $
    
 1
    
    Other comprehensive income (OCI).  10




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Loss Recognized in Income on DerivativeLocation
    

Three monthsendedSep-09
    
    
    Nine monthsendedSep-09Price Risk Management
Activites
    
    $
    (378
    )
    
    $
    (3,670
    )
 Normal purchases and normal sales
   5.
    
    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
  Derivative instruments
    Credit facility
   11




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##### Table of Contents



Asset retirement obligations
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsDerivative instruments
    
    $
    
    
    
    $
    4,773
    
    
    $
    
    
    
    $
    4,773Total assets at fair value
    
    $
    
    
    
    $
    4,773
    
    
    $
    
    
    
    $
    4,773LiabilitiesDerivative instruments
    
    $
    
    
    
    $
    4,302
    
    
    $
    
    
    
    $
    4,302Asset retirement obligation
    
    $
    
    
    
    $
    
    
    
    
    4,866
    
    
    $
    4,866Total liabilities at fair value
    
    $
    
    
    
    $
    4,302
    
    
    $
    4,866
    
    
    $
    9,168
  December 31, 2008 asset retirement obligation
    
    $
    4,208Additional liabilites assumed through
acquisition of Petrosearch
    
    $
    640Liabilities incurred
    
    
    13Liabilities settled
    
    
    (256
    )Accretion expense, included in earnings (1)
    
    
    77Change in ownership interest
    
    
    184September 30, 2009 asset retirement obligation
    
    $
    4,866
 (1)
    
    The accretion expense recorded during the period is recorded in the production costs
line item on the consolidated statement of operations and totaled $27 and $77 in the three
and nine months ended September 30, 2009, respectively. Concentration of Credit Risk
    12




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6.
    
    Impairment of Long-Lived Assets
  7.
    
    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
    
    
    (29,500
    )
    
    $
    15.83Outstanding at September 30,
2009
    
    
    647,897
    
    
    $
    15.06
    
    
    
    4.9
    
    
    $
    Exerciseable at September 30,
2009
    
    
    211,179
    
    
    $
    16.35
    
    
    
    3.0
    
    
    $
    
   13




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##### Table of Contents



Weighted-AverageGrant DateShares
    
    
    Fair ValueRestricted Stock Awards:Outstanding at January 1, 2009
    
    
    94,762
    
    
    $
    14.70Granted
    
    
    79,500
    
    
    $
    4.16Vested
    
    
    (54,889
    )
    
    $
    4.98Forfeited/returned
    
    
    Nonvested at September 30, 2009
    
    
    119,373
    
    
    $
    12.15
  8.
    
    Income Taxes
   9.
    
    Credit Facility
      14




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##### Table of Contents



10.
    
    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
  11.
    
    Comprehensive Income (Loss)
  For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss) attributable to
common stock
    
    $
    (514
    )
    
    $
    1,977
    
    
    $
    (1,611
    )
    
    $
    5,250Change in derivative instrument
fair value, net of tax
benefit of $0
    
    
    (826
    )
    
    
    15,573
    
    
    
    1,335
    
    
    
    9,536Reclassification to earnings
    
    
    (3,754
    )
    
    
    177
    
    
    
    (13,164
    )
    
    
    1,298Comprehensive income (loss)
    
    $
    (5,094
    )
    
    $
    17,727
    
    
    $
    (13,440
    )
    
    $
    16,084
  September 30,
    
    
    December 31,2009
    
    
    2008Net change in derivative instrument fair value, net
of tax benefit of $0 and $0
    
    $
    4,861
    
    
    $
    16,690Total accumulated other comprehensive gain, net
    
    $
    4,861
    
    
    $
    16,690
   15




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##### Table of Contents



12.
    
    Cash Held in Escrow
  13.
    
    Intercompany Transactions
   14.
    
    Contingencies
 Legal Proceedings
  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
   16




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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:
 
    
    The changing political environment in which we operate
 
    
    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;
 
    
    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 current and 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;
 
    
    The ability of third-party operators in projects in which we own an interest, to
continue to develop these projects;
 
    
    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.
    17




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##### Table of Contents



Business Overview and Strategy
   (Amounts in thousands of dollars, except amounts per unit of
production):
 
    
    Average Daily Production
  Atlantic Rim .
   18




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##### Table of Contents



Pinedale Anticline
 Madden Deep Unit
 
    
    Oil and Gas Sales
   
    
    Acquisition of Petrosearch Energy Corporation
  OVERVIEW OF FINANCIAL CONDITION AND LIQUIDITY
 Liquidity and Capital Resources
   19




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##### Table of Contents



Credit Facility
       September 30,
    
    
    December 31,2009
    
    
    2008Financial Position SummaryCash and cash equivalents
    
    $
    3,075
    
    
    $
    Working capital
    
    $
    (36,145
    )
    
    $
    (6,314
    )Balance outstanding on credit facility
    
    $
    34,000
    
    
    $
    24,639Stockholders equity and preferred stock
    
    $
    87,578
    
    
    $
    92,875RatiosDebt to total capital ratio
    
    
    28.0
    %
    
    
    21.0
    %Total debt to equity ratio
    
    
    38.8
    %
    
    
    26.5
    %
   20




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##### Table of Contents



Cash flow activities
  Nine
Months Ended September 30,2009
    
    
    2008Cash provided by (used in):Operating Activities
    
    $
    19,474
    
    
    $
    15,100Investing Activities
    
    
    (22,560
    )
    
    
    (26,549
    )Financing Activities
    
    
    6,161
    
    
    
    12,008Net change in cash
    
    $
    3,075
    
    
    $
    559
    Off-Balance Sheet Arrangements
   Capital Requirements
   21




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##### Table of Contents



Contractual Obligations
  Payments due by periodOne year
    
    
    2 - 3
    
    
    4 - 5
    
    
    More than 5Total
    
    
    or less
    
    
    Years
    
    
    Years
    
    
    YearsCredit facility (a)
    
    $
    34,000
    
    
    $
    34,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest on credit facility (b)
    
    
    1,292
    
    
    
    1,292
    
    
    
    
    
    
    
    
    
    
    
    Capital lease commitments
    
    
    1,694
    
    
    
    753
    
    
    
    941
    
    
    
    
    
    
    
    Operating lease commitments
    
    
    6,256
    
    
    
    1,568
    
    
    
    3,137
    
    
    
    1,551
    
    
    
    Total contractual cash commitments
    
    $
    43,242
    
    
    $
    37,613
    
    
    $
    4,078
    
    
    $
    1,551
    
    
    $
    
 (a)
    
    Under the amended agreement, any balance outstanding on our revolving line of credit at
July 31, 2010, will be due at that time. The Company is currently negotiating an extension
of this maturity date.(b)
    
    Assumes the interest rate on our revolving line of credit is consistent with that of
September 30, 2009. RESULTS OF OPERATIONS
 Three months ended September 30, 2009 compared to the three months ended September 30, 2008
 Oil and gas sales volume and price comparisons
 Three Months Ended September 30,
    
    
    Percent
    
    
    Percent2009
    
    
    2008
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    2,261,180
    
    
    $
    4.27
    
    
    
    1,876,642
    
    
    $
    6.27
    
    
    
    20
    %
    
    
    -32
    %Oil (Bbls)
    
    
    7,271
    
    
    $
    59.88
    
    
    
    5,685
    
    
    $
    98.42
    
    
    
    28
    %
    
    
    -39
    %Mcfe
    
    
    2,304,806
    
    
    $
    4.38
    
    
    
    1,910,752
    
    
    $
    6.45
    
    
    
    21
    %
    
    
    -32
    %
    22




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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 September 30,2009
    
    
    2008(in dollars per Mcfe)Average price
    
    $
    4.38
    
    
    $
    6.45Production costs
    
    
    0.84
    
    
    
    0.90Production taxes
    
    
    0.38
    
    
    
    0.74Depletion and amortization
    
    
    1.99
    
    
    
    1.76Total operating costs
    
    
    3.21
    
    
    
    3.40Gross margin
    
    $
    1.17
    
    
    $
    3.05Gross margin percentage
    
    
    27
    %
    
    
    47
    %
  23




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##### Table of Contents



Pipeline operating costs
  General and administrative expenses
  Income taxes
   24




---



##### Table of Contents



Nine months ended September 30, 2009 compared to the nine months ended September 30, 2008
 Oil and gas sales volume and price comparisons
 Nine
Months Ended September 30,
    
    
    Percent
    
    
    Percent2009
    
    
    2008
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    6,838,382
    
    
    $
    4.83
    
    
    
    4,215,099
    
    
    $
    6.80
    
    
    
    62
    %
    
    
    -29
    %Oil (Bbls)
    
    
    22,006
    
    
    $
    45.40
    
    
    
    14,672
    
    
    $
    97.18
    
    
    
    50
    %
    
    
    -53
    %Mcfe
    
    
    6,970,418
    
    
    $
    4.88
    
    
    
    4,303,671
    
    
    $
    6.99
    
    
    
    62
    %
    
    
    -30
    %
        25




---



##### Table of Contents



Transportation and gathering revenue
  Price risk management activities
  Oil and gas production expenses, production taxes, depreciation, depletion and amortization
 Nine
Months Ended September 30,2009
    
    
    2008(in dollars per Mcfe)Average price
    
    $
    4.88
    
    
    $
    7.43Production costs
    
    
    0.79
    
    
    
    1.12Production taxes
    
    
    0.36
    
    
    
    0.98Depletion and amortization
    
    
    1.93
    
    
    
    1.59Total operating costs
    
    
    3.08
    
    
    
    3.69Gross margin
    
    $
    1.80
    
    
    $
    3.74Gross margin percentage
    
    
    37
    %
    
    
    50
    %
     26




---



##### Table of Contents



Pipeline operating costs
  General and administrative expenses
  Income taxes
  CONTRACTED VOLUMES
   RemainingContractual
    
    
    Daily
    
    
    
    
    
    
    
    
    
    
    PriceProperty
    
    Volume
    
    
    Production
    
    
    Term
    
    
    Price
    
    
    Index (1)Catalina
    
    
    31,000
    
    
    
    1,000
    
    
    
    11/07-10/09
    
    
    $
    5.66
    
    
    CIG
  27




---



##### Table of Contents



RemainingContractual
    
    
    Daily
    
    
    
    
    
    
    PriceType of Contract
    
    Volume
    
    
    Production
    
    
    Term
    
    Price
    
    IndexFixed Price Swap
    
    
    736,000
    
    
    
    8,000
    
    
    1/09-12/09
    
    $7.34
    
    CIGFixed Price Swap
    
    
    4,380,000
    
    
    
    12,000
    
    
    1/10-12/10
    
    $4.30
    
    CIGCostless Collar
    
    
    3,345,000
    
    
    
    5,000
    
    
    8/09-7/11
    
    $4.50 floor $7.90 ceiling
    
    NYMEXCostless Collar
    
    
    3,650,000
    
    
    
    5,000
    
    
    12/09-11/11
    
    $4.50 floor $9.00 ceiling
    
    NYMEXFixed Price Swap
    
    
    2,920,000
    
    
    
    8,000
    
    
    1/11-12/11
    
    $7.07
    
    CIGTotal
    
    
    15,031,000
 (1)
    
    Colorado Interstate Gas Index (CIG).  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Business Combinations
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price Risks
   Interest Rate Risks
   28




---



##### Table of Contents



ITEM 4.
    
    CONTROLS AND PROCEDURES
   
  
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  
 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).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).
  29




---



##### Table of Contents



Exhibit
    
    Description: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.
 
  30




---



##### Table of Contents



SIGNATURES
  DOUBLE EAGLE PETROLEUM CO.(Registrant)Date: October 29, 2009
    
    By:
    
    /s/ Richard D. Dole

Richard D. DoleChief Executive Officer(Principal Executive Officer)Date: October 29, 2009
    
    By:
    
    /s/ Kurtis S. Hooley

Kurtis S. HooleyChief Financial Officer(Principal Accounting Officer)
  31




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##### 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).
  32




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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.
  33