##### 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, 2010
 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
    
    83-0214692(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. employer
identification no.)
 1675 Broadway, Suite 2200, Denver, Colorado 80202
 303-794-8445
 None
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a small reporting company)
    
    Small reporting Company o
 o þ
  Class 
Common stock, $.10 par value
    
    Outstanding as of July 30, 2010
11,128,936




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##### 



Page #PART I. Financial Information:Item 1. Financial StatementsConsolidated Balance Sheets as of June 30, 2010
and December 31, 2009 (Unaudited)
    
    
    2Consolidated Statements of Operations for the Three and Six Months
Ended June 30, 2010 and 2009 (Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2010 and 2009 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II. Other Information:Item 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 6. Exhibits
    
    
    27Signatures
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32
   1




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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 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    4,192
    
    
    $
    5,682Cash held in escrow
    
    
    613
    
    
    
    611Accounts receivable
    
    
    6,013
    
    
    
    6,772Assets from price risk management
    
    
    4,425
    
    
    
    Other current assets
    
    
    4,666
    
    
    
    3,982Total current assets
    
    
    19,909
    
    
    
    17,047Oil and gas properties and equipment, successful efforts method:Developed properties
    
    
    170,789
    
    
    
    165,279Wells in progress
    
    
    5,577
    
    
    
    7,544Gas transportation pipeline
    
    
    5,465
    
    
    
    5,465Undeveloped properties
    
    
    2,845
    
    
    
    2,502Corporate and other assets
    
    
    1,895
    
    
    
    1,914186,571
    
    
    
    182,704Less accumulated depreciation, depletion and amortization
    
    
    (62,723
    )
    
    
    (53,682
    )Net properties and equipment
    
    
    123,848
    
    
    
    129,022Assets from price risk management
    
    
    3,268
    
    
    
    3,566Other assets
    
    
    822
    
    
    
    859TOTAL ASSETS
    
    $
    147,847
    
    
    $
    150,494LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,643
    
    
    $
    6,177Accrued expenses
    
    
    4,661
    
    
    
    6,918Liabilities from price risk management
    
    
    
    
    
    
    4,739Accrued production taxes
    
    
    3,648
    
    
    
    2,439Capital lease obligations, current portion
    
    
    539
    
    
    
    533Other current liabilities
    
    
    308
    
    
    
    308Total current liabilities
    
    
    12,799
    
    
    
    21,114Line of credit
    
    
    31,000
    
    
    
    34,000Asset retirement obligation
    
    
    4,709
    
    
    
    4,807Liabilities from price risk management
    
    
    
    
    
    
    430Deferred tax liability
    
    
    8,616
    
    
    
    4,620Capital lease obligations, long-term portion
    
    
    274
    
    
    
    545Other long-term liabilities
    
    
    128
    
    
    
    282Total liabilities
    
    
    57,526
    
    
    
    65,798Preferred stock, $0.10 par value; 10,000,000 shares authorized;
1,610,000 shares issued and outstanding as of
June 30, 2010 and December 31, 2009
    
    
    37,972
    
    
    
    37,972Stockholders equity:Common stock, $0.10 par value; 50,000,000 shares authorized;
11,116,591 and 11,090,725 shares issued and outstanding as of
June 30, 2010 and December 31, 2009, respectively
    
    
    1,112
    
    
    
    1,109Additional paid-in capital
    
    
    44,136
    
    
    
    43,640Retained earnings
    
    
    3,021
    
    
    
    (342
    )Accumulated other comprehensive income
    
    
    4,080
    
    
    
    2,317Total stockholders equity
    
    
    52,349
    
    
    
    46,724TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    147,847
    
    
    $
    150,494
   2




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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Amounts in thousands of dollars except share and per share data)
  Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesOil and gas sales
    
    $
    7,608
    
    
    $
    10,492
    
    
    
    18,657
    
    
    $
    20,992Transportation revenue
    
    
    1,401
    
    
    
    1,583
    
    
    
    2,889
    
    
    
    3,170Price risk management activities
    
    
    103
    
    
    
    (2,152
    )
    
    
    7,925
    
    
    
    (3,292
    )Other income, net
    
    
    280
    
    
    
    117
    
    
    
    357
    
    
    
    210Total revenues
    
    
    9,392
    
    
    
    10,040
    
    
    
    29,828
    
    
    
    21,080Costs and expensesProduction costs
    
    
    2,397
    
    
    
    1,989
    
    
    
    4,339
    
    
    
    3,601Production taxes
    
    
    1,010
    
    
    
    753
    
    
    
    2,309
    
    
    
    1,642Exploration expenses including dry hole costs
    
    
    28
    
    
    
    29
    
    
    
    66
    
    
    
    55Pipeline operating costs
    
    
    971
    
    
    
    1,087
    
    
    
    2,119
    
    
    
    1,654General and administrative
    
    
    1,392
    
    
    
    1,427
    
    
    
    2,925
    
    
    
    3,101Impairment and abandonment of equipment
and properties
    
    
    80
    
    
    
    
    
    
    
    80
    
    
    
    Depreciation, depletion and amortization
    
    
    4,530
    
    
    
    4,715
    
    
    
    9,070
    
    
    
    9,097Total costs and expenses
    
    
    10,408
    
    
    
    10,000
    
    
    
    20,908
    
    
    
    19,150Income from operations
    
    
    (1,016
    )
    
    
    40
    
    
    
    8,920
    
    
    
    1,930Interest expense, net
    
    
    (385
    )
    
    
    (392
    )
    
    
    (750
    )
    
    
    (644
    )Income (loss) before income taxes
    
    
    (1,401
    )
    
    
    (352
    )
    
    
    8,170
    
    
    
    1,286Benefit (provision) for deferred income taxes
    
    
    512
    
    
    
    110
    
    
    
    (2,945
    )
    
    
    (521
    )NET INCOME (LOSS)
    
    $
    (889
    )
    
    $
    (242
    )
    
    $
    5,225
    
    
    $
    765Preferred stock dividends
    
    
    931
    
    
    
    931
    
    
    
    1,862
    
    
    
    1,862Net income (loss) attributable to common stock
    
    $
    (1,820
    )
    
    $
    (1,173
    )
    
    $
    3,363
    
    
    $
    (1,097
    )Net income (loss) per common share:Basic
    
    $
    (0.16
    )
    
    $
    (0.13
    )
    
    $
    0.30
    
    
    $
    (0.12
    )Diluted
    
    $
    (0.16
    )
    
    $
    (0.13
    )
    
    $
    0.30
    
    
    $
    (0.12
    )Weighted average shares outstanding:Basic
    
    
    11,116,476
    
    
    
    9,233,725
    
    
    
    11,111,092
    
    
    
    9,217,902Diluted
    
    
    11,116,476
    
    
    
    9,233,725
    
    
    
    11,111,092
    
    
    
    9,217,902
   3




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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands of dollars)
  Six months ended June 30,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    5,225
    
    
    $
    765Adjustments to reconcile net income to net cash from
operating activities:Depreciation, depletion, amortization and accretion
of asset retirement obligation
    
    
    9,125
    
    
    
    9,147Abandonment of non-producing properties and leases
    
    
    80
    
    
    
    6Provision for deferred taxes
    
    
    2,945
    
    
    
    521Employee stock option expense
    
    
    398
    
    
    
    693Directors fees paid in stock
    
    
    98
    
    
    
    77Non-cash gain on transfer of asset retirement obligation to third party
    
    
    (164
    )
    
    
    Change in fair value of derivative contracts
    
    
    (6,482
    )
    
    
    6,218Revenue from carried interest
    
    
    (1,282
    )
    
    
    (954
    )Gain on sale of producing property
    
    
    (142
    )
    
    
    (140
    )Changes in current assets and liabilities:Increase in deposit held in escrow
    
    
    (2
    )
    
    
    (3
    )Decrease in accounts receivable
    
    
    784
    
    
    
    14,137Increase in other current assets
    
    
    (728
    )
    
    
    (99
    )Decrease in accounts payable
    
    
    (1,471
    )
    
    
    (13,369
    )Increase (Decrease) in accrued expenses
    
    
    1,667
    
    
    
    (1,007
    )Increase in accrued production taxes
    
    
    667
    
    
    
    834NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    10,718
    
    
    
    16,826Cash flows from investing activities:Additions of producing properties and equipment, net
    
    
    (6,652
    )
    
    
    (28,315
    )Additions of corporate and non-producing properties
    
    
    (439
    )
    
    
    (15
    )Sale of corporate assets
    
    
    7
    
    
    
    Payment of acquisition related costs
    
    
    
    
    
    
    (320
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (7,084
    )
    
    
    (28,650
    )Cash flows from financing activities:Principal payments on capital lease obligations
    
    
    (265
    )
    
    
    (259
    )Issuance of stock under Company stock plans
    
    
    6
    
    
    
    5Tax withholdings related to net share settlement of
restricted stock awards
    
    
    (3
    )
    
    
    (23
    )Preferred stock dividends
    
    
    (1,862
    )
    
    
    (1,862
    )Net borrowings (repayments) on credit facility
    
    
    (3,000
    )
    
    
    17,861NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    (5,124
    )
    
    
    15,722Change in cash and cash equivalents
    
    
    (1,490
    )
    
    
    3,898Cash and cash equivalents at beginning of period
    
    
    5,682
    
    
    
    CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    4,192
    
    
    $
    3,898Supplemental disclosure of cash and non-cash transactions:Cash paid for interest
    
    $
    824
    
    
    $
    1,233Interest capitalized
    
    $
    87
    
    
    $
    643Adjustment to joint interest partners well costs
associated with unitization of Catalina
    
    $
    
    
    
    $
    1,252Additions to developed properties included in current liabilities
    
    $
    4,128
    
    
    $
    6,832Share-based compensation expense
    
    $
    496
    
    
    $
    770
   4




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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
     Principles of consolidation
  Recently adopted accounting pronouncements
  2 Earnings per share
   5




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For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss)
    
    $
    (889
    )
    
    $
    (242
    )
    
    $
    5,225
    
    
    $
    765Preferred stock dividends
    
    
    931
    
    
    
    931
    
    
    
    1,862
    
    
    
    1,862Income (loss) attributable to common stock
    
    $
    (1,820
    )
    
    $
    (1,173
    )
    
    $
    3,363
    
    
    $
    (1,097
    )Weighted average shares:Weighted average shares  basic
    
    
    11,116,476
    
    
    
    9,233,725
    
    
    
    11,111,092
    
    
    
    9,217,902Dilution effect of stock options
outstanding at the end of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average shares  diluted
    
    
    11,116,476
    
    
    
    9,233,725
    
    
    
    11,111,092
    
    
    
    9,217,902Income (loss) per common share:Basic
    
    $
    (0.16
    )
    
    $
    (0.13
    )
    
    $
    0.30
    
    
    $
    (0.12
    )Diluted
    
    $
    (0.16
    )
    
    $
    (0.13
    )
    
    $
    0.30
    
    
    $
    (0.12
    )
  For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Anti-dilutive shares
    
    
    82,360
    
    
    
    87,931
    
    
    
    93,529
    
    
    
    87,931
 3 Derivative Instruments
     Cash flow hedges
   6




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Mark to market hedging instruments
   Natural Gas forward purchase contracts:
    
    2010
    
    
    2011Volume (MMcf)
    
    
    4,048
    
    
    
    5,650
  Derivatives designated as hedginginstruments under ASC 815
    
    Balance Sheet Location
    
    
    Fair ValueAssetsCommodity derivatives
    
    Assets from price risk management - current
    
    $
    3,340Assets from price risk management - long term
    
    
    3,040Total
    
    
    
    
    
    $
    6,380
 Derivatives not designated ashedging instruments under ASC 815
    
    Balance Sheet Location
    
    
    Fair ValueAssetsCommodity derivatives
    
    Assets from price risk management - current
    
    $
    1,085Assets from price risk management - long term
    
    
    228Total
    
    
    
    
    
    $
    1,313
  7




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Amount of Gain (Loss) Recognized in OCI 1 on Derivatives forThree months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Commodity contracts
    
    $
    791
    
    
    $
    (1,268
    )
    
    $
    2,814
    
    
    $
    2,161
 Amount of Gain Reclassified from Accumulated OCILocation of Gain Reclassified
    
    into Incomefrom Accumulated OCI 1
    
    Three months ended June 30,
    
    
    Six months ended June 30,into Income (effective portion)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Oil and gas sales
    
    $
    
    
    
    $
    5,263
    
    
    $
    
    
    
    $
    9,410
 Three and six months ended2010
    
    
    2009Location of Gain Recognized in Income (Ineffective) Portion
and Amount Excluded from Effectiveness Testing
    
    
    N/A
    
    
    
    N/A
 1
    
    Other comprehensive income (OCI).   Amount of Gain (Loss) Recognized in Income on DerivativesLocation of Gain/Loss Recognized
    
    Three months ended June 30,
    
    
    Six months ended Junein Income on Derivatives
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Price risk management
activities
    
    $
    103
    
    
    $
    (2,152
    )
    
    $
    7,925
    
    
    $
    (3,292
    )
  4. Fair Value Accounting
  
    
    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.
  8




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Cash and cash equivalents
  Derivative instruments
    Credit facility
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsDerivative
instruments -
Commodity forward contracts
    
    $
    
    
    
    $
    7,693
    
    
    $
    
    
    
    $
    7,693Total assets at fair value
    
    $
    
    
    
    $
    7,693
    
    
    $
    
    
    
    $
    7,693
  Asset retirement obligations
  Concentration of credit risk
    9




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##### Table of Contents



5. Impairment of Long-Lived Assets
  6. Compensation Plans
    Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions:
    
    Shares
    
    
    Price
    
    
    Term (in years)
    
    
    ValueOutstanding at January 1, 2010
    
    
    647,897
    
    
    $
    15.06
    
    
    
    4.7Granted
    
    
    90,380
    
    
    $
    4.53Exercised
    
    
    Cancelled/expired
    
    
    (107,362
    )
    
    $
    15.04Outstanding at June 30, 2010
    
    
    630,915
    
    
    $
    13.54
    
    
    
    4.6
    
    
    $
    Exercisable at June 30, 2010
    
    
    323,035
    
    
    $
    15.35
    
    
    
    3.4
    
    
    $
    
   10




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##### Table of Contents



Weighted-AverageGrant DateStock Awards:
    
    Shares
    
    
    Fair ValueOutstanding at January 1, 2010
    
    
    87,448
    
    
    $
    12.38Granted
    
    
    30,331
    
    
    $
    4.60Vested
    
    
    (26,104
    )
    
    $
    5.11Forfeited/returned
    
    
    (17,241
    )
    
    $
    14.78Nonvested at June 30, 2010
    
    
    74,434
    
    
    $
    14.43
   7. Income Taxes
   8. Credit Facility
     11




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##### Table of Contents



9. Acquisition of Petrosearch
  10. Series A Cumulative Preferred Stock
   Redemption Date on or Before
    
    Redemption PriceJune 30, 2011
    
    $
    25.25June 30, 2012 or thereafter
    
    $
    25.00
   12




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##### Table of Contents



11. Comprehensive Income (Loss)
  For the Three Months Ended June 30,
    
    
    For the Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss) attributable to common stock
    
    $
    (1,820
    )
    
    $
    (1,173
    )
    
    $
    3,363
    
    
    $
    (1,097
    )Change in derivative instrument
fair value, net of tax expense1
    
    
    511
    
    
    
    (1,268
    )
    
    
    1,763
    
    
    
    2,161Reclassification to earnings
    
    
    
    
    
    
    (5,263
    )
    
    
    
    
    
    
    (9,410
    )Comprehensive income (loss)
    
    $
    (1,309
    )
    
    $
    (7,704
    )
    
    $
    5,126
    
    
    $
    (8,346
    )
 (1)
    
    The change in derivative instrument fair value is net of tax totaling $280 and $0 for the
three months ended June 30, 2010 and 2009, respectively. The change in derivative instrument
fair value is net of tax totaling $1,051 and $0 for the six months ended June 30, 2010 and 2009,
respectively.  June 30,
    
    
    December 31,2010
    
    
    2009Net change in derivative instrument fair value,
net
of tax benefit of $2,300 and $1,249
    
    $
    4,080
    
    
    $
    2,317Total accumulated other comprehensive gain, net
    
    $
    4,080
    
    
    $
    2,317
 12. Cash Held in Escrow
  13. Contingencies
 Legal proceedings
     13




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14. Subsequent Events
   Post Acquisition WorkingUnit
    
    Working Interest Acquired
    
    
    Interest PercentageCatalina
    
    
    3.08
    %
    
    
    72.40
    %Sun Dog
    
    
    12.60
    %
    
    
    21.54
    %Doty Mountain
    
    
    1.15
    %
    
    
    18.00
    %
   
 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, 2009, including the
following:
 
    
    A decline in oil or gas prices;
 
    
    The changing political environment in which we operate;
 
    
    Our ability to maintain adequate liquidity in connection with low oil and gas prices;
 
    
    Our ability to obtain, or a decline in, oil or gas production;
 
    
    Our ability to continue to develop our Atlantic Rim project;
 
    
    Our ability to increase our natural gas and oil reserves;
  14




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##### Table of Contents




    
    Incorrect estimates of required capital expenditures;
 
    
    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;
 
    
    Our ability to successfully integrate and profitably operate any future acquisitions;
 
    
    Increases in the cost of drilling, completion and gas collection or other costs of
production and operations;
 
    
    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 which we enter into business agreements with;
 
    
    General economic conditions, tax rates or policies, interest rates and inflation rates;
 
    
    Changes in or compliance with laws and regulations, particularly those relating to
taxation, safety and protection of the environment;
 
    
    Weather, climate change 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 current or future litigation or similar disputes and the impact on
any such outcome or related settlements.
   Business Overview and Strategy
    15




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##### Table of Contents




    
    Average Daily Production
  Atlantic Rim .
  Pinedale Anticline
  Madden Deep Unit
 
    
    Oil and Gas Sales
   16




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##### Table of Contents



OVERVIEW OF FINANCIAL CONDITION AND LIQUIDITY
 Liquidity and Capital Resources
   June 30,
    
    
    December 31,2010
    
    
    2009Financial Position SummaryCash and cash equivalents
    
    $
    4,192
    
    
    $
    5,682Working capital
    
    $
    7,110
    
    
    $
    (4,067
    )Balance outstanding on credit facility
    
    $
    31,000
    
    
    $
    34,000Stockholders equity and preferred stock
    
    $
    90,321
    
    
    $
    84,696RatiosDebt to total capital ratio
    
    
    25.6
    %
    
    
    28.6
    %Total debt to equity ratio
    
    
    59.2
    %
    
    
    72.8
    %
   17




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##### Table of Contents



Cash flow activities
  Six months ended June 30,2010
    
    
    2009(unaudited)Cash provided by (used in):Operating activities
    
    $
    10,718
    
    
    $
    16,826Investing activities
    
    
    (7,084
    )
    
    
    (28,650
    )Financing activities
    
    
    (5,124
    )
    
    
    15,722Net change in cash
    
    $
    (1,490
    )
    
    $
    3,898
    Off-Balance Sheet Arrangements
   Line of Credit
    18




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##### Table of Contents



Capital Requirements
  Contractual Obligations
  One year
    
    
    2 - 3
    
    
    4 - 5
    
    
    More thanTotal
    
    
    or less
    
    
    Years
    
    
    Years
    
    
    5 YearsCredit facility (a)
    
    $
    31,000
    
    
    $
    
    
    
    $
    31,000
    
    
    $
    
    
    
    $
    Interest on line of credit (b)
    
    
    3,662
    
    
    
    1,414
    
    
    
    2,248
    
    
    
    
    
    
    
    Capital leases
    
    
    1,128
    
    
    
    752
    
    
    
    376
    
    
    
    
    
    
    
    Operating leases
    
    
    8,193
    
    
    
    2,349
    
    
    
    5,154
    
    
    
    666
    
    
    
    24Total contractual cash
commitments
    
    $
    43,983
    
    
    $
    4,515
    
    
    $
    38,778
    
    
    $
    666
    
    
    $
    24
 (a)
    
    The amount listed reflects the balance outstanding as of June 30, 2010. Any balance
outstanding on our credit facility at January 31, 2013, will be due at that time.(b)
    
    Assumes the interest rate on our credit facility is consistent with that of June 30,
2010.  19




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##### Table of Contents



RESULTS OF OPERATIONS
 Three months ended June 30, 2010 compared to the three months ended June 30, 2009
 Oil and gas sales volume and price comparisons
 Three Months Ended June 30,
    
    
    Percent
    
    
    Percent2010
    
    
    2009
    
    
    Volume
    
    
    PriceProduct:
    
    Volume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeGas (Mcf)
    
    
    2,212,115
    
    
    $
    3.99
    
    
    
    2,342,787
    
    
    $
    4.34
    
    
    
    -6
    %
    
    
    -8
    %Oil (Bbls)
    
    
    5,892
    
    
    $
    75.00
    
    
    
    7,039
    
    
    $
    46.03
    
    
    
    -16
    %
    
    
    63
    %Mcfe
    
    
    2,247,466
    
    
    $
    4.13
    
    
    
    2,385,021
    
    
    $
    4.40
    
    
    
    -6
    %
    
    
    -6
    %
        20




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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 30,2010
    
    
    2009(in dollars per Mcfe)Average price
    
    $
    4.13
    
    
    $
    4.40Production costs
    
    
    1.07
    
    
    
    0.83Production taxes
    
    
    0.45
    
    
    
    0.32Depletion and amortization
    
    
    1.97
    
    
    
    1.93Total operating costs
    
    
    3.49
    
    
    
    3.08Gross margin
    
    $
    0.64
    
    
    $
    1.32Gross margin percentage
    
    
    15
    %
    
    
    30
    %
     21




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##### Table of Contents



Pipeline operating costs
  General and administrative expenses
  Income taxes
  Six months ended June 30, 2010 compared to the six months ended June 30, 2009
 Oil and gas sales volume and price comparisons
 Six Months Ended June 30,
    
    
    Percent
    
    
    Percent2010
    
    
    2009
    
    
    Volume
    
    
    PriceProduct:
    
    Volume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeGas (Mcf)
    
    
    4,412,125
    
    
    $
    4.34
    
    
    
    4,577,202
    
    
    $
    5.10
    
    
    
    -4
    %
    
    
    -15
    %Oil (Bbls)
    
    
    12,828
    
    
    $
    73.07
    
    
    
    14,736
    
    
    $
    38.25
    
    
    
    -13
    %
    
    
    91
    %Mcfe
    
    
    4,489,091
    
    
    $
    4.47
    
    
    
    4,665,618
    
    
    $
    5.12
    
    
    
    -4
    %
    
    
    -13
    %
     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
 Six Months Ended June 30,2010
    
    
    2009(in dollars per Mcfe)Average price
    
    $
    4.47
    
    
    $
    5.12Production costs
    
    
    0.97
    
    
    
    0.77Production taxes
    
    
    0.51
    
    
    
    0.35Depletion and amortization
    
    
    1.97
    
    
    
    1.90Total operating costs
    
    
    3.45
    
    
    
    3.02Gross margin
    
    $
    1.02
    
    
    $
    2.10Gross margin percentage
    
    
    23
    %
    
    
    41
    %
   23




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##### Table of Contents



Pipeline operating costs
  General and administrative expenses
  Income taxes
  CONTRACTED VOLUMES
   24




---



##### Table of Contents



RemainingContractual
    
    
    Daily
    
    
    
    
    
    
    PriceType of Contract
    
    Volume
    
    
    Production
    
    
    Term
    
    Price
    
    Index (1)Fixed Price Swap
    
    
    2,208,000
    
    
    
    12,000
    
    
    1/10-12/10
    
    $4.30
    
    CIGFixed Price Swap
    
    
    2,920,000
    
    
    
    8,000
    
    
    1/11-12/11
    
    $7.07
    
    CIGCostless Collar
    
    
    1,980,000
    
    
    
    5,000
    
    
    8/09-7/11
    
    $4.50 floor
    
    NYMEX$7.90 ceilingCostless Collar
    
    
    2,590,000
    
    
    
    5,000
    
    
    12/09-11/11
    
    $4.50 floor
    
    NYMEX$9.00 ceilingTotal
    
    
    9,698,000
 (1)
    
    NYMEX refers to quoted prices on the New York Mercantile Exchange. CIG refers to the
Colorado Interstate Gas price as quoted on the first day of each month.  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price Risks
   Interest Rate Risks
    25




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
   
  
 ITEM 1. LEGAL PROCEEDINGS
    
 ITEM 1A. RISK FACTORS
   26




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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit
    

Description: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).3.1
    (i)
    
    Amendment to Bylaws, New Article II, Section 3  Quorum (incorporated by reference from
Exhibit 3.1 of the companys Current report on Form 8-K dated March 5, 2010).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.
  27




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##### Table of Contents



SIGNATURES
  DOUBLE EAGLE PETROLEUM CO.
(Registrant)Date:  August 5, 2010
    By:
    /s/   Richard D. DoleRichard D. DoleChief Executive Officer
(Principal Executive Officer)Date:  August 5, 2010
    By:
    /s/   Kurtis S. HooleyKurtis S. HooleyChief Financial Officer
(Principal Accounting Officer)  28




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##### Table of Contents



Exhibit Number
    
    Description3.1
    (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).3.1
    (i)
    
    Amendment to Bylaws, New Article II, Section 3  Quorum
(incorporated by reference from Exhibit 3.1 of the
companys Current report on Form 8-K dated March 5, 2010).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).
  29




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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.
  30