##### 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, 2008
 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 0-6529
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Small reporting Company o(Do not check if a small reporting company)
  o þ
  Class
Common stock, $.10 par value
    
    Outstanding as of November 1, 2008
9,170,910




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##### 



Page #PART I. Financial Information:Item 1. Financial StatementsConsolidated Balance Sheet as of September 30, 2008 (Unaudited)
and December 31, 2007
    
    
    2Consolidated Statement of Operations for the Three and Nine
Months Ended September 30, 2008 and 2007 (Unaudited)
    
    
    3Consolidated Statement of Cash Flows for the Nine Months Ended
September 30, 2008 and 2007 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    22PART II. Other Information:Item 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 6. Exhibits
    
    
    23Signatures
    
    
    24Exhibit 31.1Exhibit 31.2Exhibit 32
   1




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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED BALANCE SHEET
 (Amounts in thousands of dollars except share and per share data)
 September 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    684
    
    
    $
    125Cash held in escrow
    
    
    615
    
    
    
    719Accounts receivable
    
    
    17,943
    
    
    
    3,664Assets from price risk management
    
    
    7,568
    
    
    
    Other current assets
    
    
    1,947
    
    
    
    586Total current assets
    
    
    28,757
    
    
    
    5,094Oil and gas properties and equipment, successful efforts method:Developed properties
    
    
    116,645
    
    
    
    61,394Wells in progress
    
    
    9,621
    
    
    
    29,768Gas transportation pipeline
    
    
    5,465
    
    
    
    5,465Undeveloped properties
    
    
    3,169
    
    
    
    3,147Corporate and other assets
    
    
    1,955
    
    
    
    1,585136,855
    
    
    
    101,359Less accumulated depreciation, depletion and amortization
    
    
    (32,022
    )
    
    
    (24,785
    )Net properties and equipment
    
    
    104,833
    
    
    
    76,574Deferred tax asset
    
    
    
    
    
    
    2,873Assets from price risk management
    
    
    4,175
    
    
    
    Other assets
    
    
    
    
    
    
    56TOTAL ASSETS
    
    $
    137,765
    
    
    $
    84,597LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    20,736
    
    
    $
    8,584Accrued expenses
    
    
    8,969
    
    
    
    2,079Liabilities from price risk management
    
    
    
    
    
    
    474Accrued production taxes
    
    
    2,833
    
    
    
    969Total current liabilities
    
    
    32,538
    
    
    
    12,106Line of credit
    
    
    17,966
    
    
    
    3,445Asset retirement obligation
    
    
    2,067
    
    
    
    1,449Liabilities from price risk management
    
    
    
    
    
    
    1,001Deferred tax liability
    
    
    1,681
    
    
    
    Total liabilities
    
    
    54,252
    
    
    
    18,001Preferred stock, $0.10 par value; 10,000,000 shares authorized;
1,610,000 shares issued and outstanding as of
September 30, 2008 and December 31, 2007
    
    
    37,972
    
    
    
    37,972Stockholders equity:Common stock, $0.10 par value; 50,000,000 shares authorized;
9,168,031 and 9,148,105 shares issued and outstanding as of
September 30, 2008 and December 31, 2007, respectively
    
    
    917
    
    
    
    915Additional paid-in capital
    
    
    34,501
    
    
    
    33,670Retained
earnings (accumulated deficit)
    
    
    764
    
    
    
    (4,486
    )Accumulated
other comprehensive income (loss)
    
    
    9,359
    
    
    
    (1,475
    )Total stockholders equity
    
    
    45,541
    
    
    
    28,624TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    137,765
    
    
    $
    84,597
   2




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##### Table of Contents



DOUBLE
EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENT OF OPERATIONS  (Amounts in thousands of dollars except share and per share data)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007RevenuesOil and gas revenue
    
    $
    11,662
    
    
    $
    3,779
    
    
    $
    29,439
    
    
    $
    11,812Transportation and gathering revenue
    
    
    1,283
    
    
    
    242
    
    
    
    2,370
    
    
    
    675Price risk management activities
    
    
    1,020
    
    
    
    
    
    
    
    3,042
    
    
    
    Other income, net
    
    
    41
    
    
    
    62
    
    
    
    258
    
    
    
    203Total revenues
    
    
    14,006
    
    
    
    4,083
    
    
    
    35,109
    
    
    
    12,690Costs and expensesProduction costs
    
    
    1,982
    
    
    
    844
    
    
    
    5,074
    
    
    
    3,910Production taxes
    
    
    1,419
    
    
    
    470
    
    
    
    3,753
    
    
    
    1,471Exploration expenses including dry holes
    
    
    391
    
    
    
    5,314
    
    
    
    922
    
    
    
    5,592Pipeline operating costs
    
    
    636
    
    
    
    165
    
    
    
    1,383
    
    
    
    250General and administrative
    
    
    1,652
    
    
    
    1,105
    
    
    
    3,861
    
    
    
    2,880Depreciation, depletion and amortization
    
    
    3,462
    
    
    
    1,349
    
    
    
    7,456
    
    
    
    4,094Impairment of equipment and properties
    
    
    
    
    
    
    2,033
    
    
    
    
    
    
    
    2,124Total costs and expenses
    
    
    9,542
    
    
    
    11,280
    
    
    
    22,449
    
    
    
    20,321Income (loss) from operations
    
    
    4,464
    
    
    
    (7,197
    )
    
    
    12,660
    
    
    
    (7,631
    )Interest (expense) income, net
    
    
    
    
    
    
    180
    
    
    
    (64
    )
    
    
    25Income (loss) before income taxes
    
    
    4,464
    
    
    
    (7,017
    )
    
    
    12,596
    
    
    
    (7,606
    )Provision for deferred taxes
    
    
    (1,557
    )
    
    
    2,225
    
    
    
    (4,554
    )
    
    
    2,544NET INCOME (LOSS)
    
    $
    2,907
    
    
    $
    (4,792
    )
    
    $
    8,042
    
    
    $
    (5,062
    )Preferred stock dividends
    
    
    (930
    )
    
    
    (879
    )
    
    
    (2,792
    )
    
    
    (879
    )Net Income (loss) attributable to common stock
    
    $
    1,977
    
    
    $
    (5,671
    )
    
    $
    5,250
    
    
    $
    (5,941
    )Net income (loss) per common share:Basic
    
    $
    0.22
    
    
    $
    (0.62
    )
    
    $
    0.57
    
    
    $
    (0.65
    )Diluted
    
    $
    0.22
    
    
    $
    (0.62
    )
    
    $
    0.57
    
    
    $
    (0.65
    )Weighted average shares outstanding:Basic
    
    
    9,167,977
    
    
    
    9,148,105
    
    
    
    9,156,079
    
    
    
    9,103,339Diluted
    
    
    9,167,977
    
    
    
    9,148,105
    
    
    
    9,156,215
    
    
    
    9,103,339
   3




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##### Table of Contents



DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 (Amounts in thousands of dollars)
  Nine Months Ended September 30,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    8,042
    
    
    $
    (5,062
    )Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, depletion, amortization and accretion of
asset retirement obligation
    
    
    7,998
    
    
    
    4,116Abandonment of non-producing properties
    
    
    188
    
    
    
    5,176Impairment of equipment and properties
    
    
    
    
    
    
    2,124Provision for deferred taxes
    
    
    4,554
    
    
    
    (2,544
    )Directors fees paid in stock
    
    
    90
    
    
    
    91Non-cash employee stock option expense
    
    
    464
    
    
    
    286Non-cash gain on derivative contracts
    
    
    (2,384
    )
    
    
    Gain on sales of producing property and equipment
    
    
    (66
    )Gain on sale of working interest in non-producing property
    
    
    
    
    
    
    (98
    )Changes in current assets and liabilities:Decrease in deposit held in escrow
    
    
    104
    
    
    
    44Decrease (increase) in accounts receivable
    
    
    (11,832
    )
    
    
    194Increase in other current assets
    
    
    (1,361
    )
    
    
    (965
    )Increase (decrease) in accounts payable
    
    
    6,610
    
    
    
    (4,023
    )Increase in accrued expenses
    
    
    829
    
    
    
    663Increase in accrued production taxes
    
    
    1,864
    
    
    
    542NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    15,100
    
    
    
    544Cash flows from investing activities:Sale of producing property and equipment
    
    
    747
    
    
    
    Additions of producing properties and equipment
    
    
    (26,904
    )
    
    
    (22,733
    )Additions of corporate and non-producing properties
    
    
    (392
    )
    
    
    (719
    )Proceeds from sale of non-producing properties
    
    
    
    
    
    
    244NET CASH USED IN INVESTING ACTIVITIES
    
    
    (26,549
    )
    
    
    (23,208
    )Cash flows from financing activities:Net proceeds from sale of common stock
    
    
    
    
    
    
    9,990Net proceeds from sale of preferred stock
    
    
    
    
    
    
    37,967Dividends paid on preferred stock
    
    
    (2,792
    )
    
    
    (879
    )Net borrowings (payments) on line of credit
    
    
    14,521
    
    
    
    (13,221
    )Exercise of options
    
    
    279
    
    
    
    27NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    12,008
    
    
    
    33,884Change in cash and cash equivalents
    
    
    559
    
    
    
    11,220Cash and cash equivalents at beginning of period
    
    
    125
    
    
    
    611CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    684
    
    
    $
    11,831Supplemental disclosure of cash and non-cash transactions:Cash paid for interest
    
    $
    390
    
    
    $
    333Interest capitalized
    
    $
    515
    
    
    $
    273Receivables from joint interest partners
    
    $
    2,447
    
    
    $
    Stock-based compensation expense
    
    $
    554
    
    
    $
    376Additions to developed properties included in current liabilities
    
    $
    16,511
    
    
    $
    2,471
   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
     Recently adopted accounting pronouncements
   New accounting pronouncements
   5




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The Hierarchy
of Generally Accepted Accounting Principles
 2.     Earnings per share
   For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss) attributable to
common stock
    
    $
    1,977
    
    
    $
    (5,671
    )
    
    $
    5,250
    
    
    $
    (5,941
    )Weighted average shares:Weighted average shares  basic
    
    
    9,167,977
    
    
    
    9,148,105
    
    
    
    9,156,079
    
    
    
    9,103,339Dilution effect of stock options
outstanding at the end of period
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    Weighted average shares  diluted
    
    
    9,167,977
    
    
    
    9,148,105
    
    
    
    9,156,215
    
    
    
    9,103,339Earnings per share:Basic
    
    $
    0.22
    
    
    $
    (0.62
    )
    
    $
    0.57
    
    
    $
    (0.65
    )Diluted
    
    $
    0.22
    
    
    $
    (0.62
    )
    
    $
    0.57
    
    
    $
    (0.65
    )
  6




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##### Table of Contents



For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Options to purchase common stock
    
    
    151,702
    
    
    
    7,624
    
    
    
    124,245
    
    
    
    26,096
 3.
    
    Fair Value of Financial Instruments
  
    
    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
  Line of Credit
  Derivative Instruments
      7




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##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsDerivative instruments
    
    $
    
    
    
    $
    11,743
    
    
    $
    
    
    
    $
    11,743Total assets at fair value
    
    $
    
    
    
    $
    11,743
    
    
    $
    
    
    
    $
    11,743LiabilitiesDerivative instruments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total liabilities at fair value
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 4.
    
    Impairment of Long-Lived Assets
  Suspended Well Costs
 Accounting for Suspended Well Costs
 5.
    
    Reserves
  6.
    
    Income Taxes
    8




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##### Table of Contents



7.
    
    Line of Credit
    8.
    
    Series A Cumulative Preferred Stock
   Redemption Date on or Before
    
    Redemption PriceJune 30, 2009
    
    $
    25.75June 30, 2010
    
    $
    25.50June 30, 2011
    
    $
    25.25June 30, 2012 or thereafter
    
    $
    25.00
   9




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##### Table of Contents



9.
    
    Comprehensive Income
  For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss) attributable to
common stock
    
    $
    1,977
    
    
    $
    (5,671
    )
    
    $
    5,250
    
    
    $
    (5,941
    )Change in derivative instrument
fair value, net of tax
benefit of $0
    
    
    15,573
    
    
    
    
    
    
    
    9,536
    
    
    
    Reclassification to earnings
    
    
    177
    
    
    
    
    
    
    
    1,298
    
    
    
    Comprehensive income (loss)
    
    $
    17,727
    
    
    $
    (5,671
    )
    
    $
    16,084
    
    
    $
    (5,941
    )
  September 30,
    
    
    December 31,2008
    
    
    2007Net change in derivative instrument fair value, net
of tax benefit of $0 and $0
    
    $
    9,359
    
    
    $
    (1,475
    )Total accumulated other comprehensive gain (loss), net
    
    $
    9,359
    
    
    $
    (1,475
    )
  10.
    
    Cash Held in Escrow
  11.
    
    Accounts Receivable
  12.
    
    Intercompany Transactions
   13.
    
    Commitments and Contingent Liabilities
 Litigation
 Double Eagle Petroleum Co.; Antelope Energy Company LLC; E. Cecile Martin f/k/a Cecile Hurt;
Hurt Properties, L.P.; James R. Hurt; John D. Traut, LLC; and Newfield Exploration Company vs.
Burlington Resources Oil & Gas Company, LP, a division of ConocoPhillips Company; ConocoPhillips
Company, a Delaware corporation.
  10




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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, 2007 including the
following:
 
    
    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 in connection with low oil and gas prices;
 
    
    Weather and other natural phenomena;
 
    
    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;
 
    
    General economic and political conditions, including the current financial market
volatility, 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;
 
    
    Increases in the cost of drilling, completion and gas collection or other costs of
production and operations;
 
    
    Our ability to continue to develop our coal bed methane projects in the Atlantic Rim;
 
    
    Revisions to estimates of required capital expenditures;
 
    
    Our ability to increase our natural gas and oil reserves;
 
    
    The amount and timing of capital deployment in new investment opportunities;
 
    
    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;
 
    
    Unexpected changes in credit worthiness of third-parties that we enter into business
agreements with;
 
    
    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.
  11




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Business Overview and Strategy
   (Amounts in thousands of dollars, except amounts per unit of
production):
 
    
    Average Daily Production
  Atlantic Rim .
  12




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##### Table of Contents



Pinedale Anticline
  Madden Deep Unit
 
    
    Oil and Gas Sales
   
    
    Cash Flow from Operations
   13




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OVERVIEW OF FINANCIAL CONDITION AND LIQUIDITY
 Liquidity and Capital Resources
   September 30,
    
    
    December 31,2008
    
    
    2007Financial Position SummaryCash and cash equivalents
    
    $
    684
    
    
    $
    125Working capital
    
    $
    (3,781
    )
    
    $
    (7,012
    )Line of credit outstanding
    
    $
    17,966
    
    
    $
    3,445Stockholders equity
    
    $
    45,541
    
    
    $
    28,624RatiosLong-term debt to total capital ratio
    
    
    28.3
    %
    
    
    10.7
    %Total debt to equity ratio
    
    
    39.5
    %
    
    
    12.0
    %
  Cash flow activities
  Nine Months Ended September 30,2008
    
    
    2007Cash provided by (used in):Operating Activities
    
    $
    15,100
    
    
    $
    544Investing Activities
    
    
    (26,549
    )
    
    
    (23,208
    )Financing Activities
    
    
    12,008
    
    
    
    33,884Net change in cash
    
    $
    559
    
    
    $
    11,220
    14




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Off-Balance Sheet Arrangements
   Capital Requirements
  Line of Credit
      15




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RESULTS OF OPERATIONS
 Three months ended September 30, 2008 compared to the three months ended September 30, 2007
 Oil and gas sales volume and price comparisons
 Three Months Ended September 30,
    
    
    Percent
    
    
    Percent2008
    
    
    2007
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    1,876,642
    
    
    $
    6.27
    
    
    
    749,497
    
    
    $
    4.79
    
    
    
    150
    %
    
    
    31
    %Oil (Bbls)
    
    
    5,685
    
    
    $
    98.42
    
    
    
    2,798
    
    
    $
    66.91
    
    
    
    103
    %
    
    
    47
    %Mcfe
    
    
    1,910,752
    
    
    $
    6.45
    
    
    
    766,285
    
    
    $
    4.93
    
    
    
    149
    %
    
    
    31
    %
        16




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##### Table of Contents



Transportation and gathering revenue
  Price Risk Management
  Oil and gas production expenses, depreciation, depletion and amortization
 Three Months Ended September 30,2008
    
    
    2007(in dollars per mcfe)Average price
    
    $
    6.45
    
    
    $
    4.93Production costs
    
    
    1.04
    
    
    
    1.10Production taxes
    
    
    0.74
    
    
    
    0.61Depletion and amortization
    
    
    1.76
    
    
    
    1.52Total operating costs
    
    
    3.54
    
    
    
    3.23Gross margin
    
    $
    2.91
    
    
    $
    1.70Gross margin percentage
    
    
    45
    %
    
    
    34
    %
   Pipeline operating costs
  General and administrative
   17




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##### Table of Contents



Income taxes
  Nine months ended September 30, 2008 compared to the nine months ended September 30, 2007
 Oil and gas sales volume and price comparisons
 Nine Months Ended September 30,
    
    
    Percent
    
    
    Percent2008
    
    
    2007
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    4,215,099
    
    
    $
    6.80
    
    
    
    2,224,437
    
    
    $
    5.05
    
    
    
    89
    %
    
    
    35
    %Oil (Bbls)
    
    
    14,762
    
    
    $
    97.18
    
    
    
    9,998
    
    
    $
    58.34
    
    
    
    48
    %
    
    
    67
    %Mcfe
    
    
    4,303,671
    
    
    $
    6.99
    
    
    
    2,284,425
    
    
    $
    5.17
    
    
    
    88
    %
    
    
    35
    %
       Transportation and gathering revenue
   18




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##### Table of Contents



Price Risk Management
  Oil and gas production expenses, depreciation, depletion and amortization
 Nine Months Ended September 30,2008
    
    
    2007(in dollars per mcfe)Average price
    
    $
    6.99
    
    
    $
    5.17Production costs
    
    
    1.18
    
    
    
    1.71Production taxes
    
    
    0.87
    
    
    
    0.64Depletion and amortization
    
    
    1.67
    
    
    
    1.62Total operating costs
    
    
    3.72
    
    
    
    3.97Gross margin
    
    $
    3.27
    
    
    $
    1.20Gross margin percentage
    
    
    47
    %
    
    
    23
    %
   Pipeline operating costs
  General and administrative
   19




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##### Table of Contents



Income taxes
  CONTRACTED VOLUMES
    FORWARD
SALES CONTRACTS
 RemainingContractual
    
    
    Daily
    
    
    
    
    
    
    FixedProperty
    
    Volume
    
    
    Production
    
    
    Term
    
    
    Price/McfCatalina
    
    
    243,000
    
    
    
    1,000
    
    
    
    06/07-05/09
    
    
    $
    5.47273,000
    
    
    
    1,000
    
    
    
    07/07-06/09
    
    
    $
    5.84546,000
    
    
    
    2,000
    
    
    
    07/07-06/09
    
    
    $
    5.69396,000
    
    
    
    1,000
    
    
    
    11/07-10/09
    
    
    $
    5.66Atlantic Rim
    
    
    304,000
    
    
    
    1,000
    
    
    
    08/07-07/09
    
    
    $
    6.15Pinedale Anticline
    
    
    273,000
    
    
    
    1,000
    
    
    
    07/07-06/09
    
    
    $
    6.41Company Total
    
    
    2,035,000
   20




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##### Table of Contents



RemainingContractual
    
    
    DailyType of Contract
    
    Volume
    
    
    Production
    
    Term
    
    Price
    
    Price Index (1)Costless Collar
    
    
    62,000
    
    
    2,000
    
    5/08-10/08
    
    $6.50 floor/$10.00 ceiling
    
    CIGCostless Collar
    
    
    453,000
    
    
    3,000
    
    11/08-3/09
    
    $6.50 floor/$13.50 ceiling
    
    CIGCostless Collar
    
    
    155,000
    
    
    5,000
    
    7/08-10/08
    
    $10.00 floor/$17.00 ceiling
    
    NYMEXOption (2)
    
    
    755,000
    
    
    5,000
    
    11/08-3/09
    
    $8.23 floor
    
    CIGFixed Price Swap
    
    
    2,920,000
    
    
    8,000
    
    1/09-12/09
    
    $7.34
    
    CIGFixed Price Swap
    
    
    2,920,000
    
    
    8,000
    
    1/11-12/11
    
    $7.07
    
    CIGTotal
    
    
    7,265,000
 (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.(2)
    
    The $8.23 CIG floor is made up of two separate contracts, a $10.50 NYMEX floor and a $2.27
basis hedge.    CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Price Risks
    21




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##### Table of Contents



Interest Rate Risks
  
 ITEM 4. CONTROLS AND PROCEDURES
   
  
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  Declining economic conditions could negatively impact our business.
  The trading volatility and price of our common stock may be affected by many factors.
  
    
    The current financial crisis, which has caused significant market volatility
worldwide;
 
    
    Governmental action or inaction in light of key indicators of economic activity
or events that can significantly influence U.S. financial markets, and media reports and
commentary about economic or other matters, even when the matter in question does not
directly relate to our business; and
 
    
    Trading activity in our common stock, which can be a reflection of changes in
the prices for oil and gas, or market commentary or expectations about our business and
overall industry.
  22




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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit
    
    Description:10.1
    
    
    Employment Agreement between the Company and Richard Dole, dated September 4, 2008
(incorporated by reference from Exhibit 10.1 of the Companys Current Report of Form 8-K dated
September 9, 2008).10.2
    
    
    Employment Agreement between the Company and Kurtis Hooley, dated September 4, 2008
(incorporated by reference from Exhibit 10.2 of the Companys Current Report of Form 8-K dated
September 9, 2008).10.3
    
    
    Employment Agreement between the Company and D. Steven Degenfelder, dated September 4, 2008
(incorporated by reference from Exhibit 10.3 of the Companys Current Report of Form 8-K dated
September 9, 2008).10.4
    
    
    Employment Agreement between the Company and Robert Reiner, dated September 4, 2008
(incorporated by reference from Exhibit 10.4 of the Companys Current Report of Form 8-K dated
September 9, 2008).10.5
    
    
    Employment Agreement between the Company and Aubrey Harper, dated September 4, 2008
(incorporated by reference from Exhibit 10.5 of the Companys Current Report of Form 8-K dated
September 9, 2008).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.
  23




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##### Table of Contents



SIGNATURES
  DOUBLE EAGLE PETROLEUM CO.
                    
(Registrant)Date: November 7, 2008
    By:
    /s/   Richard D. DoleRichard D. DoleChief Executive OfficerDate: November 7, 2008
    By:
    /s/   Kurtis S. HooleyKurtis S. HooleyChief Financial Officer  24




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##### Table of Contents



Exhibit Number
    
    Description10.1
    
    
    Employment Agreement between the Company and Richard Dole,
dated September 4 2008 (incorporated by reference from
Exhibit 10.1 of the Companys Current Report of Form 8-K
dated September 9, 2008).10.2
    
    
    Employment Agreement between the Company and Kurtis Hooley,
dated September 4, 2008 (incorporated by reference from
Exhibit 10.2 of the Companys Current Report of Form 8-K
dated September 9, 2008).10.3
    
    
    Employment Agreement between the Company and D. Steven
Degenfelder, dated September 4, 2008 (incorporated by
reference from Exhibit 10.3 of the Companys Current Report
of Form 8-K dated September 9, 2008).10.4
    
    
    Employment Agreement between the Company and Robert Reiner,
dated September 4, 2008 (incorporated by reference from
Exhibit 10.4 of the Companys Current Report of Form 8-K
dated September 9, 2008).10.5
    
    
    Employment Agreement between the Company and Aubrey Harper,
dated September 4, 2008 (incorporated by reference from
Exhibit 10.5 of the Companys Current Report of Form 8-K
dated September 9, 2008).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.
  25