##### 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 quarterly period ended September 30, 2007
 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
    
    83-0214692(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification no.)
 777 Overland Trail, P.O. Box 766, Casper, Wyoming 82602
 307-237-9330
 
  þ o
  o þ o
  o þ
  Class
    
    Outstanding as of November 1, 2007Common stock, $.10 par value
    
    9,148,105




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##### 



PagePART I. Financial Information:Item 1. Financial StatementsConsolidated Balance Sheet as of September 30, 2007 (Unaudited) and December 31, 2006
    
    
    2Consolidated Statement of Operations for the Three and Nine Months Ended September 30, 2007 and 2006 (Unaudited)
    
    
    3Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2007 and 2006 (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II. Other Information:Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 6. Exhibits
    
    
    22Signatures
    
    
    22Exhibit 13.1Exhibit 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 31,2007
    
    
    2006(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    11,831
    
    
    $
    611Cash held in escrow
    
    
    663
    
    
    
    707Accounts receivable
    
    
    4,434
    
    
    
    5,047Pipe Inventory
    
    
    1,522
    
    
    
    601Other current assets
    
    
    252
    
    
    
    208Total current assets
    
    
    18,702
    
    
    
    7,174Oil and gas properties and equipment, successful efforts method:Developed properties
    
    
    54,980
    
    
    
    53,677Wells in progress
    
    
    24,455
    
    
    
    13,839Gas transportation pipeline
    
    
    5,465
    
    
    
    5,412Undeveloped properties
    
    
    3,137
    
    
    
    3,313Corporate and other assets
    
    
    1,509
    
    
    
    1,02489,546
    
    
    
    77,265Less accumulated depreciation, depletion and amortization
    
    
    (23,769
    )
    
    
    (20,079
    )Net properties and equipment
    
    
    65,777
    
    
    
    57,186Other assets
    
    
    56
    
    
    
    46TOTAL ASSETS
    
    $
    84,535
    
    
    $
    64,406LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,015
    
    
    $
    7,964Accrued expenses
    
    
    2,002
    
    
    
    5,125Accrued production taxes
    
    
    1,633
    
    
    
    1,091Total current liabilities
    
    
    7,650
    
    
    
    14,180Line of credit
    
    
    
    
    
    
    13,221Asset retirement obligation
    
    
    697
    
    
    
    694Deferred tax liability
    
    
    726
    
    
    
    3,269Total liabilities
    
    
    9,073
    
    
    
    31,364Stockholders equity:Preferred stock, $0.10 par value; 10,000,000 shares authorized;
1,610,000 and 0 shares issued and outstanding as of
September 30, 2007 and December 31, 2006, respectively
    
    
    161
    
    
    
    Common stock, $0.10 par value; 50,000,000 shares authorized;
9,148,105 and 8,641,104 shares issued and outstanding as of
September 30, 2007 and December 31, 2006, respectively
    
    
    915
    
    
    
    864Additional paid-in capital
    
    
    71,400
    
    
    
    23,251Retained earnings
    
    
    2,986
    
    
    
    8,927Total stockholders equity
    
    
    75,462
    
    
    
    33,042TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    84,535
    
    
    $
    64,406
   2




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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 (Amounts in thousands of dollars except share and per share data)
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006RevenuesOil and gas sales
    
    $
    3,779
    
    
    $
    4,163
    
    
    $
    11,812
    
    
    $
    12,808Transportation revenue
    
    
    242
    
    
    
    272
    
    
    
    675
    
    
    
    272Other income, net
    
    
    62
    
    
    
    17
    
    
    
    203
    
    
    
    53Total revenues
    
    
    4,083
    
    
    
    4,452
    
    
    
    12,690
    
    
    
    13,133Costs and expensesProduction costs
    
    
    1,009
    
    
    
    849
    
    
    
    4,160
    
    
    
    2,532Production taxes
    
    
    470
    
    
    
    509
    
    
    
    1,471
    
    
    
    1,527Exploration expenses including dry holes
    
    
    5,314
    
    
    
    406
    
    
    
    5,592
    
    
    
    512General and administrative
    
    
    1,105
    
    
    
    858
    
    
    
    2,880
    
    
    
    2,806Depreciation, depletion and amortization
    
    
    1,349
    
    
    
    1,304
    
    
    
    4,094
    
    
    
    3,468Impairment of equipment and properties
    
    
    2,033
    
    
    
    
    
    
    
    2,124
    
    
    
    Total costs and expenses
    
    
    11,280
    
    
    
    3,926
    
    
    
    20,321
    
    
    
    10,845Income (Loss) from operations
    
    
    (7,197
    )
    
    
    526
    
    
    
    (7,631
    )
    
    
    2,288Interest (expense) income, net
    
    
    180
    
    
    
    (2
    )
    
    
    25
    
    
    
    (67
    )Income (Loss) before income taxes
    
    
    (7,017
    )
    
    
    524
    
    
    
    (7,606
    )
    
    
    2,221(Provision) Benefit for deferred taxes
    
    
    2,225
    
    
    
    (183
    )
    
    
    2,544
    
    
    
    (777
    )NET INCOME (Loss)
    
    
    (4,792
    )
    
    
    341
    
    
    
    (5,062
    )
    
    
    1,444Preferred stock requirements
    
    
    (879
    )
    
    
    
    
    
    
    (879
    )
    
    
    NET INCOME (Loss) attributable to common stock
    
    $
    (5,671
    )
    
    $
    341
    
    
    $
    (5,941
    )
    
    $
    1,444Earnings per share of common stock:Basic
    
    $
    (0.62
    )
    
    $
    0.04
    
    
    $
    (0.65
    )
    
    $
    0.17Diluted
    
    $
    (0.62
    )
    
    $
    0.04
    
    
    $
    (0.65
    )
    
    $
    0.17Weighted average shares outstanding:Basic
    
    
    9,148,105
    
    
    
    8,639,604
    
    
    
    9,103,339
    
    
    
    8,629,860Diluted
    
    
    9,148,105
    
    
    
    8,666,900
    
    
    
    9,103,339
    
    
    
    8,660,696
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DOUBLE EAGLE PETROLEUM CO.
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 (Amounts in thousands of dollars)
  Nine months ended September 30,2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    (5,062
    )
    
    $
    1,444Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Depreciation, depletion, amortization and accretion of
asset retirement obligation
    
    
    4,116
    
    
    
    3,471Abandonment of non-producing properties
    
    
    5,176
    
    
    
    287Impairment of equipment and properties
    
    
    2,124
    
    
    
    Provision (benefit) for deferred taxes
    
    
    (2,544
    )
    
    
    777Directors fees paid in stock
    
    
    91
    
    
    
    97Non-cash employee stock option expense
    
    
    286
    
    
    
    342Gain on sale of working interest in non-producing property
    
    
    (98
    )
    
    
    Changes in current assets and liabilities:Decrease (Increase) in deposit held in escrow
    
    
    44
    
    
    
    (4,471
    )Decrease (Increase) in accounts receivable
    
    
    194
    
    
    
    1,969Decrease (Increase) in pipe inventory
    
    
    (921
    )
    
    
    (601
    )Decrease (Increase) in other current assets
    
    
    (44
    )
    
    
    233Increase (Decrease) in accounts payable
    
    
    (4,023
    )
    
    
    (62
    )Increase (Decrease) in accrued expenses
    
    
    663
    
    
    
    3,651Increase (Decrease) in accrued production taxes
    
    
    542
    
    
    
    224NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    544
    
    
    
    7,361Cash flows from investing activities:Additions of producing properties and equipment
    
    
    (22,733
    )
    
    
    (13,466
    )Additions of corporate and non-producing properties
    
    
    (719
    )
    
    
    (386
    )Proceeds from sale of non-producing properties
    
    
    244
    
    
    
    NET CASH USED IN INVESTING ACTIVITIES
    
    
    (23,208
    )
    
    
    (13,852
    )Cash flows from financing activities:Net proceeds from sale of common stock
    
    
    9,990
    
    
    
    Net proceeds from sale of preferred stock
    
    
    37,967
    
    
    
    Dividends paid on preferred stock
    
    
    (879
    )
    
    
    Net payments on line of credit
    
    
    (13,221
    )
    
    
    5,320Settlement of Options
    
    
    
    
    
    
    (104
    )Exercise of options
    
    
    27
    
    
    
    325NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    33,884
    
    
    
    5,541Change in cash and cash equivalents
    
    
    11,220
    
    
    
    (950
    )Cash and cash equivalents at beginning of period
    
    
    611
    
    
    
    1,431CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    11,831
    
    
    $
    481Supplemental disclosure of cash and non-cash transactions:Cash paid for interest
    
    $
    333
    
    
    $
    45Interest capitalized
    
    $
    273
    
    
    $
    197Additions to developed properties included in current liabilities
    
    $
    2,471
    
    
    $
    3,105Additions to developed properties for retirement obligations
    
    $
    5
    
    
    $
    80
   4




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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
     New accounting pronouncements
   2.
    
    Earnings per share of common stock
   5




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    (4,792
    )
    
    $
    341
    
    
    $
    (5,062
    )
    
    $
    1,444Preferred stock requirements
    
    
    (879
    )
    
    
    
    
    
    
    (879
    )
    
    
    Income attributable to common stock
    
    $
    (5,671
    )
    
    $
    341
    
    
    $
    (5,941
    )
    
    $
    1,444Weighted average shares:Weighted average shares  basic
    
    
    9,148,105
    
    
    
    8,639,604
    
    
    
    9,103,339
    
    
    
    8,629,860Dilution effect of stock options
outstanding at the end of period
    
    
    
    
    
    
    27,296
    
    
    
    
    
    
    
    30,836Weighted average shares  fully diluted
    
    
    9,148,105
    
    
    
    8,666,900
    
    
    
    9,103,339
    
    
    
    8,660,696Earnings per share of common stock:Basic
    
    $
    (0.62
    )
    
    $
    0.04
    
    
    $
    (0.65
    )
    
    $
    0.17Fully diluted
    
    $
    (0.62
    )
    
    $
    0.04
    
    
    $
    (0.65
    )
    
    $
    0.17
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Options to purchase common stock
    
    
    7,624
    
    
    
    
    
    
    
    26,096
    
    
    
    
 3.
    
    Impairment of Long-Lived Assets
     6




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Suspended Well Costs
 Accounting for Suspended Well Costs
   Beginning balance at January 1, 2007
    
    $
    11,541Additions to capitalized exploratory well costs pending
the determination of proved reserves
    
    
    3,590Reclassifications to wells, facilities and equipment
based on the determination of proved reserves
    
    
    (1,655
    )Capitalized exploratory well costs charged to expense
    
    
    (4,388
    )Ending balance at September 30, 2007
    
    $
    9,088
  Capitalized exploratory well costs that have been
capitalized for a period of one year or less
    
    
    
    
    
    $
    5,929Capitalized exploratory well costs that have been
capitalized for a period greater than one year
    
    
    
    
    
    
    3,159Balance at September 30, 2007
    
    
    
    
    
    $
    9,088Number of projects that have exploratory well costs that
have been capitalized for a period greater than one year
    
    
    
    
    
    
    2
    7




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Unsuccessful Exploratory Well
  4.
    
    Income Taxes
     5.
    
    Line of Credit
     8




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##### Table of Contents



6.
    
    Sale of Stock
   7.
    
    Cash Held in Escrow
  8.
    
    Intercompany Note Receivable
  9.
    
    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. th th
  9




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##### Table of Contents



10.
    
    Accounts Receivable
  11.
    
    Shareholders Rights Plan
     
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS
 (Amounts in thousands of dollars, except amounts per unit of production)
  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, 2006 including the
following:
 
    
    Our ability to continue to develop our coal bed methane projects in the Atlantic Rim;
 
    
    Our ability to obtain, or a decline in, oil or gas production, or a decline in oil or
gas prices;
 
    
    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 meet growth projections;
 
    
    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 financing;
 
    
    Our ability to successfully integrate and profitably operate any future acquisitions;
  10




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
    
    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;
 
    
    General economic and political conditions, including 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; and
 
    
    The outcome of any future litigation or similar disputes and the impact on any such
outcome or related settlements.
 We may also make material acquisitions or divestitures or enter into financing transactions. None
of these events can be predicted with certainty and the possibility of their occurring is not taken
into consideration in the forward-looking statements.
 New factors that could cause actual results to differ materially from those described in
forward-looking statements emerge from time to time, and it is not possible for us to predict all
such factors, or the extent to which any such factor or combination of factors may cause actual
results to differ from those contained in any forward-looking statement. We assume no obligation to
update publicly any such forward -looking statements, whether as a result of new information,
future events, or otherwise.
 The following discussion should be read in conjunction with Item 7.  Managements Discussion and
Analysis of Financial Condition and Results of Operations  included in our 2006 Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
 Business Overview and Strategy
   (Amounts in thousands of dollars, except amounts per unit of
production):
 Average Daily Production
  Atlantic Rim.
  11




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##### Table of Contents



Pinedale Anticline
  Madden Deep Unit
 Oil and Gas Sales
   OVERVIEW OF FINANCIAL CONDITION AND LIQUIDITY
 Liquidity and Capital Resources
   12




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##### Table of Contents



September 30,
    
    December 31,2007
    
    2006Financial Position SummaryCash and cash equivalents
    
    $
    11,831
    
    
    $
    611Working capital
    
    $
    11,052
    
    
    $
    (7,006
    )Line of credit outstanding
    
    $
    
    
    
    $
    13,221Stockholders equity
    
    $
    75,462
    
    
    $
    33,042RatiosLong-term debt to total capital ratio
    
    
    0.0
    %
    
    
    28.6
    %Total debt to equity ratio
    
    
    0.0
    %
    
    
    40.0
    %
  Cash flow activities
  Nine months ended September 30,2007
    
    
    2006Cash provided by (used in):Operating Activities
    
    $
    544
    
    
    $
    7,361Investing Activities
    
    
    (23,208
    )
    
    
    (13,852
    )Financing Activities
    
    
    33,884
    
    
    
    5,541Net change in cash
    
    $
    11,220
    
    
    $
    (950
    )
    13




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##### Table of Contents



Off-Balance Sheet Arrangements
   Capital Requirements
    
    
    The South Fillmore exploratory prospect.The South Fillmore PH State 16-1 (South
Fillmore) was completed during the third quarter of 2006. During testing of the well in
the winter of 2006-2007, mechanical problems developed in the borehole. The Company plans
to re-perforate the well early in 2008, with the intention of completing the well as a
producer. In July 2007, GMT Exploration Company LLC drilled the SJ Fee 11-9 well, in which
the Company has a 50% working interest before payout and a 30% working interest after
payout, one mile northwest of the initial South Fillmore well. The SJ Fee 11-9 well has
been completed with a flow rate of approximately 2,250 Mcfe per day, and commercial gas
sales are expected to begin in December 2007. GMT is in the process of building a
three-mile pipeline to connect the SJ Fee 11-9 to a sales line. South Fillmore is within
the same field as the GMT well and initially tested at a flow rate of about 1,260 Mcfe per
day. The Company is currently evaluating the project and has plans to continue developing
the area, including potentially drilling or participating in the drilling of additional
wells.
  14




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##### Table of Contents




    
    The Nevada exploratory prospect.In August 2007, VF Neuhaus began drilling the Straight
Flush #17-1 well in Huntington Valley, Nevada. Double Eagle had a 97.3% working interest
in the well and further earned additional interests under six sections of land. No
commercial deposits of oil and gas were identified, and the well was plugged in October
2007. Costs incurred through September 30, 2007 of $752 were charged to expense as dry
hole costs. In accordance with FASBs Interpretation No. 36, the costs incurred after the
balance sheet date must be charged to expense in the period following the balance sheet
date, or, in this case, the fourth quarter of 2007. Thus, there will be an additional
expense for this well for dry hole costs, estimated at approximately $900, recognized in
the fourth quarter of 2007.
 
    
    The Cow Creek Unit Deep #2 prospect. We began drilling the Cow Creek Unit Deep #2, a
planned Madison test well near our coalbed natural gas production field at Cow Creek, in
2006 and have drilled to a depth of 9,922 feet. We have identified the crest of the
structure and will steer the well 700 feet to the southwest, drilling to a total depth of
approximately 12,100 feet, to test the Tensleep Sandstone and Madison Limestone at the top
of this anticline. We expect to have a rig back on this location by mid-2008. Since
adopting FSP 19-1, the Company continually evaluates all existing capitalized exploratory
well costs. As a result, the Company determined that $4,388 of capitalized costs related
to the Cow Creek Unit Deep #2 well required write off in the quarter ended September 30,
2007.
 
    
    The Christmas Meadows exploratory prospect.Drilling of the Unit #1 began in September
2006 and reached the originally planned total depth of 15,760 feet during the first quarter
of 2007. The drilling did not find reservoir rocks with sufficient permeability and
operations were suspended to assess alternative approaches to completing the project.
Having met the governmental permitting obligation for the Unit test, the time-frame for
drilling has been extended and the newly formed Main Fork Unit will have a term remaining
that lasts at least until April 2009. The Company has further evaluated the structure and
is working on plans to propose to its partners either to drill or farmout drilling to the
deeper Nugget Sandstone. The Company anticipates contracting a rig or farming out the
drilling, and re-entering this hole in mid-2008, after the winter weather has cleared from
this high-elevation location.
 
    
    At September 30, 2007, our combined remaining exploratory costs on the above projects
were $9,088. In the event that these wells are unsuccessful, we may be required to impair
all or a portion of the remaining costs incurred.
 Line of Credit
       15




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##### Table of Contents



RESULTS OF OPERATIONS
 Three months ended September 30, 2007 compared to the three months ended September 30, 2006
 Oil and gas sales volume and price comparisons
 Three Months Ended September 30,
    
    
    Percent
    
    
    Percent2007
    
    
    2006
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    749,497
    
    
    $
    4.79
    
    
    
    744,212
    
    
    $
    5.38
    
    
    
    1
    %
    
    
    -11
    %Oil (Bbls)
    
    
    2,798
    
    
    $
    66.91
    
    
    
    2,413
    
    
    $
    64.57
    
    
    
    16
    %
    
    
    4
    %Mcfe
    
    
    766,285
    
    
    $
    4.93
    
    
    
    758,690
    
    
    $
    5.49
    
    
    
    1
    %
    
    
    -10
    %
   Transportation revenue
   16




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##### Table of Contents



Oil and gas production expenses, depreciation, depletion and amortization
 Three Months Ended September 30,2007
    
    
    2006(in dollars per Mcfe)Average price
    
    $
    4.93
    
    
    $
    5.49Production costs
    
    
    1.32
    
    
    
    1.12Production taxes
    
    
    0.61
    
    
    
    0.67Depletion and amortization
    
    
    1.52
    
    
    
    1.47Total operating costs
    
    
    3.45
    
    
    
    3.26Gross margin
    
    $
    1.48
    
    
    $
    2.23Gross margin percentage
    
    
    30
    %
    
    
    41
    %
   General and administrative
  Income taxes
   17




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##### Table of Contents



Nine months ended September 30, 2007 compared to the nine months ended September 30, 2006
 Oil and gas sales volume and price comparisons
 Nine Months Ended September 30,
    
    
    Percent
    
    
    Percent2007
    
    
    2006
    
    
    Volume
    
    
    PriceVolume
    
    
    Average Price
    
    
    Volume
    
    
    Average Price
    
    
    Change
    
    
    ChangeProduct:Gas (Mcf)
    
    
    2,224,437
    
    
    $
    5.05
    
    
    
    2,113,057
    
    
    $
    5.78
    
    
    
    5
    %
    
    
    -13
    %Oil (Bbls)
    
    
    9,998
    
    
    $
    58.34
    
    
    
    10,098
    
    
    $
    59.84
    
    
    
    -1
    %
    
    
    -3
    %Mcfe
    
    
    2,284,425
    
    
    $
    5.17
    
    
    
    2,173,645
    
    
    $
    5.89
    
    
    
    5
    %
    
    
    -12
    %
    Transportation and other revenue
    18




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##### Table of Contents



Oil and gas production expenses, depreciation, depletion and amortization
 Nine Months Ended September 30,2007
    
    
    2006(in dollars per Mcfe)Average price
    
    $
    5.17
    
    
    $
    5.89Production costs
    
    
    1.82
    
    
    
    1.16Production taxes
    
    
    0.64
    
    
    
    0.70Depletion and amortization
    
    
    1.62
    
    
    
    1.34Total operating costs
    
    
    4.08
    
    
    
    3.20Gross margin
    
    $
    1.09
    
    
    $
    2.69Gross margin percentage
    
    
    21
    %
    
    
    46
    %
   General and administrative
  Income taxes
   19




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##### Table of Contents



CONTRACTED VOLUMES
   RemainingContractual
    
    
    Daily
    
    
    
    
    
    
    FixedProperty
    
    Volume
    
    
    Production
    
    
    Term
    
    
    Price/McfCatalina
    
    
    31,000
    
    
    
    1,000
    
    
    
    11/06-10/07
    
    
    $
    5.84609,000
    
    
    
    1,000
    
    
    
    06/07-05/09
    
    
    $
    5.47639,000
    
    
    
    1,000
    
    
    
    07/07-06/09
    
    
    $
    5.841,278,000
    
    
    
    2,000
    
    
    
    07/07-06/09
    
    
    $
    5.69Atlantic Rim
    
    
    670,000
    
    
    
    1,000
    
    
    
    08/07-07/09
    
    
    $
    6.15Pinedale Anticline
    
    
    639,000
    
    
    
    1,000
    
    
    
    07/07-06/09
    
    
    $
    6.41Company Total
    
    
    3,866,000
  RemainingContractual
    
    
    Daily
    
    
    
    
    
    
    FixedProperty
    
    Volume
    
    
    Production
    
    
    Term
    
    
    Price/McfCatalina
    
    
    731,000
    
    
    
    1,000
    
    
    
    11/07-10/09
    
    
    $
    5.66
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risks
    20




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##### Table of Contents



Commodity Price Risks
   
 ITEM 4. CONTROLS AND PROCEDURES
    
  
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
   21




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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit Number and Description:
 3.1
    
    Amended Articles of Incorporation (incorporated by reference from Exhibit 3.1 of the
Companys Current Report on Form 8-K, filed on August 28, 2007).
 4.2
    
    Shareholder Rights Agreement (incorporated by reference from Exhibit 4.1 of the Companys
Current Report on Form 8-K, filed on August 24, 2007).
 13.1
    
    S-15 to S-21 of Prospectus Supplement (to Prospectus dated December 15, 2006) filed on June
29, 2007.
 31.1
    
    Certification of Chief 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 pursuant to Rule 13a-14(a) and Rule 15a-14(a) of the
Securities Exchange Act, as amended.
  
 SIGNATURES
  DOUBLE EAGLE PETROLEUM CO.
                 (Registrant)Date:  November 6, 2007
    By:
    /s/   Lonnie R. BrockLonnie R. BrockChief Financial Officer  22




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##### Table of Contents



Exhibit Number
    
    DescriptionExhibit 3.1
    
    Amended Articles of Incorporation
(incorporated by reference from Exhibit 3.1 of
the Companys Current Report on Form 8-K, filed on August 28, 2007).Exhibit 4.2
    
    Shareholder Rights Agreement (incorporated by reference
from Exhibit 4.1 of the Companys Current Report on Form
8-K, filed on August 24, 2007).Exhibit 13.1
    
    S-15 to S-21 of Prospectus Supplement (to Prospectus dated
December 15, 2006) filed on June 29, 2007.Exhibit 31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a  14(a) and Rule 15a  14(a) of the Securities Exchange
Act, as amended.Exhibit 31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a  14(a) and Rule 15a  14(a) of the Securities Exchange
Act, as amended.Exhibit 32
    
    Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes  Oxley Act
of 2002.
  23