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Double Eagle Petroleum Company Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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Double Eagle Petroleum Company (DBLE) filed Quarterly Report for the period ended 2010-06-30.

Double Eagle Petroleum Company has a market cap of $46.7 million; its shares were traded at around $4.21 with a P/E ratio of 3.1 and P/S ratio of 1. DBLE is in the portfolios of Robert Bruce of Bruce & Co., Inc..

Highlight of Business Operations:

During the three months ended June 30, 2010, net oil and gas sales decreased 27% to $7,608, as compared to $10,492 during the same 2009 period. The decrease was due in part to the decrease in production volumes discussed above, but also due to a lower realized gas price during the period. In addition, during the three months ended June 30, 2010, our average gas price realized decreased 8%, to $3.99 from $4.34 in the comparable 2009 period. Although the average CIG index price was approximately 50% higher during the three months ended June 30, 2010, our realized gas price was lower in 2010 due to the strength of our hedges in 2009. During the three months ended June 30, 2009, our derivative instrument settlements totaled $5,263, all of which was classified as oil and gas sales on the consolidated statement of operations. In comparison, in 2010, our derivative instrument settlements totaled $1,666, but were classified as price risk management activities on the consolidated statement of operations due to the accounting treatment of these instruments.

For the six months ended June 30, 2010, oil and gas sales decreased 11% to $18,657, as compared to the same prior-year period. The decrease was due both to the lower production volumes discussed below, as well as a decrease in our average realized gas price. Our average realized gas price for the six months ended June 30, 2010 decreased 15%, to $4.34 from $5.10 during the six months ended June 30, 2009. Although the average CIG index price was approximately 53% higher for the six months ended June 30, 2010, our realized gas price was lower in 2010 due to the strength of our hedges in 2009. During the six months ended June 30, 2009, our derivative instrument settlements totaled $12,336, of which $9,410 was classified as oil and gas sales on the consolidated statement of operations. In comparison, in 2010, our derivative instrument settlements totaled $1,443 during the first six months of 2010, but were classified as price risk management activities on the consolidated statement of operations due to the accounting treatment of these instruments.

During the six months ended June 30, 2010, net cash provided by operating activities was $10,718, compared to $16,826 in the same prior-year period. The primary sources of cash during the six months ended June 30, 2010 were $5,225 of net income, which was net of non-cash charges of $9,125 related to depreciation, depletion, and amortization expenses (DD&A) and accretion expense, and non-cash stock-based compensation expense of $496. In addition, we had an increase in accrued production taxes of $667 and an increase of $2,945 in the provision for deferred income taxes. These increases were partially offset by the non-cash gain on derivative contracts of $6,482.

During the six months ended June 30, 2010, we had net cash used by financing activities of $5,124, as compared to net cash provided by financing activities of $15,722 in the same prior-year period. In the first quarter of 2009, we had significant draws on our credit facility to fund costs incurred in the drilling program in the fourth quarter of 2008. In contrast, we were able to repay $3,000 on our credit facility in the first six months of 2010 due to increased operating cash flow and slower drilling and workover activity. We also expended cash to make the first and second quarter dividend payments totaling $1,862. Dividends are expected to continue to be paid on a quarterly basis on the Series A Preferred Stock in the future at a rate of $931 per quarter.

We incurred interest expense related to the credit facility of $353 and $627, for the three months ended June 30, 2010 and 2009, respectively, and $713 and $927 for the six months ended June 30, 2010 and 2009, respectively. The Company capitalized interest costs of $37 and $343 for the three months ended June 30, 2010 and 2009, respectively, and $87 and $643 for the six months ended June 30, 2010 and 2009, respectively.

For the three months ended June 30, 2010, oil and gas sales decreased 27% to $7,608, due in part to the decrease in production volumes discussed above. In addition, during the three months ended June 30, 2010, our average realized gas price decreased 8%, to $3.99 from $4.34 in the comparable 2009 period. Although the average CIG index price was approximately 50% higher during the three months ended June 30, 2010, our realized gas price was lower in 2010 due to the strength of our hedges in 2009. During the three months ended June 30, 2009, our derivative instrument settlements totaled $5,263, all of which was classified as oil and gas sales on the consolidated statement of operations. In comparison, in 2010, our derivative instrument settlements totaled $1,666, but were classified as price risk management activities on the consolidated statement of operations due to the accounting treatment of these instruments.

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