Double Eagle Petroleum Co. today reported its financial results for the third quarter ended September 30, 2009. Highlights of the third quarter include: -- Net production volumes of 2.3 Bcfe, which represents an increase of 21% year over year; -- Clean Earnings of $3,008,000 or $0.29 per share; -- Production costs decreased to $0.84 per Mcfe versus $0.90 per Mcfe for the third quarter of 2008; -- Cash flows from operations of $2,648,000; and -- Completed acquisition of Petrosearch Energy Corporation, which resulted in net cash to the Company of $7,733,000. The Company reported Clean Earnings, a non-U.S. GAAP metric, for the third quarter of 2009 of $3,008,000 or $0.29 per share, as compared to $4,214,000, or $0.46 per share for the same prior year period. Clean Earnings excludes the effects of non-cash charges, including depreciation, depletion and amortization expense ("DD&A"), unrealized gains/losses related to the Company's economic hedges, which are recorded at fair value at each period end, as well as stock-based compensation expense. Third quarter Clean Earnings includes the impact of income taxes of $2,328,000, although the Company does not expect to pay income taxes due to its unused operating loss carryforwards. On a U.S. GAAP basis, the Company reported a net loss attributable to common shareholders of $(514,000), or $(0.05) per diluted share, as compared to a net income of $1,977,000, or $0.22 per share for the third quarter of 2008. Total revenues for the third quarter of 2009 were approximately $10,866,000, as compared to $14,006,000 in the third quarter of 2008. Production-related revenue, which excludes the non-cash hedging loss of $800,000 and other income, decreased 15% to approximately $11,580,000, as compared to the third quarter of 2008. During the period, the Company's average realized gas price decreased 32% to $4.27, compared to $6.27 in the same 2008 period. The Company benefited from its hedging program, as the average Colorado Interstate Gas ("CIG") price for the quarter decreased 52% compared to the third quarter of 2008. Production costs during the three months ended September 30, 2009, increased to $1,934,000 as compared to $1,722,000. The increase in production costs during the third quarter was primarily related to higher workover costs, as the Company performed well workovers and enhancement projects during the period. Despite the increase in workover expense during the third quarter, production costs on a per Mcfe basis decreased 7% to $0.84 per Mcfe, as compared to $0.90 a year ago. "The third quarter of 2009 was another solid quarter for Double Eagle, with year over year production growth, positive cash flow from operations, and disciplined spending. Although natural gas producers in the Rockies have still been saddled with low gas prices, we've used this as an opportunity to workover many of our existing wells in the Catalina Unit and fine tune our gathering and transportation system. These activities are expected to increase production in the later part of this year, and beyond," Richard Dole, Chairman, President and CEO of Double Eagle remarked. Total production volumes increased by 21% to 2.3 Bcfe for the quarter ended September 30, 2009, as compared to 1.9 Bcfe in the same prior-year period, and reflects production from 20 new wells in the Catalina Unit that were drilled as part of the 2008 drilling program. It also includes production from 16 new wells in the Pinedale Mesa Units from the 2008 drilling program, and new wells from the 2008 drilling program at the Sun Dog and Doty Mountain Units. The increase in production volume from new wells was reduced by i) the decrease in the Company's working interest in the wells at the Catalina Unit from 73.84% to 69.31%, ii) reduced production from certain existing wells at the Catalina Unit, due to the well workovers and the production enhancement projects, iii) a temporary reduction in transportation capacity from pipeline maintenance and iv) reduced compression in the field for several months. At September 30, 2009, the Company had outstanding borrowings on its line of credit of $34,000,000, as compared to $24,639,000 at December 31, 2008, and $42,500,000 at June 30, 2009. During the third quarter, the Company completed its acquisition of Petrosearch Energy Corporation, in exchange for approximately 1.8 million shares of Double Eagle common stock and cash consideration of $873,000. The acquisition provided the Company with net cash of $7,733,000, which the Company used to pay down a portion of its outstanding debt. Currently, the Company has a $75 million credit facility in place with a $45 million borrowing base, which matures July 31, 2010. Management is actively negotiating an extension to this credit facility with the current lending group, and believes an agreement will be reached in the fourth quarter of 2009 to extend the agreement out until 2012. The Company has a hedging program in place in order to mitigate its exposure to oil and gas production cash-flow risk caused by the decline in commodity prices. The Company has historically entered into forward sales, costless collars, and fixed price swaps to hedge its equity production. The Company has scheduled a conference call for October 29, 2009 at 9:00 AM Mountain Daylight Standard Time to review the third quarter 2009 financial results. A replay of the call will be available shortly thereafter. About Double Eagle Double Eagle Petroleum Co. explores for, develops, and sells natural gas and crude oil, with natural gas constituting more than 95% of its production and reserves. The Company's current major development activities are in its Atlantic Rim coal bed methane play and in the Pinedale Anticline in Wyoming.

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