DENVER, July 30 /PRNewswire-FirstCall/ -- Double Eagle Petroleum
Co. (NASDAQ:DBLE) today reported its financial results for the
second quarter ended June 30, 2009. Highlights of the second
quarter include: -- Net production volumes of 2.4 Bcfe, which
represents an increase of 60% year over year and 5% sequentially;
-- Clean Earnings* of $3,108,000 or $0.34 per share; -- Cash flows
from operations of $9,891,000 compared to $8,007,000 for the second
quarter of 2008; and -- Production costs decreased to $0.83 per
Mcfe versus $1.39 per Mcfe for the second quarter of 2008. The
Company reported Clean Earnings, a non-U.S. GAAP metric, for the
second quarter of 2009 of $3,108,000 or $0.34 per share, as
compared to $3,458,000, or $0.38 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. Clean Earnings
includes the impact of income taxes, which the Company does not
expect to pay due to its unused operating loss carryforwards. In
the second quarter of 2009, the Company had an unrealized loss on
its economic hedges of $(2,152,000), before the effect of taxes. On
a U.S. GAAP basis, the Company reported a net loss attributable to
common shareholders of $(1,173,000), or $(0.13) per diluted share,
as compared to a net income of $2,342,000, or $0.26 per share for
the second quarter of 2008. "During this period of low gas prices
in the Rocky Mountains, we've had excellent performance in the
areas we can control. Our production volumes have continued to
increase, both year over year and sequentially; we continue to
improve the efficiency of our operations; we reduced our general
and administrative expenses, excluding non-cash equity
compensation, quarter over quarter; and we've done an excellent job
of monitoring the future gas market to secure additional hedges to
protect our future production," Richard Dole, Chairman, President
and CEO of Double Eagle commented. Total revenues for the second
quarter of 2009 were approximately $10,040,000, as compared to
$13,789,000 in the second quarter of 2008. Production-related
revenue, which excludes the non-cash hedging loss of $2,152,000 and
other income, decreased 1% to approximately $12,075,000, as
compared to the second quarter of 2008. During the period, the
Company's average realized gas price decreased 42% to $4.34,
compared to $7.54 in the same 2008 period. The Company benefited
from its hedging program, as the average Colorado Interstate Gas
("CIG") price for the quarter decreased 70% compared to the second
quarter of 2008. The decline in natural gas prices was partially
offset by the Company's increase in production volumes during the
second quarter of 2009. Total production increased by 60% to 2.4
Bcfe for the quarter ended June 30, 2009, as compared to 1.5 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 and 10 wells from the 2007 drilling program that
began producing in the third quarter of 2008. It also includes
production from 20 new wells in the Mesa Units from the 2007 and
2008 drilling program, and new wells from the 2008 drilling program
at the Sun Dog and Doty Mountain Units. The increase of production
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
68.35%, and ii) reduced production from certain existing wells at
the Catalina Unit, as the Company performed well workovers and
production enhancements during the second quarter of 2009. (*)
Please see page 5 for reconciliation to U.S. GAAP. Production costs
during the three months ended June 30, 2009, decreased to
$1,989,000 or $0.83 per Mcfe, as compared to $2,076,000 or $1.39
per Mcfe. The decrease in well production costs on a per Mcfe basis
was largely attributed to the operating efficiencies the Company
continues to realize as its production volumes increase,
particularly at the Company-operated Catalina Unit. Borrowings on
the Company's revolving line of credit remained consistent with the
first quarter of 2009, at $42,500,000 as of June 30, 2009, as
compared to $24,639,000 at December 31, 2008. The Company's
increased its borrowings during the first half of 2009 to pay for
costs incurred in the 2008 drilling program. Under its credit
facility, the Company is required to maintain a current ratio of
1.0 to 1.0, as defined. At June 30, 2009, the Company's current
ratio was .99 to 1.0, and as a result it was not in compliance with
the current ratio covenant. The lenders have waived the current
ratio covenant until September 30, 2009, and management expects to
be in compliance at this time. Currently, the Company has a $75
million credit facility in place with a $45 million borrowing base.
The Company has a hedging policy in place in order to mitigate its
exposure to oil and gas production cash-flow risk caused by
fluctuating commodity prices. The Company has historically entered
into fixed price delivery contracts, costless collars, and fixed
price swaps to hedge its equity production. In July, 2009, the
Company added to its derivative holdings with two separate NYMEX
costless collars, each for 5,000 Mcf per day to hedge a portion of
its production through 2011. The term of the first contract is from
August 1, 2009 through July 31, 2011, with a $4.50 floor price and
a $7.90 ceiling price. The term of the second contract is from
December 1, 2009 through November 30, 2011, with a $4.50 floor
price and a $9.00 ceiling price. The table below summarizes the
current outstanding derivatives: Total NYMEX Average Volumes Price
per CIG Price (MMcf) Mcf per Mcf --------- ---------- ---------- Q3
2009 859 $7.12 305 $4.50-$7.90 Q4 2009 767 $7.27 615 $4.50-$9.00
2010 4,380 $4.30 3,650 $4.50-$9.00 2011 2,920 $7.07 2,730
$4.50-$9.00 SUMMARY STATEMENT OF OPERATIONS (In thousands, except
per share data) Three months ended Six months ended
------------------ ----------------- June 30, June 30, June 30,
June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Revenues Oil and
gas sales $10,492 $11,526 $20,992 $17,777 Transportation revenue
$1,583 $723 $3,170 $1,087 Price risk management activities $(2,152)
$1,370 $(3,292) $2,022 Other income, net $117 $170 $210 $219 ----
---- ---- ---- Total revenues 10,040 13,789 21,080 21,105 ------
------ ------ ------ Expenses Lease operating expenses 1,989 2,076
3,601 3,092 Production taxes 753 1,534 1,642 2,334 Pipeline
operating expenses 1,087 659 1,654 747 Exploration expenses
including dry holes 29 50 55 531 -- -- -- --- Total Expenses 3,858
4,319 6,952 6,704 ----- ----- ----- ----- Gross Margin Percentage
61.6% 68.7% 67.0% 68.2% General and administrative 1,427 1,302
3,101 2,209 Depreciation, depletion and amortization expense 4,715
2,979 9,097 3,994 Other income (expense), net (392) - (644) (64)
---- --- ---- --- Pre-tax income (loss) (352) 5,189 1,286 8,134
Benefit (Provision) for deferred taxes 110 (1,916) (521) (2,999)
--- ------ ---- ------ NET INCOME (LOSS) (242) 3,273 765 5,135
Preferred stock requirements 931 931 1,862 1,862 --- --- -----
----- NET INCOME (LOSS) attributable to common stock $(1,173)
$2,342 $(1,097) $3,273 ======= ====== ======= ====== Net income
(loss) per common share: Basic $(0.13) $0.26 $(0.12) $0.36 ======
===== ====== ===== Diluted $(0.13) $0.26 $(0.12) $0.36 ====== =====
====== ===== Weighted average shares outstanding: Basic 9,233,725
9,152,023 9,217,902 9,150,064 ========= ========= =========
========= Diluted 9,233,725 9,161,258 9,217,902 9,153,696 =========
========= ========= ========= SELECTED BALANCE SHEET DATA (In
thousands) June 30, December 31, 2009 2008 %Change -----------
------------- Total assets $158,198 $171,989 -8% Balance
outstanding on credit facility 42,500 24,639 72% Total
stockholders' equity 47,286 54,903 -14% SELECTED CASH FLOW DATA (In
thousands) Six months ended June 30, ------------------------- 2009
2008 %Change ---- ---- Net cash provided by operating activities
$16,826 $10,470 61% Net cash used in investing activities (28,650)
(24,484) 17% Net cash provided by financing activities 15,722
14,154 11% SELECTED OPERATIONAL DATA Three months ended
------------------- June 30, June 30, 2009 2008 %Change --------
-------- Total production (Mcfe) 2,385,021 1,494,147 60% Average
price realized per Mcfe $4.40 $7.71 -43% Use of Non-GAAP Financial
Measures The Company believes that the supplemental presentation of
"Clean Earnings" shown below provides a meaningful non-GAAP
financial measure to help management and investors understand and
compare operating results and business trends among different
reporting periods on a consistent basis, independently of regularly
reported non-cash charges. The Company's management also uses such
pro forma measures in its planning and development of target
operating models, and to enhance its understanding of ongoing
operations. Readers are cautioned not to view the non-GAAP pro
forma results as superior to or an alternative to GAAP results or
as being comparable to results reported or forecasted by other
companies. Readers should refer to the reconciliation of GAAP
results with the pro forma results for the three and six months
ended June 30, 2009 and 2008, respectively, contained below.
Reconciliation of GAAP Results to Pro Forma Results (In thousands,
except per share data) Three Months Ended Three Months Ended June
30, June 30, 2009 2008 ------------------ ------------------ Per
Share Per Share Results Basis Results Basis ------- ----- -------
----- Net income (loss) as reported under US GAAP $(1,173) $(0.13)
$2,342 $0.26 ======= ====== ====== ===== Add back non-cash items
(1): Share-based compensation expense 180 0.02 90 0.01
Depreciation, depletion, amortization and accretion expense 2,821
0.31 1,890 0.21 Non-cash loss (gain) on price risk management (2)
1,280 0.14 (864) (0.10) ----- ---- ---- ----- Clean Earnings $3,108
$0.34 $3,458 $0.38 ------ ----- ------ ----- Six Months Ended Six
Months Ended June 30, June 30, 2009 2008 ----------------
---------------- Per Share Per Share Results Basis Results Basis
------- ----- ------- ----- Net income (loss) as reported under US
GAAP $(1,097) $(0.12) $3,273 $0.36 ======= ====== ====== ===== Add
back non-cash items (1): Share-based compensation expense 458 0.05
151 0.02 Depreciation, depletion, amortization and accretion
expense 5,442 0.59 2,597 0.28 Non-cash loss (gain) on price risk
management (2) 3,700 0.40 (1,276) (0.14) ----- ---- ------ -----
Clean Earnings $8,503 $0.92 $4,745 $0.52 ------ ----- ------ -----
(1) Presented net of tax with effective tax rate of 40.5% and 36.9%
for the three and six months ended June 30, 2009 and 2008,
respectively. (2) Loss (gain) on price risk management is an
unrealized loss (gain) from the Company's mark-to-market derivative
instruments, resulting from recording the instrument at fair value
at each period end. Cash is received upon settlement of the
contract. This cash settlement is also recorded within the price
risk management activities line on the statement of operations. The
Company has scheduled a conference call for July 30, 2009 at 9:00
AM Mountain Standard Time to review the second 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.
This release contains forward-looking statements regarding Double
Eagle's future plans and expected performance based on assumptions
the Company believes to be reasonable. A number of risks and
uncertainties could cause actual results to differ materially from
these statements, including, without limitation, the success rate
of exploration efforts and the timeliness of development
activities, fluctuations in oil and gas prices, and other risk
factors described from time to time in the Company's reports filed
with the SEC. In addition, the Company operates in an industry
sector where securities values are highly volatile and may be
influenced by economic and other factors beyond the Company's
control. Double Eagle undertakes no obligation to publicly update
these forward-looking statements, whether as a result of new
information, future events or otherwise. Company Contact: John
Campbell, IR (303) 794-8445 http://www.dble.us/ DATASOURCE: Double
Eagle Petroleum Co. CONTACT: John Campbell, IR, of Double Eagle
Petroleum Co., +1-303-794-8445 Web Site: http://www.dble.us/
Copyright
