The PV-10 is based on oil at $67.24 per bbl and gas at $3.69 per mcf. It was adjusted from $75.96 per bbl and $3.945 per MMBTU by field for energy content, transportation fees, and regional price differentials.

One thing to note is the price at the end of 2006 vs. 2010:

2006 year-end price: $24.55
2010 year-end price: $4.93

Shares at the end of 2010 and even now are far cheaper than the prices from 2006 and before. I wasn't aware of DBLE back in 2006, but I'm not sure I would've purchased it then. Now, however, it is much cheaper than it once was despite being in a better financial and operating condition.

With these little guys, it's indeed important to note what the future holds. DBLE is a much different company from what it was in 2006. Mid 2007 was huge for the company, since it was awarded the right to drill 1,800 coalbed methane and 200 conventional wells in the Atlantic Rim, its biggest area by production.

DBLE was generating $11 million in operating cash flow in 2006 and now generates over $20 million. If you look at 2010, it was the first year it was self-funded, with operating cash flow outpacing capex. That's pretty rare for a small cap that can still grow. Now that it's self-funded and doesn't need infusions of capital via debt or equity issuance, we want growth.

In the end, natural gas prices are low and hitting lows. DBLE's stock price goes up if natural gas price eventually gets better, or if the Niobrara exploration goes well. The current market price assigns little if any value to the Niobrara. Also, PV-10 is based on constant pricing, and I'm a long-term believer in higher natural gas prices (though not quite in the short-term). Both potential catalysts will take some time to play out, but I believe at least one of them will hit.

If the Niobrara exploration is unsuccessful and gas prices never recover, the investment case is busted.

Best,
Paul