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Double Eagle Petroleum Co. (NASDAQ:DBLE) is a natural gas and crude oil exploration & production company based primarily in the Rocky Mountain Basins. Market capitalization is $45 million, there is a bank loan of $31 million, and $38 million in preferred stock, for an enterprise value of $114 million.

For the past six months, EBITDAX has been $18.1 million. So EV/annualized EBITDAX is 6x. If you subtract equity and just look at the part of the enterprise that is senior (bank loan and preferred stock) the multiple is 3.8x.

The preferred stock (DBLEP) yielding 9.2% is what I discovered in my never-ending quest for safe yield. By way of comparison, the PowerShares Financial Preferred Portfolio (NYSEARCA:PGF) yields 6.8%. Other preferred stock ETFs yield about this level. Whether or not they are labeled as such, these ETFs are jammed full of financial institution preferreds which are inherently much riskier than a preferred in a company with low leverage.

So the yield on DBLEP seems rich. That could be because it and the company are tiny, too small for big funds to own. I like owning DBLEP with an eye toward selling it before interest rates start rising again.

Disclosure: Long DBLEP

Source: Double Eagle Petroleum Preferreds: Low Leverage Offers Safe Yield