Delta Petroleum (DPTR) is probably misnamed. The company’s natural gas reserves totaled more than 825 billion cubic feet at the end of 2008, while its crude oil reserves totaled just 9.5 million barrels.

The company ran into problems earlier this year when it reported a dry hole in the Columbia River Basin. That fiasco cost the company more than $50 million that it could not afford. Delta’s credit line also took a hit, dropping from $225 million to $185 million. At the end of November, Delta announced that it would seek strategic alternatives, including selling the company. The initial reaction to the news drove the shares down to a new 52-week low of $0.73 just a week ago.

In a sort of delayed reaction to Exxon Mobil’s (XOM) agreement to acquire XTO Energy (XTO), Delta’s shares began recovering on Tuesday and have been rising ever since. Shares are up again this morning to $1.28, a jump of more than 20% from this morning’s open.

Delta’s primary holdings are in the Piceance Basin of western Colorado which has been particularly hard hit by the low price of natural gas. Rocky Mountain natural gas trades at a discount to the already low Henry Hub spot price that has been hovering around $5/thousand cubic feet. Rocky Mountain natural gas has been selling for around $3/thousand cubic feet.

There’s still another problem. Delta’s natural gas reserves are mostly proved, but undeveloped. A buyer, or strategic partner, would most likely have to put up a significant amount of cash to monetize the gas.

At today’s market cap of about $365 million, a buyer would be paying less than $0.50/thousand cubic feet of gas. The catch is that development costs could exceed the current selling price of the gas.

So, while it looks like Delta shareholders might be in a good position to see some return on their investment if the company is sold, their optimism might be misplaced. The Exxon purchase of XTO has roiled the waters in the natural gas marketplace, and things won’t clear up for a while yet.