The basic production and 2P reserve numbers always seem to reflect an oil to gas ratio of 6:1. How do you compare a company like Pinecrest (99% oil) to Bellatrix (about 40% oil) when the current oil:gas ratio is 39:1? Or Arcan (96%) or Novus (84%)...
The dry gas adjustment uses the current market oil to gas ratio (today roughly 39:1) to essentially convert gas production into oil at the current market price so that a more meaningful value comparison can be made.
The last time I ran these numbers on BXE, their EV to 2P reserves looked absurdly cheap ($10.03 per barrel), but when I adjusted for gas at the current market rate, EV to 2P went above $20 per barrel (higher than ARNs).
I wouldn't hang my investing hat entirely on it, it's just another metric to consider in the never-ending quest to value companies better and hopefully uncover value and avoid mistakes.
The same issue applies with reserves.