The Timid Need Not Apply

 | Aug 07, 2012 | 11:30 AM EDT
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Small-cap energy producers have started to rebound over the last few weeks after four months of brutal performance. Rising oil prices have helped the shares, as has natural gas: While the latter is still priced at under $3 per MMBtu, it's still some 40% off the lows from the year. A lot of producers are also benefiting from their efforts at shifting production to extract a higher percentage of oil vs. natural gas.

One small-cap exploration-and-production I own, and have profiled in this column, is up some 30% from its lows in late July -- Warren Resources (WRES). Below are two other speculative, fast-growing plays in the sector that should have plenty of upside should these trends continue.

Sanchez Energy (SN) is an independent E&P company with acreage in the Eagle Ford and Haynesville shale regions, among other oil-producing areas.

Here are four reasons Sanchez is a good speculative play at under $18 a share:

● Revenue is exploding. The company booked $14 million in revenue in 2011, but analysts have total sales ramping up past $60 million in 2012 and more than $200 million the year after.

● The stock soared 6% Monday on a positive operations update. Earnings are projected to go from $0.11 per share in 2011 to $0.43 in 2012 before quadrupling to $1.68 in 2013.

● Global Hunter Securities initiated the stock as a Buy in late July, and the median analysts' price target on the stock is $26 a share.

● Sanchez stock just bounced off its initial technical support level from the initial public offering.

Sanchez Energy (SN) -- Daily
Source: Yahoo! Finance

Moving right along, Halcón Resources (HK) is an independent energy company whose primary acreage is in Texas, Oklahoma and Louisiana.

Here are four reasons Halcón is a good aggressive growth play at $7 a share:

● Floyd Wilson, the chairman and CEO of Halcón, was also CEO of Petrohawk. He started that firm with $60 million in capital and eventually sold it for $12.1 billion. Wilson's intention, as stated on CNBC recently, is to sell Halcón in three years.

● Halcón is an aggressive grower. It logged a little over $100 million in revenue in 2011. Analysts have the company ramping sales past the $200 million mark this year before tripling that to almost $700 million in 2013.

● The five analysts who cover the stock have price targets ranging from $11 to $15 a share, all of which are more than 50% higher than the current stock price.

● Consensus earnings estimates for 2013 have doubled over the last three months, and several insiders have bought more than 100,000 new shares in the last week.



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