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.
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.