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"I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do." - Leonardo Da Vinci

I read a very interesting and detailed blog post on domestic onshore drilling on Friday. It went through an unusual combination of production increases accompanied by rig count decreases as producers move more production to oily fields and they became much more efficient in getting oil out of the ground. Although this is not good news for some of the oil service firms that face a declining number of their rigs being deployed, it is great news for E&P outfits that are benefitting from this migration to higher oil production and declining costs as they deploy more efficient technologies.

This should be a nice tailwind to earnings & margins in the coming quarters and years. In addition, pipeline projects in heavy producing shale regions like the Bakken in coming years should also help improve margins. Here are two fast growing oil producers in the Bakken that should also benefit on the margin from improving technology and infrastructure.

Continental Resources (NYSE:CLR) produces crude oil and natural gas. It is the biggest producer of energy from the fast rising Bakken reserve.

4 reasons CLR is a good growth play at $77 a share:

  1. The stock was initiated as a "Buy" at Deustche Bank this week. The 24 analysts that cover the Continental have a $92 price target on the shares.
  2. Consensus earnings estimates for FY2012 and FY2013 have risen nicely over the past three months, FY2013's earnings estimates have increased more than 30 cents a share in the last ninety days.
  3. Revenues are expected to grow over 35% in FY2013 after increasing at a 45% clip in FY2012. The stock sports a five year projected PEG of under 1 (.84).
  4. The vast majority of its production is oil and the stock sells for just over 16.5x forward earnings, a deep discount to its five year average (27.7).

Kodiak Oil & Gas Corp (NYSE:KOG) produces oil & gas from its properties which are primarily concentrated in the Williston Basin of North Dakota and Montana, and the Green River Basin of Wyoming and Colorado.

4 reasons to KOG is a solid growth pick at $9 a share:

  1. Almost all of the company's production is oil and it is already applying new technology and its increasing expertise getting oil from shale to new projects. It has approximately 800 net drilling locations left to put on existing acreage. It has lowered its cost to $10.5mm per well from $12mm recently.
  2. The company achieved over 250% revenue growth in FY2012 and analysts expect almost 100% sales increases in FY2013. KOG has a minuscule five year projected PEG (.40).
  3. Earnings per share more than quadrupled from FY2011. Earnings are project to rise another 75% in FY2013 by analysts. The stock is priced at less than 13x forward earnings, a discount to its five year average (16.7).
  4. The 18 analysts that cover the stock has a median price target of $12 a share on KOG. Credit Suisse has an "outperform" rating on the shares.
Source: Improving Technology And Infrastructure Bodes Well For These 2 Bakken Producers