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Morgan Stanley just came out with a list of 30 companies that have higher probabilities than their brethren of being acquired in 2013. Two energy companies made the list. They are profiled below.

Atwood Oceanics (ATW) is an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells. The company owns a fleet of approximately 11 mobile offshore drilling units.

4 reasons ATW has upside from $51 a share:

  1. The stock is cheap at under 8x forward earnings.
  2. Analysts expect over 25% revenue growth for both FY2013 and FY2014. ATW sports a cheap five year projected PEG (.53).
  3. Insiders are holding on to their shares. There has been minor net insider buying over the last six months.
  4. ATW sells in the bottom third of its five year valuation range based on P/S, P/CF and P/B. Credit Suisse has an "Outperform" rating and has a $60 price target on the shares.

Nabors Industries (NBR) operates as a land drilling contractor worldwide. The company markets approximately 500 land drilling rigs for oil and gas land drilling operations.

4 reasons NBR is a buy at under $16 a share:

  1. The stock sells at just 79% of book value.
  2. NBR sports a five year projected PEG of under 1 (.78). It also trades at a reasonable forward PE of 12.
  3. The stock was upgraded from "Hold" to "Buy" at Deutsche Bank in late November. S&P also has a "Buy" rating on Nabors.
  4. NBR is trading near the bottom of its five year valuation range based on P/B, P/E, P/S and P/CF.
Source: 2 Possible Energy Buyouts In 2013 From Morgan Stanley