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Repsol (OTCQX:REPYY) is reportedly looking to acquire North American energy assets in the $5B-$10B range. Given the problems the company has had with its other assets overseas especially in Argentina, and the explosion in North American energy production over the last six years, this makes logical sense. So which of the smaller to midsized E & P concerns would make logical acquisition targets? Here are two targets that make sense to me. Both companies are showing good production growth, are within Repsol's stated price range and sport solid valuations even without a possible "buyout" kicker.

Whiting Petroleum Corporation (NYSE:WLL) is an independent energy concern producing oil and gas primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast, and Michigan regions of the United States. I wrote that this E & P concern would make sense as an acquisition target back in November of last year. Although this has not occurred yet, the stock is up $10 a share to $54 since the article.

The company continues to grow production nicely with revenue growth tracking to nearly a 20% gain this fiscal year. The shares go for less than 13x forward earnings, a discount to its five year average (15.7). The company has easily beat bottom line estimates each of the last three quarters and consensus earnings estimates for both FY2013 & FY2014 have risen better than 10% over the last two months.

The company has an enterprise value of ~$8.5B which is near the top end of Repsol's desired acquisition range especially with a decent buyout premium. The mean price target of the 31 analysts that cover the stock is just under $64 a share. Option activity in the shares has also escalated substantially in the last few days.

Kodiak Oil & Gas (NYSE:KOG) is an independent energy company whose primarily assets and production coming from the Bakken shale which is rapidly growing to providing almost 1mm barrels a day of oil production within the region. The company has an enterprise value just north of $4B and with a 20% to 30% buyout premium would be squared within Repsol's acquisition budget.

More importantly, the company is impressively raising production. Revenues are tracking to more than doubling in 2013 and analysts project sale increases of ~45% in FY2014. The stock sports a minuscule five year projected PEG (.34). Given production growth, the stock seems undervalued at just more than 11x forward projected earnings. Operating cash flow has exploded over the past few years. It has moved from just over $10mm in FY2010 to over to $50mm to almost $400mm during the prior twelve months.

Source: Possible Acquisition Targets For Repsol In The Oil Patch