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The Federal Reserve signaled to the markets yesterday that the days of "Easy Money" is to continue for the time being. One of the consequences of this decision yesterday was commodity prices surged, including oil. Given the confluence of these two events, it might be a good time to look at a couple of speculative high risk/high reward energy concerns.

Warren Resources (WRES) is an independent energy company engaged in oil and natural gas production. The company focuses primarily on its waterflood oil recovery programs and horizontal drilling in the Wilmington field within the Los Angeles Basin of California. The company has an enterprise value of less than $300mm and stock price just under $3 a share.

The company has beaten bottom line expectations each of the last two quarters and consensus earnings estimates for both FY2013 and FY2014 have increase by more than 15% over the past two months. Revenue should grow being 7% to 8% for this fiscal year and for 2014. The stock sports a five-year projected PEG of under 1 (.91).

The shares sell for less than 9x anticipated forward earnings, a substantial discount to its five-year average (14.6). The stock also sells for just over book value. Insiders have been small net buyers of the stock in 2013 and the median price target analysts have on the stock is $5 a share.

Halcón Resources (HK) develops and produces oil and gas. It has an enterprise value of ~$4.5B. The company's principal resource plays include the Bakken/Three Forks Formations and within the Eagle Ford shale region. Myriad insiders have bought ~$1.5mm in new shares at current levels since early August. The shares currently trade for just under $5 a share.

The company is experiencing prodigious production growth. The company is looking to almost quadruple revenue in 2013 and analysts expect another gain of over 30% in FY2014. The stock has a minuscule five-year projected PEG (.11). The company posted a small loss in FY2012 but should have a profit of at least 20 cents a share. Consensus estimates call for a 50% gain in earnings for FY2014.

The 17 analysts that cover the stock have a $7 a share median price target on the shares, implying over 40% upside from current levels. The stock is selling for less than book value. The company does have a high debt load. However, operating cash flow has increased substantially since the end of FY2010 and the company recently announced over $300mm of sales on non-core assets.

Source: 2 Speculative Energy Concerns For Under $5