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(Editors' Note: This article discusses a micro-cap stock. Please be aware of the risks associated with these stocks.)

I continue to find value in some of the smaller domestic E & P concerns that have been such a key part of the huge increase of energy production in the United States over the past half dozen years. Recently I profiled Triangle Petroleum (TPLM), a small Bakken player that is up more than 80% since the article ran in June. Below are two other small speculative E & P concerns with attractive prospects that hopefully can produce the same type of results as Triangle over time.

Saratoga Resources (SARA) is an independent oil and natural gas company. The company's 12 properties cover approximately ~33,000 gross/net acres in shallow waters on parish and state leases in south Louisiana. The stock surged in August after the company reported very favorable drilling results from a new well. Even after a ~45% gain since then, the shares still sell for around $2.30 a share.

This was the first good news for a while for Saratoga as the shares sold for over $5 a share late last year. It is reassuring to me that Blackstone, which is a beneficial holder in this stock, took a $10mm new stake in the firm in 2012 at prices more than the double the current level.

The company is on track to post a small loss this fiscal year (It is significantly operating cash flow positive), but the consensus currently calls for a dime in earnings per share in FY2014 on the back of a 20% revenue gain. Saratoga receives little analyst coverage and the three analysts that do cover the stock have price targets ranging from $3.75 to $7 a share on SARA, all substantially above the shares current price. It seems a good speculative play with nice upside.

Abraxas Petroleum (AXAS) is a small (~$360mm enterprise value) E&P concern with acreage in most of the core shale producing ranges in the United States. The stock is up some 30% since I did a "Small Cap Insight" piece on it in July but I believe the shares have further upside.

Since I highlighted the shares, the company has raised its FY2013 production forecast and provided a couple of positive updates (I, II) on new production wells in the Bakken and Eagle Ford. In addition, as a result of the update production forecast, consensus earnings estimates for both FY2013 and FY2014 have increased significantly over the past two months.

Earnings are tracking to post 14 or 15 cents a share in profit in this fiscal year and analysts expect earnings to ~double in FY2014. Revenue should post a 40% increase this year and sales growth should be just under that in FY2014. The stock is selling for ~9x forward earnings, cheap given the company's growth prospects.

Source: 2 Attractive Speculative Energy Concerns For Less Than $3 A Share