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When BHP Billiton (NYSE:BHP) announced a deal to buy Petrohawk (NYSE:HK) just days ago, it sparked interest and debate within the sector as to which stocks are the best values now. CNBC's Jim Cramer weighed in with his thoughts. A new article states: "So, now that BHP is willing to pay up for Petrohawk’s oil-rich acreage, Cramer said it's time to revisit his price targets on his oil and gas shale plays."

Based on some of Cramer's industry favorites, I took a closer look at which stocks could offer the most value, and upside, with the least risk. Here they are:

Chesapeake Energy Corporation (NYSE:CHK) is one of the leading natural gas companies in the United States. It has interests in the Barnett Shale, the Haynesville and Bossier Shales, the Fayetteville Shale, the Marcellus Shale and the Eagle Ford Shale. A new report states that Chesapeake shares are trading at a substantial discount to their net asset value (NAV), read more on that here. Based on the earnings power and growth potential, these shares look cheap.


Here are some key points for CHK:
  • Current share price: $32.89
  • The 52 week range is $19.68 to $35.95
  • Earnings estimates for 2011: $2.90 per share
  • Earnings estimates for 2012: $3.15 per share
  • Annual dividend: 35 cents per share which yields 1.1%

EOG Resources (NYSE:EOG) is a leading natural gas and crude oil company. EOG has interests in the United States, Canada, the Republic of Trinidad, Tobago, the United Kingdom, and China. EOG Resources also has a joint venture agreement to develop fields located in the Eagle Ford shale region. The Cramer article states "EOG is the biggest producer in the Eagle Ford, with 520,000 net acres and they’re the top producer in the Bakken shale. Based on the Petrohawk price, Cramer thinks EOG could hit $160 a share."


Here are some key points for EOG:
  • Current share price: $101.52
  • The 52 week range is $85.42 to $121.44
  • Earnings estimates for 2011: $3.67 per share
  • Earnings estimates for 2012: $6.12 per share
  • Annual dividend: 64 cents per share which yields .6%
Pioneer Drilling Company (PDC) is a leading contract land drilling company, providing services to independent and major oil and gas exploration and production companies, including some of the companies mentioned here. These shares have nearly tripled from their 52 week lows, and the earnings power is not as strong as some of the other companies. I would wait for better opportunities to buy here.

Here are some key points for PDC:
  • Current share price: $15.50
  • The 52 week range is $5.23 to $16.24
  • Earnings estimates for 2011: 28 cents per share
  • Earnings estimates for 2012: 75 cents per share

Cheniere Energy (NYSEMKT:LNG) owns and operates liquefied natural gas (LNG) receiving terminals and natural gas pipelines in the Gulf Coast of the United States. The company is also exploring and developing oil and natural gas properties. These shares have also had a huge run from the 52 week low of only $2.30, and with losses expected this year and next, these shares look too speculative.
Here are some key points for LNG:
  • Current share price: $9.57
  • The 52 week range is $2.30 to $12.81
  • Earnings estimates for 2011: a loss of $2.84 per share
  • Earnings estimates for 2012: a loss of $2.97 per share

Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Are Cramer's Oil and Gas Plays Worth Buying?