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In spite of the precarious nature of the global economy, with still unresolved (some would say unaddressed) debt crises in Europe and the U.S., now joined by a growing concern that China’s real estate market is just the latest bubble about to burst, the energy sector, primarily oil and gas, continues to hold its own. In September, Moody’s had cut the sector’s outlook to “stable” on expectations of softening crude oil prices and tighter refining profit margins, but investors hardly took note. Perhaps of more significance is the ongoing development of shale gas resources, natural gas produced from shale. Shale gas appears destined for a big role in American energy, with major deposits in Canada and the U.S.

How all of these factors will ultimately play out is impossible to say, but energy sector stocks are still considered by many to play a critical part in a healthy stock portfolio. Below are some small caps in traditional energy, each noteworthy for different reasons. As always, due diligence is required to ferret out any weaknesses in the stocks that you may be unwilling to accept.

China North East Petroleum Holdings Ltd. (NYSE:NEP)

The company, headquartered in Song Yuan City, PRC, engages in the exploration and production of crude oil in northern China, operating, as of December, 2010, 295 producing wells over several oil fields, with proven reserves of nearly 5.5 million barrels. They also provide contract land drilling and other oil field services.

China North East Petroleum stands out for its low debt to equity ratio, with a good free cash record and profit margins.

TTM P/E 2.20, TTM P/S 0.95, EPS $1.25

Consensus 12-Month Price Target: Insufficient Information

Calumet Specialty Products Partners LP (NASDAQ:CLMT)

Calumet, headquartered in Indianapolis, IN, is a leading refiner and processor of specialty hydrocarbon products. The company’s capacity has grown significantly in the last decade, and the company now has 6 plants operating in four states. Calumet has the most diverse specialty hydrocarbon capability in the world, with a full line of naphthenic and paraffinic oils, aliphatic solvents, white mineral oils, petroleum waxes, petrolatum and hydrocarbon gels.

Calumet stands out for its dividend yield, now at over 10%.

TTM P/E 29.17, TTM P/S 0.36, EPS $0.64

Average Analyst 12-Month Price Target: 20.5

Atwood Oceanics, Inc. (NYSE:ATW)

Houston-based Atwood Oceanics has long been a leader in delivering safe, reliable, and efficient offshore drilling services to clients around the world. The company owns ten drilling rigs operating in many of the world's major offshore hydrocarbon basins, and maintains offices on six continents, with a multi-national workforce of approximately 1,400 people.

Atwood is just beyond the traditional small cap range, but has an especially strong history of both revenue and earnings growth.

TTM P/E 9.69, TTM P/S 4.13, EPS $4.16

Average Analyst 12-Month Price Target: 51

Breitburn Energy Partners LP (NASDAQ:BBEP)

Breitburn Energy, headquartered in Los Angeles, is an independent oil and gas limited partnership, focused on the acquisition and development of domestic oil and gas properties in the Los Angeles Basin in California, as well as in central Wyoming, Florida, Michigan, Indiana, and Kentucky.

Breitburn stands out for its per share cash flow, recently standing at roughly $4 per share.

TTM P/E 14.74, TTM P/S 2.74, EPS $0.87

Average Analyst 12-Month Price Target: 23

Apco Oil & Gas International, Inc. (NASDAQ:APAGF)

With headquarters in Tulsa, OK, Apco Oil and Gas is an international oil and gas exploration and production company with a focus on properties in Argentina and Columbia in South America. Apco has interests in eight oil and gas producing concessions and two exploration permits in Argentina, and three exploration and production contracts in Colombia.

Apco stands out for its steady revenue growth, coupled with its debt to equity ratio.

TTM P/E 74.96, TTM P/S 23.88, EPS $1.09

Average Analyst 12-Month Price Target: Insufficient Information

Legacy Reserves LP (NASDAQ:LGCY)

Based in Midland, TX, Legacy is an independent oil and natural gas limited partnership focused on the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Mid-Continent, and Rocky Mountain regions of the U.S. As of December 31, 2010, the company’s proved reserves had a standardized measure of $774.8 million.

Legacy stands out for its dividend yield, now at over 8%.

TTM P/E 10.11, TTM P/S 3.69, EPS $2.54

Average Analyst 12-Month Price Target: 32.75

Source: 6 Noteworthy Small Caps In Traditional Energy