There are many small-cap E&P companies with acreage positions in the Bakken Oil Shale or Eagle Ford Oil Shale. Sorting out which companies provide the best growth opportunities can be difficult. One way to measure potential 2012 growth is to compare the announced 2012 capital expenditure budgets for various small-cap stocks versus their capital structure which is total market cap plus long term debt minus cash. This provides a bang for the buck ratio which will be directly linked to future production and revenue growth of each respective company. The higher the percentage of planned capital expenditures to total capital structure the greater the growth potential. Stocks that were richly rewarded based on this ratio in 2011 included Brigham Exploration (BEXP) and Kodiak Oil and Gas (NYSE:KOG).
Kodiak Oil and Gas has been very aggressive and very successful in growing production just like Brigham Exploration was. Kodiak has a total capital structure of $2.46 billion, which includes recent transactions. The company plans to spend $585 million on its capital expenditure budget in 2012. This gives Kodiak a 2012 growth ratio of 24%.
Crimson Exploration (NASDAQ:CXPO) has a total capital structure of $321 million. The company plans to spend $74 million on its capital expenditure budget in 2012. This gives Crimson a 2012 growth ratio of 23%.
Abraxas Petroleum (NASDAQ:AXAS) has a total capital structure of $469 million. They have announced a plan to sell some non-producing assets to improve their capital structure for 2012. The company plans to spend $70 million on its capital expenditure budget in 2012. This give Abraxas a 2012 growth ratio of 15%.
U.S. Energy (NASDAQ:USEG) has a total capital structure of $90 million, which includes recent transactions. U.S. Energy plans to spend $48 million on its capital expenditure budget in 2012. This gives U.S. Energy a 2012 growth ratio of 53%.
Triangle Petroleum (NYSEMKT:TPLM) has a total capital structure of $227 million. Triangle plans to spend $123 million on its capital expenditure budget in 2012. This gives Triangle a 2012 growth ratio of 54%.
GeoResources (NASDAQ:GEOI) has a total capital structure of $806 million. Geo plans a mid-point capital expenditure budget of $205 million for 2012. This gives Geo a 2012 growth ratio of 26%.
There are many considerations besides just 2012 growth potential when considering investing in a stock. All of the above mentioned are subject to drastic changes in the price of oil or natural gas, which can impact changes in the 2012 capital expenditure budgets. Also, not all acreage is the same and all of these companies can change their budgets based on success or failure of the drill bit. Simply based on their current plans, Triangle Petroleum and U.S. Energy offer the best growth prospects for 2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.