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<< Click to read Part I -- Identifying Large-Cap Bakken/Eagle Ford Growth Opportunities

There are many small / mid / large-cap E&P companies, with acreage positions in the Bakken Oil Shale or the 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 / mid / large-cap stocks versus their enterprise value, which is total market cap plus long-term debt. This provides a bang-for-the-buck ratio, which will be a strong predictor of 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 to current valuation.

Stocks that were richly rewarded based on this ratio in 2011 included Brigham Exploration (BEXP) and Kodiak Oil and Gas (NYSE:KOG). In a previous article on small-cap opportunities, Triangle Petroleum (NYSEMKT:TPLM) and U.S. Energy (NASDAQ:USEG) scored the highest, with capital investment to enterprise value ratios of 54% and 53%, respectively.

Oasis Petroleum (NYSE:OAS) scored the highest amongst mid-cap companies with a 30% capital expenditure to enterprise value ratio and Marathon Oil (NYSE:MRO) and EOG Resources (NYSE:EOG) scored the highest amongst large-cap companies with a 20% and 22% growth rate respectively. This ratio incorporates several factors, including cash flow and liquidity available to each respective company.

Voyager Oil and Gas (VOG) has a current enterprise value of $198 million. The company plans to spend $91 million on its capital expenditure budget in 2012. This gives Voyager a 2012 capital expenditure to enterprise value growth ratio of 46%.

Clayton Williams Energy (NYSE:CWEI) has a current enterprise value of $1.68 billion. The company plans to spend $391 million on its capital expenditure budget in 2012. This gives Clayton Williams a 2012 capital expenditure to enterprise value growth ratio of 23%.

Samson Oil and Gas (NYSEMKT:SSN) has a current enterprise value of $210 million. The company plans to spend $28 million on its capital expenditure budget in 2012. This gives Samson a 2012 capital expenditure to enterprise value growth ratio of 13%.

Goodrich Petroleum (NYSE:GDP) has a current enterprise value of $1.15 billion. The company plans to spend $250 million on its capital expenditure budget in 2012. This gives Goodrich a 2012 capital expenditure to enterprise value growth ratio of 22%.

Vaalco Energy (NYSE:EGY) has a current enterprise value of $340 million. The company plans to spend $180 million on its capital expenditure budget in 2012. This gives Vaalco a 2012 capital expenditure to enterprise value growth ratio of 53%.

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, Voyager and Vaalco offer the best growth to enterprise value in 2012 and compare favorably on this metric with Triangle Petroleum and U.S. Energy.

Source: Identifying Small-Cap Opportunities In The Bakken / Eagle Ford, Part II