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The market outlook for the oil and gas sector is expected to see an uptrend in the coming quarters. Therefore, many investors have started buying big, prominent oil stocks at the current market price with a long-term perspective. Yet, the oil and gas sector is also comprised of stocks belonging to independent and small exploration companies, which should also be looked into for investment. While these companies are facing headwinds such as equipment shortages and controversial gas extraction methods, their significant land assets and strong fundamentals are helping them push forward. I believe the following five stocks should be strongly considered for investment opportunities:

Plains Exploration & Production (PXP) is one of the more prominent independent oil and gas providers engaged in exploration, extraction and similar activities pertaining to oil and natural gas. The current market value of the stock is around $44, trading toward the top of its 52-week range between $20.25 and $45.40. With a market capitalization of around $5.56 billion, the company has a strong growth prospect, along with stable capital reserves.

Although its Eagle Ford shale project has been underestimated by investors, the company is expected to generate higher revenue from its organic drilling inventory. With a price earnings ratio in the multiples of around 59.7, 2012 will likely see the company generating returns close to 19%. Being partnered with EOG resources enhances future prospects of the company even further. More so, with the expected boom in the oil and gas industry, Plains Exploration & Production could reach a target of $45 within six months from its current levels. In that context, I would recommend investors to purchase the stock at the current levels, from a mid- to long-term perspective.

Ultra Petroleum (UPL) has some of the best assets in Pennsylvania, and Wyoming, with the Marcellus Shale and Pinedale Field in its asset portfolio. The company is a small and independent producer of oil primarily engaged in the business of exploration in certain prime locations of North America. The current market price of Ultra Petroleum Corporation is around $32, trading in the middle of the 52-week low and high of $28.45 and $34.55. With a market capitalization of $3.61 billion, its earnings per share are $2.32, while the price-to-earnings ratio is maintained at around 10.30.

The primary highlight of Ultra Petroleum remains in the company's land acreage that it owns, from which a production growth of double-digits can be well estimated. Considering the company's estimated 2012 earnings before interest, taxes, depreciation, and amortization at $955 million, the current market rate of the stock is approximately six times cheaper.

In my opinion, the stock is a good buy at current price levels. Apart from the positive market outlook of the oil and gas sector in 2012, there are other catalysts which could act as essential drivers of the stock from its current price level. Its Pinedale region could see better efficiency in drilling operations, whereas its Niobrara assets could achieve better outcomes, as a result of vertical drilling operations. In a nutshell, the company's efficient use of its resources as well as proper implementation of operations in oil drilling and activities pertaining to the production of oil, can give a positive thrust to the company's stock from its current levels. I would recommend buying Ultra Petroleum at its current market price.

Energen (ENG) is currently trading at around $53. With a market capitalization of around $3.89 billion, the company enjoys a trailing twelve months earnings per share of $3.59. Depicting a price-to-sales ratio of $2.39, price-to-book ratio of approximately $1.46, and a price-to-earnings ratio of around $13.70, Energen Corporation is a decent buy at current price levels, especially for investors looking for high dividend payouts. The company's beta ratio is around 1.17, with 1.14% as the dividend yield. Moreover, the company has raised its dividends by approximately 3.70%, and for a consistent period of 30 years, Energen Corporation has paid dividends. Apart from its decent fundamentals, I recommend buying this stock at current price levels.

Rosetta Resources (ROSE) is currently trading at around $53, at the top of its 52-week low and high range of $51.92 and $53.11. Rosetta Resources Inc. has its principle projects in Colorado, California, and Texas, for carrying on its oil and natural gas business. With its 50- and 200-day moving average of $45.79 and $45.75, respectively, the company has estimated 2012 earnings per share of $3.58 versus its 2011 estimated earnings per share of $1.98. In my opinion, any assets owned in America face lesser political risks than oil related assets owned in the Middle East or Africa.

Rosetta Resources owns assets in South Alberta, and Texas, which includes its large acreage of land in the liquid rich Eagle Ford basin. Its production is estimated to be around 13 to 16 million barrels per square mile for 2012, which, in consideration of its 300,000 net acres of land in South Alberta, would mean 6.5 billion barrels of oil. Also, the fact that the company's asset of oil and gas production and exploration at its Eagle Ford shale, which operates in full capacity (pdf), is another key driver for Rosetta Resources. In relation to the company's market capitalization of around $2.60 billion, the production capacity as estimated for 2012 looks lucrative (pdf), which could been seen as an essential parameter in one's decision to invest in the company. I would still recommend buying the stock even at its current market price.

Penn Virginia Corporation (PVA) engages in drilling of oil and natural gas. Currently trading at around $6, the stock is at the bottom of its 52-week range of $4.21 and $17.94. Facing equipment shortages, the company failed to meet its production targets for natural gas. Moreover, its gas extraction is carried out by hydraulic fracturing modes, which stir controversy in its usage. Although no legislation prohibits its use, the method of extraction ought to be modified in the interest of its investors.

The last two years for the company have been turbulent, as the company had to sell assets and also pay non recurring charges due for the same. However, the company has consistently managed to pay a dividend yield of 4% per year.

The company's future prospects are solely based upon the rise in demand for domestic oil. In my opinion, as the company has sought new avenues of liquid drillings, performance will definitely improve. This improvement in performance will garner an uptrend in this stock. Further, Penn Virginia Corporation plans to restructure its debt levels as well as improve its cash spending. At the current market price, I would recommend buying this stock and holding it for the short term.

Source: An Overview Of 5 Key Oil And Gas Players