Small cap companies may grow up one day and become larger companies, earning huge returns for investors who have the fortitude and skills to play in this end of the market. Here's a look at three small capitalization players active in the Bakken play in the Williston Basin, all of which have ambitious plans to develop this play in 2012. (To know more about oil and gas, read Oil And Gas Industry Primer.)

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Small Cap Players
Kodiak Oil and Gas
(NYSE:KOG) is one of the fastest growing operators active in the Bakken and expects to exit 2011 with average daily production of 10,500 barrels of oil equivalent (BOE) per day. The company recently acquired additional properties here, and through some aggressive development estimates, that production will triple and reach 30,000 BOE per day by the end of 2012.

Kodiak Oil and Gas will spend $585 million in capital in 2012 to help accomplish this production goal and add three operated rigs during the year, bringing its total to eight by the end of 2012.

Triangle Petroleum Corporation (NYSE_AMEX:TPLM) has 81,000 net acres in the Williston Basin with the properties spread across Montana and North Dakota. The company is currently involved in the Bakken mostly on a non-operated basis, and has participated with larger independent oil and gas companies including Newfield Exploration (NYSE:NFX), EOG Resources (NYSE:EOG) and Hess Corporation (NYSE:HES).

In 2012, Triangle Petroleum plans to transition to a partially operated business model here and is targeting a development mix that is 70% operated and 30% non-operated. Triangle Petroleum has spud the company's first two operated wells and has permits approved or pending for fifteen additional operated wells. Triangle Petroleum has set a $131 million capital budget for fiscal 2013 (ends 1/31/2013) and will spend more than half this capital on the company's operated program.

Oasis Petroleum (NYSE:OAS) has more than 300,000 net acres of exposure to the Bakken and has spent $399 million in exploration and production capital during the first nine months of 2011.

Oasis Petroleum hasn't disclosed its 2012 capital budget yet, but with an estimated 1,170 drilling locations into the Bakken, investors should expect this operator to continue to focus capital on this popular oil play.

Northern Oil and Gas (NYSE:NOG) is continuing to lease up acreage prospective for the Bakken and boosted its position to 160,000 net acres as of December 2011. Northern Oil and Gas estimates that the company's well costs will increase in 2012, as it plans to participate in wells that are drilled and completed with longer laterals and additional hydraulic fracturing stages. The company estimates that the average well in 2012 will cost approximately $7.4 million to drill and complete.

Northern Oil and Gas also operates a non-operated business model and recently reported participating in wells with ConocoPhillips (NYSE:COP), Continental Resources (NYSE:CLR) and Marathon Oil (NYSE:MRO).

The Bottom Line
Investors can make huge returns through the correct selection of small capitalization stocks, and one of these four operators just might be the home-run investment needed by us all. One thing to remember is that along with the potential for higher return comes higher risk. (For additional reading, check out A Guide To Investing In Oil Markets.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    The 5 Best Buy-and-Hold Energy Stocks

    Understand why energy companies' stock are volatile when oil prices are volatile. Learn about the top five energy companies to buy and hold.
  2. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  3. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  4. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  5. Investing

    Oil: Why Not to Put Faith in Forecasts

    West Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
  6. Investing

    The Quinoa Quandary for Bolivian Farmers

    Growing global demand for quinoa has impacted Bolivian farmers' way of life. Should the American consumer be wary of buying this product?
  7. Markets

    How Energy’s Debt Bubble Affects Your Portfolio

    Depressed crude oil prices are here to stay for the foreseeable future. Here's how it will affect an oil industry riddled with unsustainable debt.
  8. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  9. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  10. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  1. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  4. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  5. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  6. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!