Oil wells, and to a lesser degree natural gas wells, are still being drilled and completed, despite the economic turmoil that has cast global markets into a malaise. Most wells in the U.S. are drilled by smaller independents that are decidedly not household names. With that in mind, we queried E&P analysts about which small caps might be creating value at the end of 2011. The impact of the shale-oil run on service costs has been significant for small-cap E&P companies. Demand for pressure pumping, rigs and related paraphernalia required to drill and produce in the hot plays has been a keen focus for analysts like John Freeman, managing director covering the E&P space for Raymond James & Associates Inc. Logically, smaller companies were seeing the brunt of service pricing increases, but that trend is settling.
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