GEOI Georesources, Inc. (MM)

Looking for a way to play the shale boom? GeoResources, Inc. (GEOI) is a small explorer that is expected to grow earnings by the double digits in 2012. This Zacks #1 Rank (Strong Buy) also is a value stock with a P/B of 2.2.

GeoResources is an independent oil and natural gas explorer with assets in the Bakken formation in Montana and North Dakota and the Eagle Ford formation in Southeast Texas. It is a small cap, with a market cap of $811 million.

GeoResources Beat by 5% in Q4

On Mar 13, GeoResources reported its fourth quarter 2011 results and surprised on the Zacks consensus by 2 cents. It was the third consecutive earnings surprise.

Earnings rose 58% to 41 cents from 26 cents a year ago. The consensus called for just 39 cents.

Revenue jumped 52% to a record $41 million from $27 million.

For the quarter, oil production was up 34%. The company ended the year with a record net production level of over 6,100 boe/d.

The year was boosted by increased activity in the key areas of Bakken and Eagle Ford with the Austin Chalk being the third prong of growth.

Average oil price after hedge settlements was up 28% to $89.48 from $69.82 a year ago. Average gas price after hedges also remained very high at $5.22 compared to $5.00 a year ago.

2012 Zacks Consensus Estimate Rises

The analysts are bullish on 2012 as the shale region remains hot.

9 estimates for 2012 have moved higher in the last month, pushing the Zacks Consensus Estimate up to $2.13 from $2.05 per share.

That is earnings growth of 57% as the company made $1.36 in 2011.

Shares Soar But Still Have Value

GeoResources has bounced back from last fall's sell off. Shares hit a new 2 year high.

Yet, GeoResources still has value.

In addition to a P/B ratio under 3.0, which usually indicates value, the company trades with a forward P/E of 14.8.

That is not the cheapest P/E ratio among its peers, but it's under the 15x cut-off I use for value.

Investors interested in the shale areas need to look beyond the big cap energy companies. GeoResources fits that bill.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

 
GEORESOURCES (GEOI): Free Stock Analysis Report
 
To read this article on Zacks.com click here.