Digging for Speculative Oil Stock Plays

Tickers in this article: MHR PVA
NEW YORK ( TheStreet) -- Today, Jim Cramer and I talked about a few speculative oil stocks.

I know people love to try to find small-cap, under-$5 stocks, and it is easy to imagine cheap shares doubling or tripling or doing even better than that. But most of these stocks are very speculative and deserve only a very small part of your portfolio. The few I speak about in the video above should be recommended only with that caveat.

But one that might be worth looking at is Magnum Hunter , which raised $400 million Wednesday in a deal with fellow small-cap independent oil E+P Penn Virginia .

Magnum Hunter was a natural gas company that has endeavored in the past 18 months to convert itself into a much more liquids-based producer, a road that so many E+Ps have tried to follow in the last two years. But Magnum may finally be turning the corner and dropping its reputation as a "bad" natural gas company.

With the sale of its Eagle Ford assets Wednesday, MHR now has a nice-looking asset mix with a more sustainable debt profile. At $4, it could be worthy of a punt.

Less worthy, in my view, is the company on the other end of the deal, Penn Virginia. Also looking to concentrate domestically in liquids, PVA sold its interest in its Indonesia assets and is doubling down on its Eagle Ford assets with its purchase from Magnum. But just because PVA is in a hot, tight oil play like Eagle Ford does not guarantee it will be successful. I still think PVA has quite a lot to prove.

I talk more about these stocks in the video above.

At the time of publication the author had no position in stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.