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Shares of Penn Virginia Corp. (PVA - Snapshot Report) hit a 52-week high of $13.30 on Feb 18. In fact, the Radnor, Pennsylvania-based oil and gas explorer has seen its stock price climb an astounding 175% over the past six months.

Despite this price appreciation, we remain optimistic about the firm’s near-term prospects, supported by its high-quality Eagle Ford Shale holdings, impressive oil production growth and continued strong operating performance led by an efficient management team.

These factors are reflected in Penn Virginia’s Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

Why the Bullishness?

A turnaround story, Penn Virginia has re-designed its asset portfolio by making an active push into liquids (from gas) to grow its production and reserves.

Concerned by the volatility in gas prices, Penn Virginia’s capital program – since 2010 – specifically focuses on the promising liquids-rich Eagle Ford region in a major shift away from dry natural gas development. The company’s strategy realignment has led to a highly visible production-growth profile.

The recently concluded acquisition of sizeable producing and undeveloped acreage in the burgeoning Eagle Ford shale formation in South Texas from Magnum Hunter Resources Corp. (MHR - Snapshot Report) will offer Penn Virginia a meaningful production growth opportunity in the high-margin North American unconventional resource plays and further drive its overall volumes.

Another positive in the Penn Virginia story is its progress toward well cost reduction. The company has been able to cut down on completion and drilling expenditure on increased efficiencies. Finally, Penn Virginia maintains a stable balance sheet that will continue to provide the flexibility to fund its capital program and pursue bolt-on acquisitions.

Zacks Rank & Stock Picks

In addition to Penn Virginia, one can look at Clayton Williams Energy Inc. (CWEI - Snapshot Report) and Warren Resources Inc. (WRES - Snapshot Report) as good buying opportunities. These domestic upstream players, with a Zacks Rank #1 (Strong Buy), have seen solid secular growth and harbor the potential to rise significantly from the current levels.

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