Enough with all of the random oil forecasts for the next 12 months. Enough! Some analysts say oil is going to $75, while others believe it’s going to $175. Some people are bullish on oil stocks, while others are bearish, claiming that supply has flooded the market.

The fact of the matter is that certain oil and gas stocks are so undervalued, compared with their current net-asset values, that the price of the underlying commodity is almost meaningless.

Sure, if oil goes to $70 per barrel and natural gas gets to $5, these stocks might get hit. But in the long run, these companies are going to be huge market gainers, and even possible takeover targets from the mega integrated companies looking for some hyped-up growth.

With that in mind, we set up the Cheap Small-Cap Oil Stocks portfolio at Stockpickr.com

Newfield Exploration (NFX): This oil and natural gas producer with substantial assets in the Oklahoman Woodford Shale recently said that it expects production values to grow to 22% to 26% for the rest of 2008 over 2007 levels. Oklahoma regulators have been supportive of owner/operator oil companies recently.

Newfield has pulled back substantially from its $70 high and trades with a forward P/E of 6.76 and EV/EBITA of 5.277.

PetroQuest Energy (PQ): This independent oil and natural gas producer boasts a historical drilling success rate of 89%. PetroQuest has most of its assets located in the Arkoma basin in Arkansas. PetroQuest has about 40,000 net acres in the Woodford Shale (up 46% since 2007) and more than 18,000 net acres in the Fayetteville Shale.

The company has the highest acres-over-enterprise-value, at 27.3 million on 40,000 Woodford acres, vs. XTO’s (XTO) 120,000 acres on an EV level of only 3 million.

PetroQuest trades with a forward P/E of 9.92 and EV/EBITDA of 4.807.

Ram Energy (RAME): Ram has large oil and natural gas findings coming online soon in the Barnett Shale. Sales were up 222% last quarter based on high oil and natural gas prices.

What we find attractive about Ram Energy is how cheap it is vs. its peers. Ram Energy has a price/net asset value (NAV) of 0.28, which is the lowest of its sector. Its EV/proved reserves is also the lowest in the group, at $14.88.

On the technology side, we like a company called Particle Drilling Technologies (PDRT). Basically, the company makes proprietary drilling bit systems, aimed partially at “hard-rock” formations.

Unlike typical crush and grind bits (which are extremely costly and time-consuming, partially in hard-rock formations), particle drilling blasts the hard rock away by using small particles of hardened steel that are entrained in a drilling fluid. These steel balls impact the hard rock more than 4 million times per minute.

The company is still in the early stages, but recent tests in Utah and Texas showed that Particle's bit technology only took eight hours to drill a 120-foot hard-rock interval at depths exceeding 11,000 feet. Drilling through this same amount of hard-rock with standard drill bit technologies typically takes 24 hours or more.

Particle management says that its technology can generate over $1 billion in revenue.

While all the normal plays, such as Exxon (XOM), ConocoPhillips (COP) and Chevron (CVX), dominate the headlines, we think there are some steals here.

For more ideas, including Cabot Oil & Gas (COG), ATP Oil & Gas (ATPG) and Ultra Petroleum (UPL), please check out the Cheap Small-Cap Oil Stocks portfolio.

Posted on Sept. 3, 2008