Due to the positive long term fundamentals for Oil & Gas, my current top 3 picks are in that sector. This is due to combination of issues: the pricing of oil in US Dollars, the large US federal deficit, Quatitative easing, political turmoil in the Middle East, Fukishima disaster (note I do not believe nuclear power is dead, but just stalled), and general growth in Aisa.

Interoil Corp (IOC) (Oct 10 - 41.72/share: Current trades at about 0.27/mcfe with historical transactions inthe range of 2/mcfe. Elk/Antelope find was noted by GLJ Resources to be similar to the famous Arun field and with 58.6% ownership (equivalent to 5.5tcfe). Currently, IOC is is working with MS, UBS, and MacQuerie to partner with a Supermajor and sell a portion of its interests. If sold at a low 1/mcfe that would value IOC at 7.8billion USD market capitalization (current market cap. 2.25 billion USD). They have Bwata/Triceratops which is currently estimated to be at 4.7tcfe and at least 10 other possible reefal structures over 3.9 million acres. So why is it so cheap? No meaningful cashflow until at least late 2014 and political risk in Papua New Guinea (PNG). I believe the risk is overblown. PNG is a British Common law country with no history of nationalization of assets, of course, there is a large history of corruption. Of course, post-Fukishima world (note Japan is the worlds largest importer of LNG after Korea - China currently uses LNG for around 7% of its energy production from LNG, but note the large increase in receiving terminal construction and complaints about pollution from coal plants). Several near term catalysts, including the partnering and selldown with a supermajor. Additionally, insiders bought $42 million USD of shares at the last public offering at $75/share. Current price is $46/share. Further, George Soros' family owns ~1 out of every 9 shares.

Sonde Resources (SOQ)(Oct. 12 - 2.25/share): Small Canadian firm trading about a third of its valuation by parts that has a shareholder purchase limitation agreement ending Dec. 17, 2011 after agreeing to not purchase above 20% for 2 years. Key properties in Duvernay region, 60,000 net acres valued at ~2,000/acre based on recent sales. Zero debt and $30mil USD cash, with market cap of 140 million USD. Drumheller Manville I pool infill horizontals worth ~$200 million USD, also lower risk since improved drilling technic is merely raising the percent recoverable, hence very low risk. Also, on 7th November Block of cost of Libya/Tunisia they have 207 mmbbls of oil PIIP with likely 60 mmbbl recoverable which is conservatively estimated at $120 million USD. Contingent reserve report due out in soon and also Force Majeure was recently lifted. Also, insiders have been buying.

ATP Oil & Gas (ATPG) (Oct. 10 - 8.53/share) : This is a highly leveraged, deep value play with highly technically competent managment. Also, note that this firm is a developer of properties, not an exploration firm, something the market does not appreciate in my opinion. After being greatly harmed by the financial crisis and Macando well leak in the Gulf of Mexico ATPG is finally back up to full spead and with a PV 10 of $5.8 billion USD based on SEC Pricing (Market cap ~500 million USD), with $2.3 billion USD in net debt, $1 billion in infrastructure. Currently, drilling 4th well at Telemark after which the firm should be FCF even/ slightlypositive and after hooking up the pipeline for the Clipper find they will be securely ahead. The big came changer is their Cheviot asset in the North Sea. ATPG picked it up cheap, as they always do, after other producers were unable to handle the high water content. So they specifically designed and are building the Octabuoy to handle such. Cheviot has 39.0 mmboe proven and 17.0 mmboe probably (65% oil) and is expected to be online 2014. Due to convertible dilution above 27.5, which was raised by management's call option purchase, I say sell the Jan 2013 calls for around 0.90, nice yield for the current pricing. Also, insiders have been buying.

ATP Oil & Gas (Nov. 14 - 5.69) recently underperformed due to underperformance from one of their Telemark wells. Without too much detail, the well came in about half the rate initially anounced because the sand was much finer then what was expected requiring the well to be throttled to have the initial 7,000 boepd to avoid damaging the gravel pack. The reserves are expected to stay the same, but at a slower rate. They could drill a second well from Mods 202 rig on the Titan platform, which is much cheaper than a drilling ship, but still a negative due to time and costs. I expect they will get Titan maxed out (25k bopd) and if needed they could always sell/partner on Cheviot to cover costs. However, if oil prices drop dramatically and stay down then the firm would fold, but this is nothing new, this time the market was greatly disappointed. Based on the large recent decline, excellent assets and management, I believe it is a nice speculative play at the current price.

Other picks over the last two years have included:  ACXM, CRGN, DLX, EPE, HUN, IBKR, and WFC. Currently holding HUN and WFC, in addtion to ATPG, IOC, SOQ, SPY, and Cash.