What’s more, the best operators can recoup the entirety of their investments in new wells in 18 months or less, because while the wells must go relatively deep, the brittle carbonate prevalent across the formation is particularly responsive to hydraulic fracturing.

The high return rates have lured a rising tide of corporate investment of late, and from some pretty parsimonious spenders. Growth Portfolio holding Devon Energy (NYSE: DVN) has just shelled out $6 billion for the Eagle Ford assets of privately-held GeoSouthern to enter what Devon calls the “best part of best play in North America.” Mining giant BHP Billiton (NYSE: BHP), which is cutting its investment in new metals mines, is planning to invest $4 billion a year in US shale development, primarily in the Eagle Ford.

But neither of these companies offers the same concentrated bet on Eagle Ford’s continuing bounty as Carrizo Oil & Gas (Nasdaq: CRZO), the small-cap driller that in a space of three years has transformed itself from a gas producer into an Eagle Ford success story.

During the most recent quarter, its 84 net wells in the Eagle Ford accounted for 84 percent of Carrizo’s booming oil production, and thereby for the bulk of the company’s strong profits. Carrizo expects to follow this year’s 47 percent increase in crude output with another gain of more than 40 percent in 2014.

Eagle Ford windfalls have allowed the company to limit leverage below 2.5 times net-debt-to-EBITDA, and the balance sheet should continue to strengthen next year.

Carrizo’s 58,000 Eagle Ford net acres offer an internal rate of return on drilling of 87 percent when WTI trades at $100, and a none-too-shabby 57 percent annual rate of return with crude at $85, according to the company. At $70 a barrel, Carrizo would have to make do with a 34 percent rate of return on its Eagle Ford assets.

Carrizo’s probable reserves in the Eagle Ford are four times the size of its proved reserves, and if the company is right about the “very high likelihood of conversion to proved,” could end up being worth nearly $4 billion, or more than twice CRZO’s current market capitalization. In addition to the Eagle Ford, Carrizzo also holds significant and expanding acreage in the Utica, the only shale play poised to challenge the profitability of the Eagle Ford, along with wells in the Niobrara and the Marcellus.

So far, management has delivered on its promises, helping the share price nearly double since the beginning of the year.

Source: company presentation

Despite the gains and the superior economics of the Eagle Ford, the current valuation shows a discount to top Bakken producers and TES portfolio picks Oasis Petroleum (NYSE: OAS) and Continental Resources (NYSE: CLR).  Cash flow from operation should cover the bulk of next year’s capital spending, and Carrizo should be able to access the rest on favorable terms whether it chooses to add debt or issue more equity.

We’re adding the best available proxy for the Eagle Ford to our Aggressive Portfolio. Buy CRZO below $46.  

While Carrizo’s $1.6 billion market cap leaves it a small-cap stock, Gastar Exploration’s (NYSE: GST) $291 million brands it as more of a micro-cap. Like Carrizo, Gastar is attempting to transform itself from a gas producer into an oil driller. Unlike Carrizo, it’s counting not on the Eagle Ford but on a far less famous domestic basin, the still developing Hunton Limestone Play in Oklahoma.

For now, gas, mostly from Gastar’s 27 net operated wells on the West Virginia side off the Marcellus, still accounts for more than 70 percent of the production by volume, with the remainder split between natural gas liquids and oil.

But the Hunton, where Gastar leases nearly 100,000 acres after a recent acquisition, has the potential to change that in a big way.   Hunton wells can be drilled 30 to 50 percent cheaper than the Eagle Ford’s yet one of the first operating wells drilled here by Gastar was recently revealed to be as productive as most of Eagle Ford’s during its first 10 days. And while the Hunton’s geology is more variable than the Eagle Ford’s it may yet prove as predictable in terms of locating the biggest gushers.

It wouldn’t take much to dramatically move Gastar’s needle: crude production totaled just 128,000 barrels in the latest quarter, though that was still three times the year-ago levels. The CEO, who owns nearly 3 percent of the outstanding shares, pulled off a coup this spring and summer in acquiring 157,000 Hunton acres from Chesapeake, recouping the entire selling price by selling off the less appealing half of that acreage and repurchasing 6.8 million shares at less than one-third their current price in the bargain.

The subsequent sale of $44 million in East Texas gas assets will help ensure that Gastar has the resources it needs to continue to develop the Hunton. If further drilling bears out to superb early results, an internal rate of return in excess of 100 percent on the Hunton wells isn’t out of the question. We’re adding Gastar to the Aggressive Portfolio as that portfolio’s riskiest and most speculative play. Buy GST below $5.75.