Three of the largest M&A deals of the past couple of months have been for oil-weighted producers, and all three buyers are funds—one private equity and two special-purpose acquisition companies (SPACs).

Publicly held SPAC United Refining Energy Corp. has bid $580 million for privately held Chaparral Energy Inc., whose 146 million barrels of oil equivalent (BOE) are 62% oil. Edge Petroleum Corp. planned to buy Chaparral last year but the deal fell through over post-commodity-price-collapse financing, and Edge is now in Chapter 11 proceedings.

Tom Hicks’ publicly held SPAC, Hicks Acquisition Co. I, has purchased Nick Sutton’s privately held Resolute Energy Corp., which owns 49.3 million proved BOE, of which 91% is oil. And, private-equity firm Apollo Global Management LLC will buy oil-weighted Parallel Petroleum Corp. for $483 million, after having failed to win its bid for oily producer Legacy Reserves LP earlier this year, as oil prices rose and Apollo’s bid did not.

Larry Lee, president of Ram Resources Inc., another oil-weighted producer, noted when the company’s borrowing base was affirmed last month that 59% of the cash-flow yield from its production mix “is driven by the price of oil.”

Private investment-fund manager Jim Wicklund of Carlson Capital LLC told Energy Capital Week attendees this past June, “What hedge funds love right now is oily and shaley. If you are a conventional gas producer, you need to get a white suit and dance like John Travolta. You are so passé, it is almost scary.”

Shaley Oil No. 1 is the Williston Basin’s Bakken and Three Forks-Sanish formations. “We are in the first inning of what is already and will be one of the largest oil discoveries in North America,” says Jefferies & Co. senior E&P analyst Subash Chandra in a recent OilandGasInvestor.com-hosted webinar. “We’re probably talking about billions of barrels of recoverable oil that can come out of this play.”

Chandra couldn’t cite a single Bakken disqualifier. The play, centered in and around Mountrail County, North Dakota, is producing better and better wells, its economics work at lower oil prices, incidences of success there are spreading, and the number of potentially successful well locations is underestimated by Wall Street, he says.

“There are legitimately thousands of locations that Wall Street has yet to get its hands around.” Results so far suggest Middle Bakken wells produce independent of the Three Forks-Sanish formation. “We are not draining the Three Forks with a Bakken well…so we can pretty much double these locations over time.”

Several Bakken-weighted producers’ stock prices in 2009 have grown between 50% and 700%, including Whiting Petroleum Corp., Brigham Exploration Co., Kodiak Oil & Gas Corp., GeoResources Inc., Northern Oil & Gas Inc. and Continental Resources Inc. Their 2009 returns have also outperformed the Amex Oil Index.

While Bakken producers’ stock prices include great expectations for the play, expectations can be greater, Chandra says. “There isn’t a single Bakken company that can’t earn its premium over time and…earn an even higher one.”

He estimates the average Bakken well is economic at $50 Nymex oil, assuming a $7.50 basis differential. Nymex oil was approximately $76 at press time.

Also at press time, C.K. Cooper & Co. analyst Sven Del Pozzo launched coverage of “oil rich” Whiting “whose operating leverage and recently declining debt load put it on the cusp of delivering much-stronger operating cash flows under $70 perpetual Nymex oil.”

In contrast, U.S. shale-gas producers’ stock prices have grown between 10% and 80%, including Chesapeake Energy Corp. (all major U.S. shale-gas plays), Southwestern Energy Co. (mostly the Fayetteville), Devon Energy Corp. (Barnett and Haynes­ville) and Range Resources Corp. (Barnett and Marcellus).

The contrarian buy is gas. Tudor, Pickering, Holt & Co. analyst Dan Pickering stands by his “$7.50 in 2010” forecast. He and fellow analysts reported at press time: “Remember: Gas supply is falling like a rock.” On Chesapeake, nearly 100% weighted to U.S. natural gas, “you’ll make lots of money buying…Keep doing it.”