NEW YORK ( TheStreet) - The recent high oil prices and drilling technology upgrades have made Marcellus Shale, the largest natural gas shale play in the U.S., economically viable. Professor Engelder of Pennsylvania State University estimates recoverable natural gas reserves in this shale play at around 489 trillion cubic feet (Tcf) with an economic value of around $2 trillion.

Chesapeake Energy ( CHK), Penn Virginia ( PVA), Carrizo Oil & Gas ( CRZo), Consol Energy ( CNX), Rex Energy ( REXX), Gastar Exploration ( GST) and Magnum Hunter Resources ( MHR) are seven Marcellus stocks with potential to deliver attractive returns over the next one year.

According to analysts surveyed by Bloomberg, these stocks have an average buy rating of 73% and a 54% upside potential. The stocks are arranged in ascending order of potential upside.

7. Chesapeake Energy ( CHK), the second largest producer of natural gas in the U.S., is focused on discovering and developing conventional and unconventional natural gas and oil fields onshore in the U.S. Chesapeake has major stakes in the Barnett, Fayetteville, Haynesville, Marcellus and Bossier natural gas shale wells and other unconventional liquid plays.

Net income for the second quarter of 2011 was $467 million, compared to $235 million in the year-ago quarter. Revenue for the quarter was $1.79 billion, vs. $1.16 billion in 2010 second quarter.

By the end of the second quarter, Chesapeake developed the largest combined inventories of onshore leasehold (14.48 million net acres). Of the total acreage, Marcellus Shale accounts for 12%, or a net 1.75 million acres. Net production from the property is 320 million cubic feet equivalent (MMCFE) a day with an operating rig count of 30.

Analysts polled by Bloomberg give the stock 56% buy rating. In the last year, the stock has appreciated 49% and is currently trading at 10.9 times its estimated 2011 earnings.

6. Rex Energy ( REXX) is an independent oil and gas company operating in the Illinois, Appalachian and the Denver-Julesburg Basin in the U.S.

During the second quarter of 2011, production averaged 35.2 MMcfe per day, up 27% from the prior quarter and 87% over the second quarter of 2010. Profitability was higher during the quarter. EBITDAX was $13.3 million, an increase of 130% from the same quarter prior year. Net income quadrupled to $3.4 million.

The company has a joint venture agreement with a subsidiary of Sumitomo Corporation to sell and transfer interests in its Marcellus Shale assets. For the second quarter, Marcellus drilling and operational investment was $47.2 million and $61.1 million year to date. Of the total reserves of 201.7 Bcfe, Marcellus Shale accounts for 72%, or 1.46 Bcfe of reserves.

Analysts expect the stock to deliver 31% in the next year with buy ratings of 69%. The stock is trading at 26 times its estimated 2012 earnings.

5. Gastar Exploration ( GST) is an independent U.S.-based company engaged in the exploration, development and production of natural gas and oil. The company is pursuing natural gas exploration in the deep Bossier gas well in the Hilltop area in East Texas and the Marcellus Shale in West Virginia and central and southwestern Pennsylvania.

Net income for the second quarter of 2011 stood at $126,000 compared to a net loss of $2.5 million for the second quarter last year. Net operating cash flow increased to $6.1 million from $2.7 million in the same period last year. Natural gas and oil revenue increased to $8.5 million, up 26% compared to the same period a year ago. As of December, 2010, the company's total proven reserves were 49.9 billion cubic feet (Bcf) of natural gas and 61,300 barrels of oil, or 50.3 (Bcfe), with 83% proven reserves.

As of December, 2010, Gastar's proven reserves in the Marcellus Shale region were approximately 2.8 Bcfe, representing 6% of company's total proven reserves. On Marcellus' prospects, Russell Porter, Gastar's CEO, commented, "We are highly encouraged by the initial test results of our liquids-rich area of the Marcellus Shale in Marshall County, West Virginia and are excited to have our Marcellus drilling program underway. Based on the early indications, we believe we are operating in a very productive area of the play that could generate excellent returns on investment. Additionally, we believe our active program positions us to achieve significant reserve growth by year end 2011, with escalating oil and gas production volumes later in the year and throughout 2012, as we put these wells on line."

Analysts expect the stock to deliver 40% upside in the next one year with a buy rating of 80%. The stock is trading at 12 times its estimated 2012 earnings.

4. Consol Energy ( CNX) is a diversified fuel producer and services provider in Eastern U.S.

During the second quarter of 2011, net income increased to $174 million from $103 million in the second quarter of 2010. The company has been trying to monetize a portion of its Marcellus Shale acreage. Total production during the quarter was 6.0 Bcf, up 161% from the year-earlier quarter, an indication of accelerated drilling activity in the Marcellus.

Marcellus Shale reserves averaged 5.5 Bcf per well in December. In the first half of 2011, 40 horizontal wells were drilled, with results in the three regions of Southwestern Pennsylvania, Central Pennsylvania and Northern West Virginia meeting or exceeding expectations.

The stock rose 32% in the last one year and has potential to deliver 43% over the next one year. The stock has a 82% buy rating and is trading at 15.8 times its estimated 2011 earnings.

3. Carrizo Oil & Gas ( CRZo), operating through subsidiaries, engages in the exploration, development, exploitation, and production of oil and natural gas in the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, the Eagle Ford Shale in South Texas and in proven onshore trends along the Texas and Louisiana Gulf Coast regions.

During the second quarter of 2011, the company had record production of 11.2Bcfe, up 20% from the same quarter prior year. Proven reserves estimated for 2010 were 842 Bcfe, with 48% developed. The Marcellus Shale accounts for about 3 Bcfe of reserves. The company added a second development drilling rig in the Marcellus Shale in Northeastern Pennsylvania.

During the second quarter, the company received cash distribution of $3.3 million on its investment in ACP II Marcellus, a joint venture partner in the Marcellus Shale and an affiliate of Avista Capital Partners, L.P., a private equity fund. The stock is expected to deliver 49.9% returns in the next one year and has 75% buy rating. It is trading at 23 times its estimated 2011 earnings.

2. Penn Virginia ( PVA) is an independent oil and gas company with presence in various onshore regions including East Texas and the Marcellus Shale.

For the second quarter of 2011, production was 11.7 Bcfe, a 12% increase compared to 10.5 Bcfe in the prior-year quarter. Shale properties of Haynesville and Eagle Ford contributed about 19% of total daily equivalent production.

H. Baird Whitehead, the company's CEO, said, "As a result of this shift in production mix towards higher-margin oil and NGLs, and despite the decreased guidance for natural gas production, we expect second-half 2011 revenues, EBITDAX and other cash flows to increase and for that trend to continue into 2012."

Management provided production guidance of 48.5 Bcfe to 50.5 Bcfe for 2011. Capital expenditure for the year is at $360 million to $380 million. The stock is expected to deliver 77% in a year's time and has a 60% buy rating.

1. Magnum Hunter Resources ( MHR) is an independent oil and gas company, active in the Marcellus Shale, Eagle Ford and Williston basin.

Second-quarter 2011 production increased to 450 million barrel oil equivalent (Mboe), tripling from the second quarter of 2010. Net revenue increased to $33 million from $8.4 million in the year-ago quarter. The company has expanded its lease acreage positions in Eagle Ford and Marcellus Shale plays.

Magnum's proposed 2011 fiscal capital expenditure is $255 million and it plans to fund it through a combination of internal accruals, commercial bank credit facilities and additional debt capital resources. At the end of the quarter, the company's net debt-to- capital ratio was 18% and debt-to-adjusted EBITDA was 2.8 times.

Analysts expect the stock to deliver 107% in the next one year with buy ratings of 88%. The stock is trading at 19 times its estimated 2012 earnings.

>>To see these stocks in action, visit the 7 Marcellus Shale Plays to Watch portfolio on Stockpickr.

If you liked this article you might like

Atlassian, AeroVironment, Granite Construction: 'Mad Money' Lightning Round

Atlassian, AeroVironment, Granite Construction: 'Mad Money' Lightning Round

The Bottom? Not So Fast: Cramer's 'Mad Money' Recap (Tuesday 2/6/18)

The Bottom? Not So Fast: Cramer's 'Mad Money' Recap (Tuesday 2/6/18)

Closing Bell: LIVE MARKETS BLOG

Closing Bell: LIVE MARKETS BLOG

These Stocks Are Getting Roughed Up in Tuesday's Market Selloff

These Stocks Are Getting Roughed Up in Tuesday's Market Selloff

Jim Cramer: Looking for Treasure in the Cellar

Jim Cramer: Looking for Treasure in the Cellar