NEW YORK ( TheStreet) -- In a recent report, the U.S. Energy Information Agency predicted that global energy demand will increase over 55% by 2040. While "Big Oil" stocks have done well in the current bull market, it is "Small Oil" companies that should benefit the most from the increasing need for oil and natural gas around the world in the years ahead. Other than the dividend income increasing, there is little to expect in the way of total return growth from Exxon Mobil ( XOM), Chevron ( CVX) and other Big Oil firms. That is a result of any future energy demand factors already being accounted for in the stock price rise of major oil and natural gas companies. The returns have also been enhanced by investment dollars flowing into the commodity sector due to quantitative easing measures from central bankers around the world. Oil assets have benefited tremendously from being purchased as inflation hedges as a result of the creation of massive amounts of fiat currencies without the corresponding economic growth. But that has not lifted the share prices of many Small Oil stocks. These publicly traded companies do not have the market capitalization to absorb all of the investment capital seeking the best deal for the money. Institutional investors many times cannot buy shares of entities that are below a certain price level or market capitalization size. That results in very appealing opportunities for individual investors in Small Oil. This is presently happening with Octagon 88 (OCTX: OCTBB), an oil and natural gas firm with extensive holdings in Canada. Due to very positive reports about the potential of its assets and results from drilling, the stock price of Octagon 88 has soared more than 25% over the last quarter of market action. Over the same period, by contrast, Exxon Mobil has fallen more than 5% and Chevron has dropped by more than 3%. While all publicly traded companies have a mandate to enhance shareholder value, Americas Petrogas (BOE.V) is taking very tangible action. Americas Petrogas has retained Jefferies for the consideration of "range of strategic alternatives." This move was initiated after bullish reports on the assets of Americas Petrogas in Argentina. For its most recent quarterly results, Americas Petrogas had double-digit increases in both revenues and production.
Northern Oil and Gas ( NOG), operating in the Bakken formation in North Dakota, has increased production by more than 70% in the past year. As a result, the share price has risen by more than 30% over the last quarter. That trend should continue as the analyst community projects that earnings-per-share will increase by 35% for Northern Oil and Gas over the next five years. Small Oil firms also do not have the exposure of Big Oil on concerns about political unrest and operational security, in general. Occidental Petroleum ( OXY) just announced that it was selling assets in the Middle East and North Africa due to "political risk," as reported by the Los Angeles Times. Farther down the coast of Africa, Royal Dutch Shell ( RDS-A) has put blocks in Nigeria on the market due to theft problems. According to a piece in The Wall Street Journal, Repsol (REPYY: PINK), the Spanish oil giant, is looking to spend up to $10 billion for assets in North America due to its desire for more secure holdings. Both Octagon 88 and Northern Oil & Gas have the holdings in North America that Repsol and others now find alluring due to the political stability of the continent. Americas Petrogas is headquartered in Calgary, the oil and natural gas capital of Canada. Investors should follow the lead of Repsol and others in looking for assets in North America, with many Small Oil firms having the very appealing features for long-term gains. At the time of publication, Yates held no positions in the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.