If you want a largely local play on three of the major energy plays going, take a look at Canadian Natural Resources (NYSE:CNQ). Not only does this company derive most of its production from North America (lowering political risk), but it has operations in gas, heavy crude, and oil sands -- three areas that have gotten a lot of attention in the past year or so.

Canadian Natural also happens to be among those independent energy companies that are able to increase production by fairly meaningful amounts. In the second quarter, for instance, combined production rose 10%, with oil production rising 17%. While realized gas prices did fall off from last year, oil prices were higher overall and the heavy oil discount shrank, meaning that Canadian Natural got relatively more money per barrel.

Production costs also appeared to be in good order. Expenses rose 7% overall and sit at a level that's more or less comparable to other independent producers like EnCana (NYSE:ECA), Apache (NYSE:APA), Chesapeake (NYSE:CHK), and so on. And while the company's large undeveloped acreage and ongoing drilling plans expose it to the rising rates from drillers like Nabors (NYSE:NBR) and service companies like Schlumberger (NYSE:SLB), you've got to spend that money if you want to boost your production and sell that $70-a-barrel oil.

Canadian Natural also happens to have a kicker that many other independents do not. Namely, the Horizon oil sands project, which is slated to begin production in late 2008. Canadian Natural could conceivably produce about 110,000 barrels of synthetic light crude each day, about a 20% boost from current levels, before ongoing development doubles that output around 2012. The key, though, is economical development and cost control -- companies like Royal Dutch Shell (NYSE:RDSb) have faced sharp cost increases in the oil sands, so that's an ongoing risk factor.

I like this company, but it's not the cheapest among the major independents that I follow. Now you could argue that the company's diversification should grant it some premium to its rivals, but that's a Fool-by-Fool call. For now, this Fool sees it as undervalued but not enough to be a top pick.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).