A few days back, I wrote my bullish take on another exploration and production company, Penn West Energy (NYSE: PWE). Though its immediate fundamentals don't look great, it's still myopic to write off the stock. Today, we have another such stock, Crimson Exploration (Nasdaq: CXPO), which has been through the blues yet looks promising moving forward. Investors should take notice.

The fundamentals
Crimson Exploration engages in exploration and production on oil and gas properties located in Texas, Mississippi, and southwest Louisiana. The company recently made a significant upward revision of its proven reserves -- 71% over its 2009 estimates. The present worth of its net reserves, discounted at 10%, stands at $239.1 million. That's an attractive number for a company with a market cap of just $180 million, and it implies that the stock might be undervalued at today's prices.

While year-over-year revenues decreased by 14.2% in 2010, the gross profit margin stood at 78% -- better than the 75.9% averaged over the past five years. The long-term debt-to-equity ratio fell to 94% in 2010 from 105% in 2009. Although not a huge drop, the trend augurs well for the company, which has progressively managed to reduce its long-term debt from $277 million in 2008 to $172 million at the end of 2010.

The company isn't profitable, yet investors shouldn't take that as a bad sign. With estimated reserves significantly revised, the future looks promising. The company also produces cash, with its unlevered free cash flow figures rising this past year to $15.2 million.

The Foolish bottom line
In all, I believe this stock looks promising in the long run, though the hiccups may continue into the immediate future. Yet, compared with Delta Petroleum (Nasdaq: DPTR), the fundamentals are a lot more appealing. What's your opinion on this stock? Let us know with your comments below.

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Isac Simon owns no shares of any of the companies mentioned in this article.

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