With a share price below $3 and a market capitalization near $200 million, Samson Oil and Gas (AMEX: SSN) may look like a risky stock. It does have some risks worth considering, but it offers a potential upside, too. Let's take a closer look at whether you might want to buy, sell, or hold it.

Founded in 1980, based in Australia, and operating out of Colorado, Samson is involved in acquiring, exploring, developing, and producing oil and gas properties in the United States.

The company main assets include projects in Wyoming's Hawk Springs and the Bakken shale field. It recently acquired 20,000 more acres in Bakken, with an option to grab 70,000 more. In some of its projects, it has partnered with Halliburton (NYSE: HAL), which sports deeper pockets. (Halliburton itself is worth considering, as it has been posting strong revenue growth despite its involvement in the Gulf oil spill and uncertainty surrounding that.)

Bakken's potential has many investors and companies excited. Samson's six producing Bakken wells generate most of its production. Continental Resources (NYSE: CLR), with more than 900,000 net acres in Bakken, has been posting very strong production rates, generating more than 1,000 barrels per day. Kodiak Oil and Gas (NYSE: KOG) bought more than 13,000 acres there just a few months ago, advancing its total acreage to 155,000.

Samson's balance sheet looks promising, too, with negligible debt and ample cash. That was partly achieved by selling its Greater Green River Basin properties to Chesapeake Energy (NYSE: CHK). (Chesapeake has been reorganizing itself a bit lately, announcing plans to spin off its oilfield services business.)

Over the past few years, Samson's revenue has grown strongly, while its cost of sales has fallen considerably. Net losses in 2007, 2008, and 2009 turned into positive earnings in 2010 and 2011.

Some have suggested that Samson may be a good acquisition target, as well. That's not a crazy idea, as many in the industry have been consolidating. Statoil, for example, bought Brigham Exploration for its Bakken properties, and recently sported 375,000 acres there.

Risks for the company include its ability to consume its cash quickly. It's expecting to spend $22 million in the fourth quarter alone.

As with other companies focused on exploring for oil and gas, Samson's future is tied to how successful it is at that. If its assets ultimately disappoint, so will its earnings and stock performance.

Another concern is fracking, as Samson does engage in this controversial practice. If public outcry leads to regulations restricting fracking, Samson's production might suffer.

Before jumping into this company, you may want to wait for additional promising signs, such as rising production levels and corresponding revenue increases.

The verdict
Samson is a promising company, but promises don't always deliver. If you're interested in it, take time to learn more before you invest. Or just add it to your watchlist and keep an eye on it. At this point in its life, it's more of a speculative portfolio candidate than a proven performer.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.