Quick -- name the capital of Kazakhstan.

Don't feel bad if you don't know (it's Astana). After all, Kazakhstan is one of those countries that's "over there, somewhere ..." Sandwiched between Russia, China, the Caspian Sea, and three other former Soviet republics, not too many people give a lot of thought to this Texas-size reservoir of fossil fuels.

Canadian oil producer PetroKazakhstan (NYSE:PKZ) does give a lot of thought to it, though, as the company conducts all of its energy operations there.

Despite a hot market for petroleum, PetroKazakhstan's fourth-quarter results weren't especially impressive. Revenue climbed 30% for the quarter and net income grew 29%, while share buybacks boosted EPS growth more than 36%. While those would ordinarily be great results, even giants like ExxonMobil (NYSE:XOM) are posting 30% EPS growth these days.

Results for the quarter were hurt by a combination of lower production, transport delays, and incrementally lower demand for the types of crude produced by the company. Nevertheless, margins were strong, and the company more than doubled its free cash flow, with $372 million of it for 2004.

Trading at less than seven times trailing earnings and less than nine times trailing enterprise value-to-free cash flow, PetroKazakhstan looks dirt cheap. Before jumping to snap up these "cheap" shares, though, investors need to consider some of the risks exclusive to this company.

While the company grew reserves by more than 11% in 2004, its proven reserve life (that is, proven reserves divided by production) is low at just over seven years. While proven reserve life varies considerably from company to company, most large-cap energy companies stand at nearly nine years, and many smaller producers have proven lives in the high teens.

Also, because Kazakhstan is landlocked, shipping out the oil is a bit more of a hassle. PetroKazakhstan does have access to some pipelines, but must also rely in part upon rail shipment, which raises costs.

Finally, PetroKazakhstan is entirely dependent upon operations in Kazakhstan. As investors learned the hard way recently with Harvest Natural Resources (NYSE:HNR), political whim can wreak havoc on a business and the stock price. While the government of Kazakhstan has thus far conducted business pretty fairly, a change in the domestic economic or political climate, or both, could alter matters quickly.

With all that said, there are definite positives with this company.

It has exceptionally low finding and development costs (at just over $1 per barrel), and the opening of an oil pipeline into northwestern China in 2006 could dramatically improve its profitability.

Kazakhstan (and the surrounding area) is also blessed in terms of undeveloped fuel resources, and PetroKazakhstan should have the opportunity to add to reserves without going too far afield to do so. With strong cash flow and a good balance sheet, the company should have plenty of money to use to develop its energy reserves.

Investors looking for exposure to higher energy prices without so much risk might want to look instead at options like ExxonMobil, Ultra Petroleum (AMEX:UPL), or Total (NYSE:TOT). But for investors who can accept the higher risk and hang on through the occasional disappointments and scares, PetroKazakhstan shares may prove to be a real petrobargain.

Fool contributor Stephen Simpson, a chartered financial analyst, has no ownership interest in any stocks mentioned.