As I follow the energy world, I spend a lot of time looking for independent producers trading at nutty valuations. While I have long been interested in PetroKazakhstan (NYSE:PKZ) as a company -- and have traded the stock a couple of times -- the question before us all is, once again, whether we should be interested in the stock.

Results weren't bad in the first quarter. Production was up nearly 5% in the quarter, and higher prices led the company to post 54% revenue growth. Management followed through with solid execution, and net income grew 89% while a lower share count allowed earnings per share to double.

Of interest to me is the refining business, which continues to grow both in absolute and relative terms. Revenue from refined products climbed nearly 88% and made up 43% of total revenue -- up from about 36% in the year-ago period. While only time will prove me right or wrong, I think this is actually a good thing -- refining should add some stability to the business and somewhat reduce its dependence on crude and gas production.

There was plenty of other good news as well. Cash continues to accumulate, debt is stable (and declining as a percentage of equity), and free-cash-flow growth is solid.

But it's not all sweetness and light. Curtailments caused by gas-flaring rules will pinch production, and the company is still in a relatively weak reserve and reserve-replacement position.

What's more, there's an ongoing battle with Russia's Lukoil (NASDAQ:LUKOY) that spooks some investors. At the risk of oversimplification, Lukoil is trying to weasel out of a pipeline agreement with PetroKazakhstan in the hopes of getting cheaper access. Lukoil is pulling out all of the old tricks -- accusing PetroKazakhstan of stealing oil and asserting that the original agreement was invalid in the first place. This has been a standard trick for Lukoil in the past, and it remains to be seen whether they will get away with it.

The question, though, is whether that's already sufficiently reflected in the stock price. The stock is trading at about four times trailing earnings -- more or less in line with the average P/E over the past few years. But trailing P/E can be a deceptive metric.

Three primary moving parts have to be considered here -- the company's output (which is, over time, a derivative of reserves), oil prices, and the cost of production. PetroKazakhstan has incredibly low production costs, so that's not a major problem for now. But the combination of production and oil prices is tricky, especially with PetroKazakhstan's relatively modest production growth outlook.

Accordingly, while stabile oil prices and modest production might crimp growth, cash flow should stay strong -- perhaps making the stock unsuitable for growth-oriented types, but more appropriate for more patient value-oriented types.

I've got to admit that this is a tricky stock for me. Conventional valuation looks like a gimme, but modest production and reserve figures are a legitimate operational concern, and there's no telling what the political/legal situation is going to be in a year or two. Risk-tolerant investors should take a long look, but more conservative investors might want to look at an independent like Ultra Petroleum (AMEX:UPL) or Chesapeake (NYSE:CHK), or a high-quality major oil producer.

For more energy-investing ideas:

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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).