Oil and natural gas explorers have been sold off with everything else. However, there are a select few whose stocks are trading at a low level compared to proven energy reserves. These might be a few good companies to hold until (and if) oil gets back up into the $150 range.

Energy explorers have what are called proven reserves and probable reserves. Proven reserves are a sure thing with current drilling techniques. Probable reserves are a little iffy. An explorer might find energy at the tip of Mount Kilimanjaro - but that doesn’t mean they can haul the equipment to the top.

Off course the engineering companies and explorers sometimes fudge about how much they have. It’s often thought that Aramco of Saudi Arabia exaggerates the amount of oil in the ground. Shell (RDS) got into a lot of trouble a few years ago when they had to come clean and lower reserve numbers.

According to a report from Citigroup, Anadarko (APC), Chesapeake (CHK), Canadian Natural Resources (CNQ) and Noble Energy (NBL) all trade at low net asset values compared to reserves. Anadarko, Chesapeake, and Noble’s stocks all trade at about what their proven reserves are.

Canadian Natural Resources is a different story. It also has downstream (refining) and oil sands. These numbers are a moving target, as the price of oil and the stock markets gyrate.

What an investor needs to be mindful of are high debt levels. Chesapeake ran with $1 million in cash and over $13 billion in debt in the first quarter. That’s insane! Can you imagine living off credit cards and barely making payments just because you expect your job to bail you out? (Oops, that’s what everyone in America is doing.)

Anadarko has $1.7 billion due in bonds next years. After that, it is several years before more debt matures. Chesapeake’s first loan of $1.25 billion is due in 2010. Canadian Natural has $2.35 billion due next year and then $5.33 billion in 2012. As long as a company can pay that off or roll it into a new bond, it will be okay. However, if Wall Street isn't in the mood to buy corporate debt, there could be a problem.

Watching a commodities company is like watching a mad scientist mix potions. Too much debt, and the company can go bankrupt. Too little debt, and it can’t keep up with competition - and the stock and company lags behind. And don’t forget, the wells they drill for eventually go dry.

Almost all commodity companies hedge exposure. Management would rather lock in a price than watch oil drop to $20 a barrel and scramble for capital like they did in the 1980s. One has to wonder how all of those derivatives will do with potential counterparty risk. If a company enters an order to sell a million barrels of oil at a strike price of $90, is the other party going to be around in 4 years to make good on that bet? What about swaps? How does this financial debacle affect energy producers?

If the current credit problems continue to roil through the markets, oil and natural gas might be a good place to find some cover. They say that American uses 25% of all oil, and yet represents only about 5% of the population. True - but that still means that everyone else uses 75% of oil. Even if we are in a deep recession, the demand for oil is predicated upon global consumption, not just US consumption.

Eventually the price of oil has to go back up. You just want to be in the right place to take advantage of it.