Readers of this space know that one of my preferred sectors has been in oil and oil services.

Further, with oil now well above $110 per barrel, one may think that all of the attractive oil plays have been bid up. Indeed, most have, but one that may represent an opportunity, for high-risk investors only, is TXCO Resources.

TXCO Resources (NASDAQ: TXCO) acquires, explores, develops, and produces oil and gas properties. The company's primary focus is on developing oil and gas reserves on properties located in Texas. The company's reserve mix is 54% oil and 46% natural gas.

In general, analysts expect TXCO's revenue to increase by better than 20% in F2008 after an impressive 30% gain in F2007.

Further, analysts also like the fact that TXCO's proved reserves increased substantially, via drilling and acquisition, to 91.8 billion CFE at the end of F2007, from 41.4 billion CFE at the end of F2006. The Reuters F2008/F2009 EPS consensus estimates for TXCO are 57 cents / 75 cents.

The First Call mean rating for TXCO is: Buy [14 firms]. Mean 2008 target: $21 [high: $29, low: $18].

The risks? TXCO remains dependent on successful drilling efforts and on strong oil / natural gas prices. Analysts are also keeping an eye on the company's skilled labor costs.

Note: TXCO is a volatile, exploration-based small cap. If you can not tolerate 20-30% price swings, TXCO shares aren't for you.

Stock Analysis: TXCO Resources is a high-risk stock not suitable for moderate-risk and low-risk investors. Investors with an investment horizon longer than two years should be rewarded from TXCO's shares. Sell / Stop Loss if you were to purchase shares in this company: $7.50

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.