According to JP Morgan it is the small and overlooked explorer/producers that should perform better on the stock market over the next few months, especially after their September quarter reports are digested.

In a preview of what to expect in upcoming quarterlies JP Morgan singled out Woodside as the pick of the big stocks, but then rated Buru, Drillsearch and Aurora as offering better value for investors because they have underperformed relative to the majors.

"Across the sector as a whole, the small caps [market value] look better value than the large caps," the bank said.

Interesting as it is to read investment tips that cover virtually the whole oil and gas sector it is more interesting to analyse why some of the smaller stocks are more highly rated.

In the case of Buru, an explorer that has been edging closer to something significant for the past few years JP Morgan reckons that 2014 will be delivery time. This is why the stock is rated the preferred exposure among stocks outside the top 100.

"Calendar 2014 is shaping as a critical year for the Canning Basin pure play as it progresses the conventional oil plays and tight wet gas plays in tandem," the bank said.

Four key events could trigger revitalised interest in Buru which JP Morgan believes has the potential to effectively double its share price over the next 12 months from recent sales at around $1.58 to a target of $3.18.

What the bank sees as trigger events at Buru are:

• development drilling at the Ungani oil discovery in this quarter and in the first quarter of 2014
• flow testing of Ungani North Number 1 oil and gas discovery, and the "frac" program covering both the Valhalla and Yulleroo regions
• further oil exploration wells
• possible farm-out deals to secure funding for forward drilling and development.

While Buru is a clear winner in terms of potential share-price performance over the next 12-months there are four other Australian oil and gas stocks JP Morgan reckons could outperform.

Second cab off the rank is another small company, Drillsearch. While only a recent addition to the bank's universe of oil and gas stocks that it follows, it is the top pick for companies with Cooper Basin exposure.

"Drillsearch offers strong exposure to the Cooper renaissance, particularly conventional oil," the bank said.

"Drillsearch's Cooper wet gas is underestimated by the market and is becoming more valuable thanks to east coast [Australia] market dynamics". That is bank speak for the looming gas shortage in Sydney and Melbourne.

The other stocks that score an overweight (or buy) tip from JP Morgan are Aurora, AWE and Woodside. Neutral (hold) rankings are assigned to Santos, Roc, and Senex, while Oil Search and Beach are marked down with ratings of underweight (sell).

Because Woodside and Santos will be first to file their quarterlies it is worth digging a little deeper into why one is expected to go up (Woodside) and the other (Santos) is flat.

In the case of Woodside, the preferred large cap exposure, the bank's enthusiasm should become clearer on Thursday when the company could reveal an improvement in the price it is receiving for its LNG exports, and perhaps an update on its proposed entry into the development of the Leviathan gas project off the coast of Israel.

"We see Woodside as the principal Australian beneficiary of a very tight near-term LNG market," JP Morgan said. "Woodside and its existing customers are rolling legacy contracts on the North West Shelf an Pluto."

What the bank expects is for Woodside to be able to extract higher LNG prices thanks to a tight market with even a modest increase in the sales price delivering a substantial boost to Woodside's profits.

Santos, however, did not rate as well with a comment that its current share price looks "a less compelling entry point", an opinion that caused its stock to be cut from an overweight recommendation to neutral.

Key issues for investors to watch in the quarterly reporting season are any comments from Woodside on Pluto contract pricing, and fresh news on flows from Cooper Basin shale wells by companies active in that region, especially Santos with its Moomba 191 well that started flowing a year ago and is showing few signs of decline.