Investors looking for the “next big thing”, should glance over toward African stocks. Featuring many of the same attributes as other emerging market superstars, Africa has all the hallmarks of becoming the next China or Brazil. While it may be a risky play, the rewards of investing in African stocks could be great.

And one of the main attributes propelling Africa forward is its vast resource wealth — specifically its abundance of oil & natural gas. The country is only now getting around to exploiting that abundance.

With nations like Tanzania, Mozambique, and Uganda beginning to tap their energy potential, investors willing to take the plunge on the continent could be handsomely rewarded. And gaining access may be easier than the average investor thinks. Taking a ride in African energy stocks could be as easy as buying shares in your local energy stocks.

Huge Potential In African Stocks

For most investors, the general perception of the African continent is one of strife, disease, famine and corruption. However, today’s Africa is quickly becoming a hotbed of hope and prosperity, with the region’s energy industry leading the way towards modernization.

The untouched continent features a vast amount of shale and offshore energy deposits — in some instances they even rival U.S. deposits. Nations like Nigeria, Libya and Algeria have always been the major sources of reserves and production, but new finds in Ghana, Kenya and Uganda are rewriting African history. According to BP’s (BP) 2012 Statistical Energy Survey, Africa had proven oil reserves of 132 billion barrels at the end of 2011 and nearly 513 trillion cubic feet (Tcf) of natural gas. That’s about 42 years’ worth of supply at current production and roughly 8% of the world’s total reserves.

However, these reserves do not take into account the vast unconventional opportunities that the continent has. Some of the most recent and biggest “elephant” finds in the oil and gas sector have come from offshore deposits in West Africa, while fracking and horizontal drilling have unearthed huge deposits in the Sub-Saharan African nations like Kenya and South Africa. Adding those in to Africa’s bounty, we get nearly 13% of the world’s reserves.

But with so much of Africa having little to no seismic work done, the potential for the continent is almost limitless. It’s truly the new frontier of oil investing.

The beauty is that so many African nations are eager to spur development of their own economies. That makes accessing this bounty progressively easier and easier for many energy stocks. Many foreign state-owned oil companies like China’s PetroChina (PTR) have been working in Africa — building new refineries in Chad and Niger — while public energy firms like Exxon (XOM) have plowed ahead into a variety of African nations and locales.

Oil investing in Africa isn’t a slam dunk, however.

Despite reforms, the region is still risky. Military coups and insurgent uprisings do occur. Additionally, the lack of infrastructure and rising oil thefts are a huge problems on the continent. “Bunkering” or tapping into existing oil pipelines to steal crude has cost Africa and its oil firms about $100 billion dollars since 2003. Yet, despite this issues, the reward for investors with long enough timelines is great.

Three African Energy Stocks To Buy

So, with all that potential balanced by a fair bit of risk, how do investors know which African stocks are worth their investment? Here’s a look at three of the best:

African Stocks — Anadarko (APC)

Palma, Mozambique could be one of the last places investors would want to tread. But independent energy stock Anadarko (APC) might make it the source of the most ambitious energy project in all of Africa. APC hit natural gas pay dirt a few years ago, discovering an estimated 50 to 70 trillion cubic feet (Tcf) of recoverable natural gas in offshore Mozambique.

That amount of fuel — plus other finds in the nation — could make Mozambique the world’s third-largest exporter of liquefied natural gas (LNG) by the start of the next decade. And given its resources in the nation, APC will be in the driver’s seat. The government has also been “bending” the rules for APC by extending tax breaks and other incentives for the firm to build out LNG and natural gas extraction facilities.

For APC investors, you get to bet on one of the brightest African stocks in the energy sector, while still having the relative safety of a global energy giant. APC shares aren’t the cheapest in the energy patch (carrying a forward P/E of 19), but the company is one of the fastest growing on the production front.

Cobalt Energy (CIE)

For smaller energy firm Cobalt Energy (CIE), the government of Angola hasn’t been as kind as Mozambique has been with Anadarko. Last year, issues with royalty rates sent CIE stock down in a hurry. Since hitting a low of around $13, CIE shares have been trading sideways. Cobalt recently got another blow to its potential after receiving a nasty Wells Notice from the SEC.

Despite these issues, CIE has a ton of oil in offshore Angola. Initial test wells show that Cobalt is sitting on roughly 400 to 700 million barrels of oil. Those numbers don’t include other blocks of land it has in the nation or neighboring Gabon. It’s risky, but if things go right for the stock, its share price could surge.

Investors taking the plunge in CIE stock do have some good company. Billionaire edge fund manager John Paulson continues to load up on CIE stock and options — recently upping his stake by 14 million shares. That’s a huge vote of confidence in CIE and African stocks.

Tullow Oil (TUWOY)

England’s Tullow Oil (TUWOY) has already found huge successes in Ghana and Uganda. However, its real growth will continue to come from Kenya’s massive Rift Valley. No commercially exploitable oil had ever been found in Kenya until TUWOY starting drilling back in 2012. Now the company continues to find lots and lots of oil, making TUWOY one of the best African stocks around.

Based on initial test wells among its four major discoveries in the Rift Valley, Tullow estimates that it has around 600 million barrels worth of oil reserves. However, by applying state-of-the-art fracking and horizontal drilling techniques, it predicts that those reserves will jump up to more than 1 billion barrels worth of crude. Those reserve estimates don’t take into account what it already producers/owns in Ghana or Uganda. Nor does it include newly acquired acreage and deals in Mozambique, Equatorial Guiana and the Congo.

At the end of the day, TUWOY is the best pure-play and the best of the African stocks we’ve mentioned. With a forward P/E of 15, Tullow shares are moderately priced. However, given its leadership position in Africa’s oil & gas sector, a slight premium is warranted.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.