It’s one of Wall Street’s most torrid areas of speculation following Chevron-Texaco’s recent $18 billion pitch to buy Unocal. The big question: Which is the next energy company to be swallowed? Except for the giants – such as ExxonMobil, British Petroleum, and Total of France – just about every energy name with sizable reserves is being bandied about as a potential buyout on the Street’s heated takeover circuit.

In this context, one seasoned energy pro, Alan Gaines, a former crack institutional analyst who was a consultant to corporate raider Carl Icahn in his hostile efforts to acquire Phillips Petroleum, Texaco, and USX, tells me his prime energy takeover candidate is Pogo Producing, a leading Houston-based oil and gas exploration and production company.

Pogo, which had net income last year of $261.8 million on revenues of $1.32 billion, has proven reserves of 1.1 trillion cubic feet of natural gas and 116.4 million barrels of oil.

Mr. Gaines, who has held a stake in Pogo for about two years and added to his holdings a couple of months ago, said his favorable view of the company as a takeover candidate largely reflects the following:

* It’s the most undervalued energy company, relative to its assets.

* A proactive management that’s ready and willing to enhance shareholder values.

* It has the lowest cash flow multiple among its peers (4.2), versus the industry average of 5.5.

* A giant takeover premium, an estimated 46% relative to Pogo’s current price.

Mr. Gaines, currently CEO of Dune Energy (a small Houston-based energy exploration company that focuses on natural gas and is 78%-owned by Itera Holdings, Russia’s second-biggest gas producer), figures Pogo could fetch about $70 a share in the event of a takeover, or around $4.5 billion. The stock currently trades at $47.34.

Who might buy Pogo? Mr. Gaines’s candidates center on ChevronTexaco; one of the large independent energy companies, such as Devon Energy, Amerada Hess, or Kerr-McGee; or a foreign giant, such as China’s National Oil Company (which had been widely rumored to be interested in Unocal).

What happens if there is no takeover of Pogo? Mr. Gaines figures the company, based on its fundamental strengths, still has the potential to rise about 20% to $58-$60 over the next 12 months.

What does Pogo have to say? Sorry, but it didn’t respond to calls seeking comment.

Aside from Pogo, Mr. Gaines sees several other ripe takeover targets in the energy sector, notably those with solid managements, rising production, increasing cash flow, and improving balance sheets. His top picks, each of whose stocks he has owned for a number of years, follow (with their current and prospective buyout targets in parenthesis): Marathon Oil, $46.43 ($60); Apache, $58.87 ($116); Amerada Hess,$95.50 ($119); and Pioneer Natural Resources $43.61, ($54).

In a related development, we see that even smart guys sometimes make dumb moves. Mr. Gaines, for example, recently sold about half of his holdings in Kerr-McGee. He had theorized that corporate raider Carl Icahn, who had made some threatening noises about the company, implying a possible hostile bid, would have virtually no shot at pulling off such a deal. Mr. Gaines goofed. In an apparent effort to fend off Mr. Icahn, Kerr-McGee announced plans yesterday to buy back $4 billion worth of stock and sell off some assets. In response, its stock jumped $4.93 to $78.90. Earlier in the session, it had traded as high as $81.98, a shade under its recent 52-week high of $83.30.

In yet another related matter, Mr. Gaines expects oil prices to remain high over at least the next two to three years, with a range of $40 a barrel on the low side and $70 on the high side. While the recent drop in prices from a high of about $68 a barrel has prompted some energy trackers to reiterate their forecast of an eventual drop to the mid-$30s, Mr. Gaines believes such an assumption is unrealistic. He reasons that the ongoing threats of war in the Middle East and supply disruptions from terrorist activities should keep oil and energy stock prices relatively high.