Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Oil & Gas - Exploration and Production industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Oil & Gas - Exploration and Production Stock News

Before choosing which top Oil & Gas - Exploration and Production stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The outlook for the oil and gas exploration and production sub-industry is mostly favorable for the foreseeable future. As a result of the COVID-19 pandemic, a major oil shock occurred in 2020. Since then, crude oil prices have begun to recover, currently priced at around $60 per barrel as a result of persistent supply cuts by the OPEC-Plus Consortium. While the demand perspective remains uncertain, from a supply perspective, both OPEC and non-OPEC participants have a conservative production outlook in 2021. The most significant unknown factor is the potential lifting of Iran sanctions by the Biden administration and its impact. According to the International Energy Agency (IEA), oil demand is expected to increase by about 5.4 mmb/d, to 96.4 mmb/d in 2021. While this appears to be a strong year-over-year increase, it is well in line with the 2019 demand of around 100 mmb/d, signifying only a 60% recovery from the pandemic. In May 2021, the EIA forecasted WTI crude oil prices as $59 dollars per barrel in 2021 and $57 per barrel in 2022. At these price points, exploration and production operations are expected to generate significant free cashflow.

Why Focus on Undervalued Oil & Gas - Exploration and Production Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Oil & Gas - Exploration and Production Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Oil & Gas - Exploration and Production industry for Tuesday, February 06, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil & Gas - Exploration and Production industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Crescent Energy Co’s Value Grade

Value Grade:

Crescent Energy Company is an independent energy company. The Company is engaged in the acquiring and developing a portfolio of energy assets. Its asset bases include oil and natural gas assets in onshore United States basins, such as the Eagle Ford, Rockies, Barnett, Permian, and Mid-Con. The Company has a portfolio of assets in various regions across the United States in approximately 48 states, primarily focused on Texas and the Rockies. Its portfolio includes oil and natural gas assets, and operations are located onshore in the United States basins, such as the Eagle Ford, Rockies, Barnett, Permian, and Mid-Con. The Company seeks to invest in energy assets and deliver operations.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Crescent Energy Co has a Value Score of 70, which is considered to be undervalued.

When you look at Crescent Energy Co’s price-to-sales ratio at 0.75 compared to the industry median at 1.69, this company has a lower price relative to revenue compared to its peers. This could make Crescent Energy Co’s stock more attractive for value investors.

Crescent Energy Co’s price-earnings ratio is 78.37 compared to the industry median at 6.84. This means it has a higher share price relative to earnings compared to its peers. This could make Crescent Energy Co less attractive for value investors.

Now, let’s assess Crescent Energy Co’s EV/EBITDA ratio, also known as enterprise multiple. At 4.5, when compared to the industry median of 4.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Crescent Energy Co’s shareholder yield is higher than its industry median ratio of 1.42%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Crescent Energy Co’s price-to-book ratio is lower than its industry median ratio of 1.19. This could make Crescent Energy Co more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Crescent Energy Co’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Crescent Energy Co’s price-to-free-cash-flow ratio is higher than its industry median ratio of 7.23. This could make Crescent Energy Co less attractive because the higher P/FCF ratio indicates that Crescent Energy Co is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

GeoPark Ltd’s Value Grade

Value Grade:

GeoPark Ltd is a Colombia-based company operating in the energy sector. As an oil and gas explorer, operator and consolidator the Company has assets and growth platforms in Colombia, Ecuador, Chile and Brazil. Working interests from operation in 42 hydrocarbon blocks comprise of natural gas exploration and production (E&P;) and crude oil production on land as well as offshore across over 700,000 acres. The Del Mosquito block in Argentina's Austral basin, and the Cerro Dona Juana and Loma Cortaderal blocks in the Neuquen basin are wholly owned by GeoPark Holdings Limited, while the Fell block in Chile's Magallanes region is 90% owned by the Company, with the remaining interest in associated infrastructure, production facilities, operating licenses and a technical database are held by state oil firm, Enap.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

GeoPark Ltd has a Value Score of 95, which is considered to be undervalued.

GeoPark Ltd’s price-earnings ratio is 3.5 compared to the industry median at 6.8. This means that it has a lower price relative to its earnings compared to its peers. This makes GeoPark Ltd more attractive for value investors.

GeoPark Ltd’s price-to-book ratio is lower than its peers. This could make GeoPark Ltd more attractive for value investors when compared to the industry median at 1.19.

You can read more about GeoPark Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Gulf Coast Ultra Deep Royalty Trust’s Value Grade

Value Grade:

Gulf Coast Ultra Deep Royalty Trust (the Royalty Trust) is a statutory trust. The Company holds overriding royalty interest in future production from each of McMoRan's Inboard Lower Tertiary/Cretaceous exploration prospects located in the shallow waters of the Gulf of Mexico and onshore in South Louisiana. The Royalty Trust's reserve fund short-term investments include United States treasury securities. The Company's subject interests consist of approximately 20 specified Inboard Lower Tertiary/Cretaceous. The offshore subject interests consisted of exploration prospects, including Barataria, Barbosa, Blackbeard East, Blackbeard West, Blackbeard West, Bonnet, Calico Jack, Captain Blood, Davy Jones, Davy Jones West, Drake, England, Hook, Hurricane, Lafitte, Morgan, and Queen Anne's Revenge. The Company?s onshore subject interests consisted of Highlander, Lineham Creek, and Tortuga.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Gulf Coast Ultra Deep Royalty Trust has a Value Score of 70, which is considered to be undervalued.

Gulf Coast Ultra Deep Royalty Trust’s price-earnings ratio is 3.4 compared to the industry median at 6.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Gulf Coast Ultra Deep Royalty Trust more attractive for value investors.

Gulf Coast Ultra Deep Royalty Trust’s price-to-book ratio is lower than its peers. This could make Gulf Coast Ultra Deep Royalty Trust more attractive for value investors when compared to the industry median at 1.19.

You can read more about Gulf Coast Ultra Deep Royalty Trust’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Pedevco Corp’s Value Grade

Value Grade:

PEDEVCO Corp. is an oil and gas company focused on the acquisition and development of oil and natural gas assets. The Company's properties are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the Permian Basin) and in the Denver-Julesberg Basin (D-J Basin) in Colorado. The Company holds approximately 32,870 net Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through its wholly owned operating subsidiary, Pacific Energy Development Corp. (PEDCO), which is referred to as Permian Basin Asset and approximately 11,580 net D-J Basin acres located in Weld and Morgan Counties, Colorado, through its wholly owned operating subsidiary, Red Hawk Petroleum, LLC (Red Hawk), which is referred to as D-J Basin Asset. It holds interests in 381 gross (377 net) wells in its Permian Basin Asset of which 42 are active producers, 16 are active injectors and two are active saltwater disposal wells, all of which are held by PEDCO.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Pedevco Corp has a Value Score of 64, which is considered to be undervalued.

Pedevco Corp’s price-earnings ratio is 40.6 compared to the industry median at 6.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Pedevco Corp less attractive for value investors.

Pedevco Corp’s price-to-book ratio is higher than its peers. This could make Pedevco Corp less attractive for value investors when compared to the industry median at 1.19.

You can read more about Pedevco Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

PHX Minerals Inc’s Value Grade

Value Grade:

PHX Minerals Inc. is a natural gas and oil mineral company. The Company is an owner and manager of perpetual natural gas and oil mineral interests in resource plays in the United States. It owns interests in leasehold acreage and non-operated working interests in natural gas and oil properties. Exploration and development of its natural gas and oil properties is conducted by third-party natural gas and oil exploration and production companies (primarily independent operating companies). The Company is focused on growth through mineral acquisitions in its core areas of focus in the SCOOP and Haynesville and development of its significant mineral acreage inventory. It owns mineral acreage principally located in Oklahoma, Texas, Louisiana, North Dakota and Arkansas.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

PHX Minerals Inc has a Value Score of 85, which is considered to be undervalued.

PHX Minerals Inc’s price-earnings ratio is 7.4 compared to the industry median at 6.8. This means that it has a higher price relative to its earnings compared to its peers. This makes PHX Minerals Inc less attractive for value investors.

PHX Minerals Inc’s price-to-book ratio is higher than its peers. This could make PHX Minerals Inc less attractive for value investors when compared to the industry median at 1.19.

You can read more about PHX Minerals Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Permian Resources Corp’s Value Grade

Value Grade:

Permian Resources Corporation is an independent oil and natural gas company. The Company is focused on the acquisition, optimization and development of oil and natural gas properties. The Company’s assets and operations are concentrated in the core of the Delaware Basin. Its operations are concentrated in the core of the Delaware Basin and include over 400,000 net leasehold acres across the Permian Basin, including Eddy and Lea Counties, New Mexico and Reeves and Ward Counties, Texas.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Permian Resources Corp has a Value Score of 69, which is considered to be undervalued.

Permian Resources Corp’s price-earnings ratio is 14.3 compared to the industry median at 6.8. This means that it has a higher price relative to its earnings compared to its peers. This makes Permian Resources Corp less attractive for value investors.

Permian Resources Corp’s price-to-book ratio is higher than its peers. This could make Permian Resources Corp less attractive for value investors when compared to the industry median at 1.19.

You can read more about Permian Resources Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Oil & Gas - Exploration and Production Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Oil & Gas - Exploration and Production stocks as well as other industrys.

Choosing Which of the 6 Best Oil & Gas - Exploration and Production Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Crescent Energy Co stock has a Value Grade of B.
• GeoPark Ltd stock has a Value Grade of A.
• Gulf Coast Ultra Deep Royalty Trust stock has a Value Grade of B.
• Pedevco Corp stock has a Value Grade of B.
• PHX Minerals Inc stock has a Value Grade of A.
• Permian Resources Corp stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 undervalued stocks in the Oil & Gas - Exploration and Production industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Oil & Gas - Exploration and Production Stocks

Want to learn more about Oil & Gas - Exploration and Production stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, February 06
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, February 05
• Why Dorchester Minerals LP’s (DMLP) Stock Is Down 4.94%
• Why Highpeak Energy Inc’s (HPK) Stock Is Up 5.08%

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