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.

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 Monday, February 26, 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.

Callon Petroleum Company’s Value Grade

Value Grade:

Callon Petroleum Company is an independent oil and natural gas company. The Company is focused on the acquisition, exploration and sustainable development of assets in the Permian Basin in West Texas. The Company's operations are focused on the oil-weighted Delaware and Midland Basins in West Texas. The Company utilizes horizontal drilling and its life of field co-development model to develop its acreage. The Company has predominantly focused on the horizontal development of several prospective intervals including multiple levels of the Wolfcamp and Bone Springs in the Delaware Basin. In the Midland Basin, the Company’s primary intervals include the Wolfcamp and Spraberry shales. The Company has an acreage position of approximately 145,000 net acres in the core of the Permian Basin.

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.

Callon Petroleum Company has a Value Score of 77, which is considered to be undervalued.

When you look at Callon Petroleum Company’s price-to-sales ratio at 0.87 compared to the industry median at 2.01, this company has a lower price relative to revenue compared to its peers. This could make Callon Petroleum Company’s stock more attractive for value investors.

Callon Petroleum Company’s price-earnings ratio is 3.92 compared to the industry median at 7.59. This means it has a lower share price relative to earnings compared to its peers. This could make Callon Petroleum Company more attractive for value investors.

Now, let’s assess Callon Petroleum Company’s EV/EBITDA ratio, also known as enterprise multiple. At 3.2, when compared to the industry median of 4.6, 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. Callon Petroleum Company’s shareholder yield is lower 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. Callon Petroleum Company’s price-to-book ratio is lower than its industry median ratio of 1.30. This could make Callon Petroleum Company more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Callon Petroleum Company’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Callon Petroleum Company’s price-to-free-cash-flow ratio is higher than its industry median ratio of 8.32. This could make Callon Petroleum Company less attractive because the higher P/FCF ratio indicates that Callon Petroleum Company 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.

EOG Resources Inc’s Value Grade

Value Grade:

EOG Resources, Inc. (EOG) is an independent (non-integrated) crude oil and natural gas company. The Company is engaged in exploration, development, production and marketing crude oil, natural gas liquids (NGLs) and natural gas primarily in producing basins in the United States of America, The Republic of Trinidad and Tobago (Trinidad), the Sultanate of Oman and other international areas. Its operations are all crude oil, NGLs and natural gas exploration and production related. Its operations are focused on the productive basins in the United States with a focus on crude oil and, to a lesser extent, liquids-rich natural gas plays. The Company has operations in offshore Trinidad and Oman, as well as it is executing an abandonment and reclamation program in Canada.

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.

EOG Resources Inc has a Value Score of 72, which is considered to be undervalued.

EOG Resources Inc’s price-earnings ratio is 8.3 compared to the industry median at 7.6. This means that it has a higher price relative to its earnings compared to its peers. This makes EOG Resources Inc less attractive for value investors.

EOG Resources Inc’s price-to-book ratio is lower than its peers. This could make EOG Resources Inc more attractive for value investors when compared to the industry median at 1.30.

You can read more about EOG Resources 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.

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 94, which is considered to be undervalued.

GeoPark Ltd’s price-earnings ratio is 3.6 compared to the industry median at 7.6. 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 1.30.

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.

Range Resources Corp’s Value Grade

Value Grade:

Range Resources Corporation is an independent natural gas and natural gas liquids producer with operations focused on projects in the Appalachian Basin. It is engaged in the exploration, development and acquisition of natural gas and oil properties in the United States. Its principal area of operations is the Marcellus Shale in Pennsylvania. Its natural gas and oil operations are concentrated in the Appalachian region of the United States, in the Marcellus Shale in Pennsylvania. Its properties consist of interests in developed and undeveloped natural gas and oil leases. It owns over 1,428 net producing wells in Pennsylvania. Its reserves are primarily in the Marcellus Shale formation but also include the Utica and Upper Devonian formations. It has approximately 894,000 gross acres under lease. Its subsidiaries include Range Resources-Appalachia, LLC, Range Resources-Pine Mountain, LLC, Range Production Company, LLC, Range Resources-Midcontinent, LLC and Range Resources-Louisiana, Inc.

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.

Range Resources Corp has a Value Score of 77, which is considered to be undervalued.

Range Resources Corp’s price-earnings ratio is 5.6 compared to the industry median at 7.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Range Resources Corp more attractive for value investors.

Range Resources Corp’s price-to-book ratio is lower than its peers. This could make Range Resources Corp more attractive for value investors when compared to the industry median at 1.30.

You can read more about Range 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.

San Juan Basin Royalty Trust’s Value Grade

Value Grade:

San Juan Basin Royalty Trust (the Trust) is an express trust. The principal asset of the Trust is the Royalty, which consists of a 75% net overriding royalty interest that burdens the Subject Interests located in the San Juan Basin. PNC Bank acts as the trustee of the Trust. The primary function of the Trustee is to collect the Royalty Income, to pay all expenses and charges of the Trust and to distribute the remaining available income to the Unit Holders. The Trust is a widely held fixed investment trust (WHFIT) classified as a non-mortgage widely held fixed investment trust (NMWHFIT). The Trust?s reserves consisted of natural gas reserves, and proceeds from the subject interests, which were attributable to the production and sale of natural gas by Hilcorp, as well as other proceeds.

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.

San Juan Basin Royalty Trust has a Value Score of 68, which is considered to be undervalued.

San Juan Basin Royalty Trust’s price-earnings ratio is 3.1 compared to the industry median at 7.6. This means that it has a lower price relative to its earnings compared to its peers. This makes San Juan Basin Royalty Trust more attractive for value investors.

San Juan Basin Royalty Trust’s price-to-book ratio is lower than its peers. This could make San Juan Basin Royalty Trust more attractive for value investors when compared to the industry median at 1.30.

You can read more about San Juan Basin 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.

TXO Partners LP’s Value Grade

Value Grade:

TXO Partners, L.P. is an oil and gas company. The Company is focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. The Company’s acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. The Company seeks to maintain low-risk development and exploitation of its existing properties, increasing its reserves and production. It owns 50% of Cross Timbers Energy, LLC (Cross Timbers Energy). Cross Timbers Energy’s properties are located primarily in the San Juan Basin of New Mexico and Colorado and the Permian Basin of West Texas and New Mexico. The Company also has a wholly owned subsidiary, MorningStar Operating LLC, which owns oil and gas assets primarily in the San Juan Basin of New Mexico and Colorado and the Permian Basin of West Texas and New Mexico. oil and gas company.

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.

TXO Partners LP has a Value Score of 91, which is considered to be undervalued.

TXO Partners LP’s price-earnings ratio is 7.7 compared to the industry median at 7.6. This means that it has a higher price relative to its earnings compared to its peers. This makes TXO Partners LP less attractive for value investors.

TXO Partners LP’s price-to-book ratio is higher than its peers. This could make TXO Partners LP less attractive for value investors when compared to the industry median at 1.30.

You can read more about TXO Partners LP’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.

• Callon Petroleum Company stock has a Value Grade of B.
• EOG Resources Inc stock has a Value Grade of B.
• GeoPark Ltd stock has a Value Grade of A.
• Range Resources Corp stock has a Value Grade of B.
• San Juan Basin Royalty Trust stock has a Value Grade of B.
• TXO Partners LP stock has a Value Grade of A.

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 Monday, February 26
• 7 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, February 23
• 7 Undervalued Oil & Gas - Exploration and Production Stocks for Thursday, February 22
• What You Need to Know About Coterra Energy Inc's Q4 Earnings

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