Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 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 7 undervalued stocks in the Oil & Gas - Exploration and Production industry for Monday, March 04, 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.

Gulfport Energy Corp’s Value Grade

Value Grade:

Gulfport Energy Corporation is an independent natural gas-weighted exploration and production company. The Company is focused on the exploration, acquisition, and production of natural gas, crude oil and natural gas liquid (NGL) in the United States, with a primary focus in the Appalachia and Anadarko basins. Its principal properties are located in Eastern Ohio, targeting the Utica and in central Oklahoma targeting the South-Central Oklahoma Oil Province (SCOOP) Woodford and SCOOP Springer formations. The Utica is a hydrocarbon-bearing rock formation located in the Appalachian Basin of the United States and Canada. It has approximately 188,000 net reservoir acres located primarily in Belmont, Harrison, Jefferson and Monroe Counties in Eastern Ohio. The SCOOP play mainly targets the Devonian to Mississippian aged Woodford Shale. It has approximately 73,000 net reservoir acres located primarily in Garvin, Grady and Stephens Counties.

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.

Gulfport Energy Corp has a Value Score of 94, which is considered to be undervalued.

When you look at Gulfport Energy Corp’s price-to-sales ratio at 1.16 compared to the industry median at 2.05, this company has a lower price relative to revenue compared to its peers. This could make Gulfport Energy Corp’s stock more attractive for value investors.

Gulfport Energy Corp’s price-earnings ratio is 1.60 compared to the industry median at 7.88. This means it has a lower share price relative to earnings compared to its peers. This could make Gulfport Energy Corp more attractive for value investors.

Now, let’s assess Gulfport Energy Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 1.6, 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. Gulfport Energy Corp’s shareholder yield is higher than its industry median ratio of 1.65%. 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. Gulfport Energy Corp’s price-to-book ratio is higher than its industry median ratio of 1.26. This could make Gulfport Energy Corp less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Gulfport Energy Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Gulfport Energy Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 8.38. This could make Gulfport Energy Corp fairly attractive because the higher P/FCF ratio indicates that Gulfport Energy Corp 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.

Highpeak Energy Inc’s Value Grade

Value Grade:

HighPeak Energy, Inc. is an independent crude oil and natural gas company. The Company is engaged in the acquisition, development and production of crude oil, natural gas liquid (NGL) and natural gas reserves. The Company?s assets are primarily located in Howard and Borden Counties, Texas, which lie within the northeastern part of the crude oil-rich Midland Basin. Its acreage is composed of two core areas, Flat Top to the north and Signal Peak to the south. The Company, through Priority Power Management, LLC develops an electric high-voltage (EHV) substation, medium voltage distribution systems and a 13-megawatt direct current solar photovoltaic facility located on approximately 80 acres of land owned by the Company north of Big Spring, Texas in Howard County to provide for the Company?s electrical power needs in its Flat Top operating area including powering drilling rigs and day-to-day operations. It has over 100,000 net acres located primarily in Howard County.

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.

Highpeak Energy Inc has a Value Score of 69, which is considered to be undervalued.

Highpeak Energy Inc’s price-earnings ratio is 12.0 compared to the industry median at 7.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Highpeak Energy Inc less attractive for value investors.

Highpeak Energy Inc’s price-to-book ratio is lower than its peers. This could make Highpeak Energy Inc more attractive for value investors when compared to the industry median at 1.26.

You can read more about Highpeak Energy 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.

Ovintiv Inc’s Value Grade

Value Grade:

Ovintiv Inc. is an oil and natural gas exploration and production company. The Company is focused on the development of its multi-basin portfolio of top tier oil and natural gas assets located in the United States and Canada. Its operations also include the marketing of oil, natural gas liquids (NGLs) and natural gas. The Company operates through three segments: USA Operations, Canadian Operations and Market Optimization. USA Operations segment includes the exploration for, development of, and production of oil, NGLs, natural gas and other related activities within the United States. Canadian Operations segment includes the exploration for, development of, and production of oil, NGLs, natural gas and other related activities within Canada. Market Optimization segment is primarily responsible for the sale of the Company’s production to third-party customers and enhancing the associated netback price. The segment’s activities also include third-party purchases and sales of products.

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.

Ovintiv Inc has a Value Score of 71, which is considered to be undervalued.

Ovintiv Inc’s price-earnings ratio is 5.0 compared to the industry median at 7.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Ovintiv Inc more attractive for value investors.

Ovintiv Inc’s price-to-book ratio is lower than its peers. This could make Ovintiv Inc more attractive for value investors when compared to the industry median at 1.26.

You can read more about Ovintiv 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.

Paramount Resources Ltd’s Value Grade

Value Grade:

Paramount Resources Ltd. is a Canada-based energy company. The Company explores and develops both conventional and unconventional petroleum and natural gas. It also pursues longer-term strategic exploration and pre-development plays and holds a portfolio of investments in other entities. Its principal properties are located in Alberta and British Columbia. The Company's operations are organized into three regions: the Grande Prairie Region, located in the Peace River Arch area of Alberta, which is focused on Montney developments at Karr and Wapiti; the Kaybob Region, located in west-central Alberta, which includes the Kaybob North Duvernay development, the Kaybob North Montney oil development and other shale gas and conventional natural gas producing properties, and the Central Alberta and Other Region, which includes the Willesden Green Duvernay development in central Alberta and shale gas producing properties in the Horn River Basin in northeast British Columbia.

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.

Paramount Resources Ltd has a Value Score of 80, which is considered to be undervalued.

Paramount Resources Ltd’s price-earnings ratio is 7.2 compared to the industry median at 7.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Paramount Resources Ltd more attractive for value investors.

Paramount Resources Ltd’s price-to-book ratio is higher than its peers. This could make Paramount Resources Ltd less attractive for value investors when compared to the industry median at 1.26.

You can read more about Paramount Resources 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.

SandRidge Energy Inc’s Value Grade

Value Grade:

SandRidge Energy, Inc. is an independent oil and natural gas company that is focused on the acquisition and development of oil and gas properties. The Company?s primary areas of operation are the Mid-Continent region in Oklahoma and Kansas. The Company holds interests in over 1,471 gross producing wells, approximately 992 of which it operates, and approximately 551,000 gross total acres under lease located primarily in Oklahoma and Kansas. Its productive wells consist of wells that are producing hydrocarbons. The Company sells its oil, natural gas and natural gas liquids (NGLs) to a range of customers, including oil and natural gas companies and trading and energy marketing companies. The Company?s subsidiaries include Lariat Services, Inc., SandRidge Exploration and Production, LLC, SandRidge Holdings, Inc., SandRidge Midstream, Inc., SandRidge Operating Company and SandRidge Realty, LLC.

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.

SandRidge Energy Inc has a Value Score of 91, which is considered to be undervalued.

SandRidge Energy Inc’s price-earnings ratio is 2.9 compared to the industry median at 7.9. This means that it has a lower price relative to its earnings compared to its peers. This makes SandRidge Energy Inc more attractive for value investors.

SandRidge Energy Inc’s price-to-book ratio is higher than its peers. This could make SandRidge Energy Inc less attractive for value investors when compared to the industry median at 1.26.

You can read more about SandRidge Energy 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.

Talos Energy Inc’s Value Grade

Value Grade:

Talos Energy Inc. is a technically driven independent exploration and production company. The Company has its operations in the United States and offshore Mexico, both through upstream oil and gas exploration and production and the development of carbon capture and sequestration (CCS) opportunities. The Company operates through the exploration and production of oil, natural gas and natural gas liquid (NGLs) segment (Upstream Segment). It has operations across a range of Deepwater and shallow water assets in both the United States and Mexico. Its area of focus in the United States is the Gulf of Mexico Deepwater and its core areas are Green Canyon, Mississippi Canyon and Shelf and Gulf Coast. Green Canyon is a Deepwater region in the Central United States, Gulf of Mexico. Mississippi Canyon is a Deepwater region in the eastern portion of the Central United States, Gulf of Mexico. Its CCS portfolio includes multiple future project sites along the United States Gulf Coast.

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.

Talos Energy Inc has a Value Score of 66, which is considered to be undervalued.

Talos Energy Inc’s price-earnings ratio is 13.8 compared to the industry median at 7.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Talos Energy Inc less attractive for value investors.

Talos Energy Inc’s price-to-book ratio is higher than its peers. This could make Talos Energy Inc less attractive for value investors when compared to the industry median at 1.26.

You can read more about Talos Energy 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.

Unit Corp’s Value Grade

Value Grade:

Unit Corporation is a natural gas contract drilling company. The Company is primarily engaged in the development, acquisition, and production of oil and natural gas properties, the land contract drilling of natural gas and oil wells, and the buying, selling, gathering, processing, and treating of natural gas. The Company operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream. The Oil and Natural Gas segment explores, develops, acquires, and produces oil and natural gas properties for its own account. The Contract Drilling segment contracts to drill onshore oil and natural gas wells for others and for its own account. The Mid-Stream segment buys, sells, gathers, processes, and treats natural gas for third parties and for its own account. The Company?s producing oil and natural gas properties, unproved properties, and related assets are primarily located in Oklahoma and Texas, in addition to Arkansas, Kansas, and North Dakota to a lesser extent.

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.

Unit Corp has a Value Score of 98, which is considered to be undervalued.

Unit Corp’s price-earnings ratio is 1.5 compared to the industry median at 7.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Unit Corp more attractive for value investors.

Unit Corp’s price-to-book ratio is higher than its peers. This could make Unit Corp less attractive for value investors when compared to the industry median at 1.26.

You can read more about Unit 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 7 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.

• Gulfport Energy Corp stock has a Value Grade of A.
• Highpeak Energy Inc stock has a Value Grade of B.
• Ovintiv Inc stock has a Value Grade of B.
• Paramount Resources Ltd stock has a Value Grade of B.
• SandRidge Energy Inc stock has a Value Grade of A.
• Talos Energy Inc stock has a Value Grade of B.
• Unit Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 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.

• 7 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, March 04
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, March 01
• Why SilverBow Resources Inc’s (SBOW) Stock Is Up 4.93%
• 7 Undervalued Oil & Gas - Exploration and Production Stocks for Thursday, February 29

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