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 Wednesday, March 27, 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.

Alpine Summit Energy Partners Inc’s Value Grade

Value Grade:

Alpine Summit Energy Partners, Inc. is a Canada-based developer and financial company, which operates and develops oil and gas assets. The Company is focused on its drilling activity in the Austin Chalk and Eagle Ford formations in the Giddings and Hawkville (Webb County) Fields. The Austin Chalk directly overlies the oil-sourcing Eagle Ford formation. The Company’s subsidiary is HB2 Origination, 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.

Alpine Summit Energy Partners Inc has a Value Score of 92, which is considered to be undervalued.

Now, let’s assess Alpine Summit Energy Partners Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 1.5, when compared to the industry median of 4.4, 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. Alpine Summit Energy Partners Inc’s shareholder yield is lower than its industry median ratio of 2.14%. 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. Alpine Summit Energy Partners Inc’s price-to-book ratio is lower than its industry median ratio of 1.39. This could make Alpine Summit Energy Partners Inc more attractive to investors looking for a new addition to their portfolio.

Coterra Energy Inc’s Value Grade

Value Grade:

Coterra Energy Inc. is an independent oil and gas company. The Company is engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs). Its operations are primarily concentrated in three core operating areas: the Permian Basin in west Texas and southeast New Mexico, the Marcellus Shale in northeast Pennsylvania and the Anadarko Basin in the Mid-Continent region in Oklahoma. Its Permian Basin properties hold approximately 296,000 net acres in its core operating area in the Delaware Basin. Its Marcellus Shale properties hold approximately 186,000 net acres in the dry gas window of the Marcellus Shale. The Anadarko Basin properties hold approximately 182,000 net acres and its development activities are primarily focused on both the Woodford Shale and the Meramec formations. It sells oil, natural gas and NGLs to industrial customers, local distribution companies, oil and gas marketers, pipeline companies and power generation facilities.

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.

Coterra Energy Inc has a Value Score of 74, which is considered to be undervalued.

Coterra Energy Inc’s price-earnings ratio is 12.9 compared to the industry median at 8.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Coterra Energy Inc less attractive for value investors.

Coterra Energy Inc’s price-to-book ratio is lower than its peers. This could make Coterra Energy Inc more attractive for value investors when compared to the industry median at 1.39.

You can read more about Coterra 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.

Occidental Petroleum Corp’s Value Grade

Value Grade:

Occidental Petroleum Corporation is an international energy company with assets primarily in the United States, the Middle East, and North Africa. The Company is an oil and gas producer in the United States, including a producer in the Permian and DJ basins, and the offshore Gulf of Mexico. It operates through three segments: oil and gas, chemical and midstream and marketing. The oil and gas segment explores for, develops, and produces oil (which includes condensate), natural gas liquids (NGL) and natural gas. The chemical segment primarily manufactures and markets basic chemicals and vinyls. The midstream and marketing segment purchases, markets, gathers, processes, transports, and stores oil (which includes condensate), NGL, natural gas, carbon dioxide (CO2) and power. The midstream and marketing segment provides flow assurance and maximizes the value of its oil and gas. It also optimizes its transportation and storage capacity and invests in entities that conduct similar activities.

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.

Occidental Petroleum Corp has a Value Score of 63, which is considered to be undervalued.

Occidental Petroleum Corp’s price-earnings ratio is 16.1 compared to the industry median at 8.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Occidental Petroleum Corp less attractive for value investors.

Occidental Petroleum Corp’s price-to-book ratio is lower than its peers. This could make Occidental Petroleum Corp more attractive for value investors when compared to the industry median at 1.39.

You can read more about Occidental Petroleum 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.

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 62, which is considered to be undervalued.

Pedevco Corp’s price-earnings ratio is 236.8 compared to the industry median at 8.6. 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 1.39.

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.

Reserve Petroleum Co’s Value Grade

Value Grade:

The Reserve Petroleum Company is an independent oil and gas company. The Company is engaged in oil and natural gas exploration, development and minerals management with areas of concentration in Arkansas, Kansas, Oklahoma, South Dakota, Texas and Wyoming. Its principal properties are oil and natural gas properties. It has interests in approximately 860 producing properties with 69% of them being working interest properties and the remaining 31% being royalty interest properties. It owns non-producing mineral interests in 256,534 gross acres equivalent to 88,214 net acres. These mineral interests are in ten different states in the north and south-central United States. A total of 81,080 (92%) net acres are in the states of Arkansas, Kansas, Oklahoma, South Dakota, Texas and Wyoming, the areas of concentration for the Company in its exploration and development programs. Its subsidiaries consist of majority owned Grand Woods Development, LLC and wholly owned Trinity Water Services, 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.

Reserve Petroleum Co has a Value Score of 68, which is considered to be undervalued.

Reserve Petroleum Co’s price-earnings ratio is 14.1 compared to the industry median at 8.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Reserve Petroleum Co less attractive for value investors.

Reserve Petroleum Co’s price-to-book ratio is higher than its peers. This could make Reserve Petroleum Co less attractive for value investors when compared to the industry median at 1.39.

You can read more about Reserve Petroleum Co’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.

SM Energy Co’s Value Grade

Value Grade:

SM Energy Company s an independent energy company. The Company is engaged in the acquisition, exploration, development, and production of oil, gas, and natural gas liquid (NGL) in the state of Texas. The Company’s asset portfolio is comprised of assets in the Midland Basin of West Texas and in the Maverick Basin of South Texas. The Company’s Midland Basin assets are located in the Permian Basin in West Texas is comprised of approximately 110,000 net acres and include its RockStar assets in Howard and Martin Counties, Texas, its Sweetie Peck assets in Upton and Midland Counties, and Klondike assets in Dawson and northern Martin counties (Midland Basin). Its South Texas assets are comprised of approximately 155,000 net acres located in Dimmit and Webb Counties, Texas (South Texas). The Company’s operations in South Texas are focused on production from the Eagle Ford shale formation and Austin Chalk formation, and further development of the Austin Chalk formation.

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.

SM Energy Co has a Value Score of 90, which is considered to be undervalued.

SM Energy Co’s price-earnings ratio is 7.1 compared to the industry median at 8.6. This means that it has a lower price relative to its earnings compared to its peers. This makes SM Energy Co more attractive for value investors.

SM Energy Co’s price-to-book ratio is lower than its peers. This could make SM Energy Co more attractive for value investors when compared to the industry median at 1.39.

You can read more about SM Energy Co’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.

Southwestern Energy Co’s Value Grade

Value Grade:

Southwestern Energy Company is an independent energy company. The Company operates through two segments: Exploration and Production (E&P;) and Marketing. The Company is engaged in development, exploration and production of natural gas, as well as associated natural gas liquids (NGLs) and oil in its core positions in the Appalachia and Haynesville natural gas basins in the United States. It is focused on the development of unconventional natural gas reservoirs located in Louisiana, West Virginia, Pennsylvania, and Ohio. Its operations in West Virginia, Pennsylvania and Ohio (Appalachia) are primarily focused on the Marcellus Shale, the Utica and the Upper Devonian unconventional natural gas and liquids reservoirs. Its operations in Louisiana (Haynesville) are primarily focused on the Haynesville and Bossier natural gas reservoirs. It operates a fleet of drilling rigs and leased two pressure pumping spreads with an associated pump down horsepower capacity of 102,000 horsepower.

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.

Southwestern Energy Co has a Value Score of 71, which is considered to be undervalued.

Southwestern Energy Co’s price-earnings ratio is 5.2 compared to the industry median at 8.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Southwestern Energy Co more attractive for value investors.

Southwestern Energy Co’s price-to-book ratio is lower than its peers. This could make Southwestern Energy Co fairly attractive for value investors when compared to the industry median at 1.39.

You can read more about Southwestern Energy Co’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.

• Alpine Summit Energy Partners Inc stock has a Value Grade of A.
• Coterra Energy Inc stock has a Value Grade of B.
• Occidental Petroleum Corp stock has a Value Grade of B.
• Pedevco Corp stock has a Value Grade of B.
• Reserve Petroleum Co stock has a Value Grade of B.
• SM Energy Co stock has a Value Grade of A.
• Southwestern Energy Co stock has a Value Grade of B.

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 Wednesday, March 27
• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, March 26
• Why APA Corp (US)’s (APA) Stock Is Down 4.94%
• Why Kosmos Energy Ltd’s (KOS) Stock Is Down 4.71%

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