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 Tuesday, May 28, 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.

Chord Energy Corp’s Value Grade

Value Grade:

Chord Energy Corporation is an independent exploration and production company, which is engaged in the acquisition, exploration, development and production of crude oil, natural gas liquids (NGL) and natural gas. The Company’s operations were focused on the North Dakota and Montana areas of the Williston Basin targeting the Middle Bakken and Three Forks formations which are present across a substantial portion of its acreage. The Company has approximately 1,029,263 net leasehold acres in the Williston Basin, of which approximately 99% is held by production. It has approximately 3,760 gross (2,876.0 net) operating producing wells. Its working interest for producing wells averaged 76% in total and 51% in the wells it operates. The Company has an average daily production of 173,425 net barrels of oil equivalent per day (Boepd). It sells its crude oil, NGL and natural gas production to refiners, marketers and other purchasers that have access to nearby pipeline and rail 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.

Chord Energy Corp has a Value Score of 87, which is considered to be undervalued.

When you look at Chord Energy Corp’s price-to-sales ratio at 1.82 compared to the industry median at 2.35, this company has a lower price relative to revenue compared to its peers. This could make Chord Energy Corp’s stock more attractive for value investors.

Chord Energy Corp’s price-earnings ratio is 8.44 compared to the industry median at 11.11. This means it has a lower share price relative to earnings compared to its peers. This could make Chord Energy Corp more attractive for value investors.

Now, let’s assess Chord Energy Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.0, when compared to the industry median of 5.4, 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. Chord Energy Corp’s shareholder yield is higher than its industry median ratio of 2.01%. 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. Chord Energy Corp’s price-to-book ratio is higher than its industry median ratio of 1.43. This could make Chord Energy Corp less attractive to investors looking for a new addition to their portfolio.

CNX Resources Corp’s Value Grade

Value Grade:

CNX Resources Corporation is an independent low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin. The majority of its operations are centered on unconventional shale formations, primarily the Marcellus Shale and Utica Shale, in Pennsylvania, Ohio and West Virginia. Additionally, it operates and develops Coalbed Methane (CBM) properties in Virginia. It has rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 527,000 net Marcellus Shale acres and approximately 607,000 net Utica Shale acres. The Company holds approximately 53,000 acres of incremental Upper Devonian acres. It has rights to extract CBM in Virginia from approximately 278,000 net CBM acres. It extracts CBM natural gas primarily from the Pocahontas #3 seam. It has rights to extract natural gas from other Shale and shallow oil and gas formations, primarily in Illinois, Indiana, New York, and others.

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.

CNX Resources Corp has a Value Score of 83, which is considered to be undervalued.

CNX Resources Corp’s price-earnings ratio is 4.1 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes CNX Resources Corp more attractive for value investors.

CNX Resources Corp’s price-to-book ratio is higher than its peers. This could make CNX Resources Corp less attractive for value investors when compared to the industry median at 1.43.

You can read more about CNX 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.

California Resources Corp’s Value Grade

Value Grade:

California Resources Corporation is an independent energy and carbon management company committed to energy transition. It produces the lowest carbon intensity oil in the United States. It is in the early stages of developing several carbon capture and storage projects in California. Its carbon management business, Carbon TerraVault, is focused on building, installing, operating, and maintaining carbon dioxide (CO2) capture equipment, transportation assets and storage facilities in California. It has operations in oil and gas basins, including San Joaquin Basin, Los Angeles Basin, Sacramento Basin, and other. It holds substantially all the working, surface and mineral interests in the Elk Hills field, which is its largest producing asset in the San Joaquin basin, and has a large ownership interest in several other oil fields located in the San Joaquin basin, including Buena Vista and Coles Levee. The Los Angeles Basin is a northwest-trending plain about 50 miles long and 20 miles wide.

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.

California Resources Corp has a Value Score of 70, which is considered to be undervalued.

California Resources Corp’s price-earnings ratio is 13.5 compared to the industry median at 11.1. This means that it has a higher price relative to its earnings compared to its peers. This makes California Resources Corp less attractive for value investors.

California Resources Corp’s price-to-book ratio is lower than its peers. This could make California Resources Corp more attractive for value investors when compared to the industry median at 1.43.

You can read more about California 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.

Diamondback Energy Inc’s Value Grade

Value Grade:

Diamondback Energy, Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. The Company's activities are primarily focused on horizontal development of the Spraberry and Wolfcamp formations of the Midland Basin and the Wolfcamp and Bone Spring formations of the Delaware Basin, both of which are part of the larger Permian Basin in West Texas and New Mexico. Its total acreage position in the Permian Basin includes approximately 607,877 gross (493,769 net) acres, which consists primarily of 428,324 gross (349,707 net) acres in the Midland Basin and 174,828 gross (143,742 net) acres in the Delaware Basin. The Company is also engaged in midstream gathering, compression, water handling, disposal and treatment operations. Its subsidiary Viper Energy, Inc., also owns mineral interests in 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.

Diamondback Energy Inc has a Value Score of 72, which is considered to be undervalued.

Diamondback Energy Inc’s price-earnings ratio is 10.9 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Diamondback Energy Inc more attractive for value investors.

Diamondback Energy Inc’s price-to-book ratio is lower than its peers. This could make Diamondback Energy Inc more attractive for value investors when compared to the industry median at 1.43.

You can read more about Diamondback 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.

Obsidian Energy Ltd’s Value Grade

Value Grade:

Obsidian Energy Ltd. is a Canada-based exploration and production company. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. It has a portfolio of assets producing around 32,000 barrels of oil equivalent (boe) per day. Its operating areas include Cardium, Peace River and Viking areas of Alberta. Its Cardium asset is a fully delineated and de-risked asset. It is focused on manufacturing repeatable low-decline and high-netback light-oil wells across its Cardium land base. The Viking is a light oil, horizontal development play located in central Alberta. Its operations are focused in the Esther area. Peace River is a stable, cold-flow, base production asset. It operates on a contiguous and an acreage within the heart of the Peace River Oilsands region.

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.

Obsidian Energy Ltd has a Value Score of 97, which is considered to be undervalued.

Obsidian Energy Ltd’s price-earnings ratio is 9.2 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Obsidian Energy Ltd more attractive for value investors.

Obsidian Energy Ltd’s price-to-book ratio is higher than its peers. This could make Obsidian Energy Ltd less attractive for value investors when compared to the industry median at 1.43.

You can read more about Obsidian Energy 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.

SilverBow Resources Inc’s Value Grade

Value Grade:

SilverBow Resources, Inc. is an energy company. The Company explores, develops, and produces oil and gas in the Eagle Ford Shale and Austin Chalk in South Texas where it has assembled approximately 222,000 net acres across five operating areas. Its operating areas include Webb County Gas, Western Condensate, Southern Eagle Ford, Central Oil and Eastern Extension. As operator, it designs and manages the development of a well and supervises operation and maintenance activities on a day-to-day basis. The Company has gas gathering agreements with Howard Energy Partners providing for the transportation of its Eagle Ford and Austin Chalk production on the pipeline from its Fasken, Rio Bravo, La Mesa and Northern Webb areas to the Kinder Morgan Texas Pipeline, Eagle Ford Midstream or Howard's Impulsora Pipeline (Nueva Era). It has an agreement with Eagle Ford Gathering LLC that provides for the gathering and processing for almost all of its natural gas production in the Artesia area.

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.

SilverBow Resources Inc has a Value Score of 76, which is considered to be undervalued.

SilverBow Resources Inc’s price-earnings ratio is 5.2 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes SilverBow Resources Inc more attractive for value investors.

SilverBow Resources Inc’s price-to-book ratio is higher than its peers. This could make SilverBow Resources Inc less attractive for value investors when compared to the industry median at 1.43.

You can read more about SilverBow 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.

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 63, which is considered to be undervalued.

TXO Partners LP’s price-to-book ratio is lower than its peers. This could make TXO Partners LP fairly attractive for value investors when compared to the industry median at 1.43.

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 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.

• Chord Energy Corp stock has a Value Grade of A.
• CNX Resources Corp stock has a Value Grade of A.
• California Resources Corp stock has a Value Grade of B.
• Diamondback Energy Inc stock has a Value Grade of B.
• Obsidian Energy Ltd stock has a Value Grade of A.
• SilverBow Resources Inc stock has a Value Grade of B.
• TXO Partners LP 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 Tuesday, May 28
• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, May 27
• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, May 24
• Why Mach Natural Resources LP’s (MNR) Stock Is Down 4.27%

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