Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 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 5 undervalued stocks in the Oil & Gas - Exploration and Production industry for Monday, September 30, 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.

ConocoPhillips’s Value Grade

Value Grade:

ConocoPhillips is an exploration and production company. The Company operates through six segments. The Alaska segment primarily explores for, produces, transports and markets crude oil, natural gas, and natural gas liquids (NGLs). The Lower 48 segment consists of operations located in the 48 contiguous United States and the Gulf of Mexico. Its Canada segments consist of the Surmont oil sands developments in Alberta and British Columbia. The Europe, Middle East and North Africa segment consists of operations principally located in the Norwegian sector of the North Sea, the Norwegian Sea, Qatar, Libya, and commercial and terminal operations in the United Kingdom. The Asia Pacific segment has exploration and production operations in China, Malaysia, Australia and commercial operations in China, Singapore, and Japan. The Other International segment includes interests in Colombia as well as contingencies associated with prior operations in other countries.

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.

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

When you look at ConocoPhillips’s price-to-sales ratio at 2.17 compared to the industry median at 2.13, this company has a higher price relative to revenue compared to its peers. This could make ConocoPhillips’s stock less attractive for value investors.

ConocoPhillips’s price-earnings ratio is 11.66 compared to the industry median at 10.86. This means it has a higher share price relative to earnings compared to its peers. This could make ConocoPhillips less attractive for value investors.

Now, let’s assess ConocoPhillips’s EV/EBITDA ratio, also known as enterprise multiple. At 6.2, when compared to the industry median of 5.2, the company may be considered overvalued 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. ConocoPhillips’s shareholder yield is higher than its industry median ratio of 0.39%. 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. ConocoPhillips’s price-to-book ratio is higher than its industry median ratio of 1.33. This could make ConocoPhillips less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at ConocoPhillips’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. ConocoPhillips’s price-to-free-cash-flow ratio is higher than its industry median ratio of 6.83. This could make ConocoPhillips less attractive because the higher P/FCF ratio indicates that ConocoPhillips 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.

Granite Ridge Resources Inc’s Value Grade

Value Grade:

Granite Ridge Resources, Inc. is an oil and gas exploration and production company. It owns a portfolio of wells and top-tier acreage across the Permian and four other prolific unconventional basins across the United States. It holds interests in wells in core operating areas of the Permian, Eagle Ford, Bakken, Haynesville and Denver-Julesburg (DJ) plays. It owns an interest in approximately 2,826 gross (176.50 net) producing wells, 309,472. The Permian Basin extends from southeastern New Mexico into west Texas. The Permian Basin consists of mature legacy onshore oil and liquids-rich natural gas reservoirs. The Eagle Ford shale formation stretches across south Texas and includes Austin Chalk and Buda formations. The Williston Basin stretches through North Dakota, the northwest part of South Dakota, and eastern Montana. The Haynesville Basin is a premier natural gas basin located in Northwestern Louisiana and East Texas. The DJ basin is a geologic basin centered in eastern Colorado.

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.

Granite Ridge Resources Inc has a Value Score of 91, which is considered to be undervalued.

Granite Ridge Resources Inc’s price-earnings ratio is 13.9 compared to the industry median at 10.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Granite Ridge Resources Inc less attractive for value investors.

Granite Ridge Resources Inc’s price-to-book ratio is higher than its peers. This could make Granite Ridge Resources Inc less attractive for value investors when compared to the industry median at 1.33.

You can read more about Granite Ridge 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.

Harbour Energy PLC (ADR)’s Value Grade

Value Grade:

Harbour Energy plc is an independent oil and gas company. It is engaged in the acquisition, exploration, development and production of oil and gas reserves on the United Kingdom and Norwegian Continental Shelves, Indonesia, Vietnam and Mexico. Its North Sea segment includes the United Kingdom and Norwegian continental shelves. Its International segment includes Indonesia, Vietnam and Mexico. Its UK offshore operating positions include the Greater Britannia Area, J-Area, AELE, Catcher Area and Tolmount Area. Its UK North Sea interests include East Irish Sea, Galleon, Ravenspurn North and Johnston. It has an operating interest in the Tuna field and acreage in the South Andaman Sea gas play. It also has an interest in the Zama field in Mexico's Sureste basin. Its operations in Vietnam are focused on its Chim Sao and Dua oil fields. It is also producing 475,000 barrels of oil equivalent per day with significant production in Norway, the United Kingdom, Argentina, North Africa and Germany.

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.

Harbour Energy PLC (ADR) has a Value Score of 88, which is considered to be undervalued.

Harbour Energy PLC (ADR)’s price-earnings ratio is 29.3 compared to the industry median at 10.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Harbour Energy PLC (ADR) less attractive for value investors.

Harbour Energy PLC (ADR)’s price-to-book ratio is lower than its peers. This could make Harbour Energy PLC (ADR) more attractive for value investors when compared to the industry median at 1.33.

You can read more about Harbour Energy PLC (ADR)’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 gas company engaged in the development, acquisition, and production of oil and gas assets. Its area of operations is the Mid-Continent and Western Anadarko regions in Oklahoma, Texas and Kansas. Its operations are the production, development and acquisition of hydrocarbon resources. It holds interests in about 1,453 gross (849 net) producing wells, over 958 of which it operates and 548,895 gross (364,201 net) total acres under lease. Its productive wells consist of wells that are producing hydrocarbons. It sells its oil, natural gas, and natural gas liquids to a variety of customers, including oil and natural gas companies and trading and energy marketing companies. It has assets in the Western Anadarko Basin. These assets include 42 producing wells, four drilled uncompleted wells and leasehold interest in 11 drilling and spacing units. Its subsidiaries include SandRidge Exploration and Production, LLC, SandRidge Realty, LLC 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.

SandRidge Energy Inc has a Value Score of 63, which is considered to be undervalued.

SandRidge Energy Inc’s price-earnings ratio is 10.9 compared to the industry median at 10.9. This means that it has a higher price relative to its earnings compared to its peers. This makes SandRidge Energy Inc fairly 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 1.33.

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.

W&T; Offshore, Inc.’s Value Grade

Value Grade:

W&T; Offshore, Inc. is an independent oil and natural gas producer. The Company is engaged in the exploration, development and acquisition of oil and natural gas properties in the Gulf of Mexico. It has a working interest in over 53 offshore producing fields in federal and state waters (which include 44 fields in federal waters and nine in state waters). The Company has under lease approximately 597,100 gross acres (440,000 net acres) spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 435,600 gross acres on the conventional shelf, approximately 153,500 gross acres in the deepwater and 8,000 gross acres in Alabama onshore. The Company's wholly owned subsidiaries consists of Aquasition Energy, LLC, Aquasition, LLC, Aquasition II, LLC, Aquasition III, LLC, Aquasition IV, LLC, Aquasition V, LLC, Green Hell, LLC, Seaquester, LLC, Seaquestration, LLC, and W & T Energy VI, 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.

W&T; Offshore, Inc. has a Value Score of 78, which is considered to be undervalued.

W&T; Offshore, Inc.’s price-to-book ratio is lower than its peers. This could make W&T; Offshore, Inc. more attractive for value investors when compared to the industry median at 1.33.

You can read more about W&T; Offshore, 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.

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 5 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.

• ConocoPhillips stock has a Value Grade of B.
• Granite Ridge Resources Inc stock has a Value Grade of A.
• Harbour Energy PLC (ADR) stock has a Value Grade of A.
• SandRidge Energy Inc stock has a Value Grade of B.
• W&T; Offshore, Inc. stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, September 30
• Which Is a Better Investment, Crescent Energy Co or Ovintiv Inc Stock?
• Which Is a Better Investment, Gulfport Energy Corp or Ovintiv Inc Stock?
• Which Is a Better Investment, Ovintiv Inc or Veren Inc Stock?

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