Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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.

Latest Oil & Gas - Exploration and Production Stock News

Before choosing which top Oil & Gas - Exploration and Production stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The outlook for the oil and gas exploration and production sub-industry is mostly favorable for the foreseeable future. As a result of the COVID-19 pandemic, a major oil shock occurred in 2020. Since then, crude oil prices have begun to recover, currently priced at around $60 per barrel as a result of persistent supply cuts by the OPEC-Plus Consortium. While the demand perspective remains uncertain, from a supply perspective, both OPEC and non-OPEC participants have a conservative production outlook in 2021. The most significant unknown factor is the potential lifting of Iran sanctions by the Biden administration and its impact. According to the International Energy Agency (IEA), oil demand is expected to increase by about 5.4 mmb/d, to 96.4 mmb/d in 2021. While this appears to be a strong year-over-year increase, it is well in line with the 2019 demand of around 100 mmb/d, signifying only a 60% recovery from the pandemic. In May 2021, the EIA forecasted WTI crude oil prices as $59 dollars per barrel in 2021 and $57 per barrel in 2022. At these price points, exploration and production operations are expected to generate significant free cashflow.

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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4 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 4 undervalued stocks in the Oil & Gas - Exploration and Production industry for Friday, January 13, 2023. 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.

Berry Corporation (Bry)’s Value Grade

Value Grade:

Berry Corporation (bry) is an independent upstream energy company. The Company operates through two segments: development and production (D&P;), and well servicing and abandonment. The development and production segment is engaged in the development and production of onshore conventional oil reserves primarily located in California, as well as Utah. Its California operating area consists of properties located in Midway-Sunset, South Belridge, McKittrick and Poso Creek fields in the San Joaquin basin in Kern County. The Company operates Uinta basin operations in the Brundage Canyon, Ashley Forest, and Lake Canyon areas in Utah. The well servicing and abandonment segment provides wellsite services in California to oil and natural gas production companies, with a focus on well servicing, well abandonment services and water logistics. The Company’s subsidiaries include Berry Petroleum Company, LLC; CJ Berry Well Services Management, LLC; and C&J; Well 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.

Berry Corporation (Bry) has a Value Score of 97, which is considered to be undervalued.

When you look at Berry Corporation (Bry)’s price-to-sales ratio at 0.72 compared to the industry median at 1.87, this company has a lower price relative to revenue compared to its peers. This could make Berry Corporation (Bry)’s stock more attractive for value investors.

Berry Corporation (Bry)’s price-earnings ratio is 3.80 compared to the industry median at 5.44. This means it has a lower share price relative to earnings compared to its peers. This could make Berry Corporation (Bry) more attractive for value investors.

Now, let’s assess Berry Corporation (Bry)’s EV/EBITDA ratio, also known as enterprise multiple. At 2.6, when compared to the industry median of 3.2, 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. Berry Corporation (Bry)’s shareholder yield is higher than its industry median ratio of 0.00%. 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. Berry Corporation (Bry)’s price-to-book ratio is lower than its industry median ratio of 1.83. This could make Berry Corporation (Bry) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Berry Corporation (Bry)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Berry Corporation (Bry)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 5.98. This could make Berry Corporation (Bry) less attractive because the higher P/FCF ratio indicates that Berry Corporation (Bry) 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.

Ecopetrol SA (ADR)’s Value Grade

Value Grade:

Ecopetrol S.A. is an oil company. The Company operates in Colombia, Peru, Brazil and the United States Gulf Coast. The Company's segments include Exploration and Production, Transportation and Logistics, and Refining, Petrochemicals and Biofuels. The Company's Exploration and Production segment includes exploration, development and production activities in Colombia and abroad. The Company's Transportation and Logistics segment includes the transportation of crude oil, motor fuels, fuel oil and other refined products, including diesel and biofuels. The Company's main crude oil pipeline systems' operating capacity is approximately 1.34 million barrels per day (BPD). The Company's main refineries are the Barrancabermeja refinery, which it directly owns and operates, and a refinery in the Free Trade Zone in Cartagena that is operated by Reficar S.A., a subsidiary of the Company. The Company also owns and operates two other minor refineries: Orito and Apiay.

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.

Ecopetrol SA (ADR) has a Value Score of 96, which is considered to be undervalued.

Ecopetrol SA (ADR)’s price-earnings ratio is 3.4 compared to the industry median at 5.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Ecopetrol SA (ADR) more attractive for value investors.

Ecopetrol SA (ADR)’s price-to-book ratio is higher than its peers. This could make Ecopetrol SA (ADR) less attractive for value investors when compared to the industry median at 1.83.

You can read more about Ecopetrol SA (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 natural gas company that is focused on acquisition, development and production activities. The Company’s primary areas of operation are the Mid-Continent in Oklahoma and Kansas. The Company holds interests in over 1,442 gross producing wells, approximately 947 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 83, which is considered to be undervalued.

SandRidge Energy Inc’s price-earnings ratio is 3.7 compared to the industry median at 5.4. 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 1.83.

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.

Spindletop Oil & Gas Co’s Value Grade

Value Grade:

Spindletop Oil & Gas Co. is an independent oil and gas company. The Company is engaged in the exploration, development, production and acquisition of oil and natural gas; the rental of oilfield equipment, and through one of its subsidiaries, the gathering and marketing of natural gas. The Company’s segments include exploration, acquisition, development and production of oil and natural gas; natural gas gathering, and commercial real estate investment. It is also engaged in commercial real estate leasing through leasing office space to non-related third-party tenants. Its products include crude oil and natural gas, which are sold to oil and gas companies, brokers, pipelines, and distributors. It owns land and a two-story commercial office building in Dallas, Texas. It operates properties in approximately six states, including Texas, Oklahoma, New Mexico, Louisiana, Alabama, and Arkansas. The Company’s wholly owned subsidiaries include Spindletop Drilling Company and Prairie Pipeline Co.

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.

Spindletop Oil & Gas Co has a Value Score of 76, which is considered to be undervalued.

Spindletop Oil & Gas Co’s price-earnings ratio is 6.6 compared to the industry median at 5.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Spindletop Oil & Gas Co less attractive for value investors.

Spindletop Oil & Gas Co’s price-to-book ratio is higher than its peers. This could make Spindletop Oil & Gas Co less attractive for value investors when compared to the industry median at 1.83.

You can read more about Spindletop Oil & Gas 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 4 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.

• Berry Corporation (Bry) stock has a Value Grade of A.
• Ecopetrol SA (ADR) stock has a Value Grade of A.
• SandRidge Energy Inc stock has a Value Grade of A.
• Spindletop Oil & Gas Co stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, January 13
• Which Is a Better Investment, Antero Resources Corp or Baytex Energy Corp Stock?
• Which Is a Better Investment, Antero Resources Corp or Black Stone Minerals LP Stock?
• Which Is a Better Investment, Antero Resources Corp or California Resources Corp Stock?

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