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.

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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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 Thursday, May 18, 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.

APA Corp (US)’s Value Grade

Value Grade:

APA Corporation is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids (NGLs). Its upstream business has exploration and production operations in three geographic areas: the United States (U.S.), Egypt, and offshore the United Kingdom (U.K.) in the North Sea (North Sea). It has exploration, and appraisal operations in Suriname, as well as interests in other international locations. The Company?s midstream business (Altus Midstream) is operated by Altus Midstream Company through its subsidiary Altus Midstream LP (collectively, Altus). Altus owns, develops, and operates a midstream energy asset network in the Permian Basin of West Texas. It holds approximately 789,000 gross acres (451,000 net acres) in the Southern Midland Basin. The Company holds approximately 229,000 gross acres (131,000 net acres) in the Delaware Basin. It also holds approximately 2.5 million gross acres (1.1 million net acres) in legacy properties.

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.

APA Corp (US) has a Value Score of 86, which is considered to be undervalued.

When you look at APA Corp (US)’s price-to-sales ratio at 0.97 compared to the industry median at 1.49, this company has a lower price relative to revenue compared to its peers. This could make APA Corp (US)’s stock more attractive for value investors.

APA Corp (US)’s price-earnings ratio is 5.27 compared to the industry median at 4.53. This means it has a higher share price relative to earnings compared to its peers. This could make APA Corp (US) less attractive for value investors.

Now, let’s assess APA Corp (US)’s EV/EBITDA ratio, also known as enterprise multiple. At 3.0, when compared to the industry median of 2.9, 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. APA Corp (US)’s shareholder yield is higher than its industry median ratio of 0.01%. 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. APA Corp (US)’s price-to-book ratio is higher than its industry median ratio of 1.27. This could make APA Corp (US) less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at APA Corp (US)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. APA Corp (US)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 4.63. This could make APA Corp (US) more attractive because the lower P/FCF ratio indicates that APA Corp (US) 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.

Chevron Corporation’s Value Grade

Value Grade:

Chevron Corporation manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream. The Upstream segment consists primarily of exploring for, developing and producing and transporting crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas; transporting crude oil by international oil export pipelines; transporting, storage and marketing of natural gas, and a gas-to-liquids plant. The Downstream segment consists primarily of refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing renewable fuels; transporting crude oil and refined products, and manufacturing and marketing commodity petrochemicals.

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.

Chevron Corporation has a Value Score of 74, which is considered to be undervalued.

Chevron Corporation’s price-earnings ratio is 8.4 compared to the industry median at 4.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Chevron Corporation less attractive for value investors.

Chevron Corporation’s price-to-book ratio is lower than its peers. This could make Chevron Corporation more attractive for value investors when compared to the industry median at 1.27.

You can read more about Chevron Corporation’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.

Enerplus Corp’s Value Grade

Value Grade:

Enerplus Corporation (Enerplus) is a Canada-based oil and gas exploration and production company. The Company is focused on the development of North American oil and natural gas assets. Its portfolio includes light oil assets in the Bakken (North Dakota) and Marcellus natural gas shale region (northeast Pennsylvania). The Company holds approximately 238,500 net acres in North Dakota. Its acreage is primarily located across the Fort Berthold Indian Reservation, as well as in Williams and Dunn Counties. Enerplus holds an interest in approximately 33,000 net acres in the dry gas window of the Marcellus shale in northeast Pennsylvania. This non-operated position is located across Susquehanna, Bradford, Wyoming, Sullivan, and Lycoming 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.

Enerplus Corp has a Value Score of 91, which is considered to be undervalued.

Enerplus Corp’s price-earnings ratio is 3.3 compared to the industry median at 4.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Enerplus Corp more attractive for value investors.

Enerplus Corp’s price-to-book ratio is lower than its peers. This could make Enerplus Corp more attractive for value investors when compared to the industry median at 1.27.

You can read more about Enerplus 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.

Northern Oil and Gas Inc’s Value Grade

Value Grade:

Northern Oil and Gas, Inc. is an independent energy company. The Company is engaged in the acquisition, exploration, exploitation, development and production of crude oil and natural gas properties in the United States, primarily in the Williston Basin, the Appalachian Basin and the Permian Basin. Its primary focus is investing in non-operated minority working and mineral interests in oil and gas properties, with a core area of focus in three basins within the United States. It primarily engages in oil and natural gas exploration and production by participating on a proportionate basis alongside third-party interests in wells drilled and completed in spacing units that include its acreage. In addition, the Company acquires wellbore-only working interests in wells, in which the Company does not hold the underlying leasehold interests from third parties unable or unwilling to participate in particular well proposals. The Company has leased approximately 258,970 net acres.

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.

Northern Oil and Gas Inc has a Value Score of 76, which is considered to be undervalued.

Northern Oil and Gas Inc’s price-earnings ratio is 2.0 compared to the industry median at 4.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Northern Oil and Gas Inc more attractive for value investors.

Northern Oil and Gas Inc’s price-to-book ratio is lower than its peers. This could make Northern Oil and Gas Inc more attractive for value investors when compared to the industry median at 1.27.

You can read more about Northern Oil and Gas 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.

PHX Minerals Inc’s Value Grade

Value Grade:

PHX Minerals Inc. is a natural gas and oil-focused mineral company. The Company is focused on perpetual natural gas and oil mineral ownership in resource plays in the United States. The Company also owns interests in leasehold acreage and non-operated interests in natural gas and oil properties. Its exploration and development of its natural gas and oil properties is conducted by natural gas and oil exploration and production companies. Its focus is on growth through mineral acquisitions and the development of its mineral acreage inventory in its core focus areas. It owns mineral and leasehold interests in multiple resource plays in the United States, including positions in the Haynesville, SCOOP, STACK, Bakken/Three Forks, Permian Basin and Fayetteville plays. It owns mineral acres located primarily in Oklahoma, Texas, North Dakota, Louisiana and Arkansas. The Company also has working interests in 6,362 producing natural gas and oil wells.

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.

PHX Minerals Inc has a Value Score of 88, which is considered to be undervalued.

PHX Minerals Inc’s price-earnings ratio is 3.3 compared to the industry median at 4.5. This means that it has a lower price relative to its earnings compared to its peers. This makes PHX Minerals Inc more attractive for value investors.

PHX Minerals Inc’s price-to-book ratio is higher than its peers. This could make PHX Minerals Inc less attractive for value investors when compared to the industry median at 1.27.

You can read more about PHX Minerals 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.

Pioneer Natural Resources Co’s Value Grade

Value Grade:

Pioneer Natural Resources Company is an independent oil and gas exploration and production company. The Company explores for, develops and produces oil, natural gas liquids (NGLs) and gas in the Midland Basin in West Texas. The Company conducts exploitation and exploration activities in the Spraberry/Wolfcamp oil field located in the Midland Basin in West Texas. The Company holds approximately 964 thousand gross acres, of which 948 thousand gross acres are located in the Spraberry/Wolfcamp field in the Midland Basin of West Texas. The Company has a joint venture with Sinochem Petroleum USA LLC, which encompasses approximately 212 thousand gross acres. The oil produced from the Spraberry/Wolfcamp field in the Midland Basin is West Texas Intermediate Sweet, and the gas produced is casinghead gas with an average energy content of 1,400 British thermal unit (Btu). The oil and gas are produced primarily from six formations, including Spraberry, Jo Mill, Dean, Wolfcamp, Strawn and Atoka.

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.

Pioneer Natural Resources Co has a Value Score of 75, which is considered to be undervalued.

Pioneer Natural Resources Co’s price-earnings ratio is 7.2 compared to the industry median at 4.5. This means that it has a higher price relative to its earnings compared to its peers. This makes Pioneer Natural Resources Co less attractive for value investors.

Pioneer Natural Resources Co’s price-to-book ratio is lower than its peers. This could make Pioneer Natural Resources Co more attractive for value investors when compared to the industry median at 1.27.

You can read more about Pioneer Natural Resources 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.

Riley Exploration Permian Inc’s Value Grade

Value Grade:

Riley Exploration Permian, Inc. is an independent oil and natural gas company. The Company is focused on the acquisition, exploration, development and production of oil, natural gas, and natural gas liquids (NGLs) in Texas and New Mexico. The Company is engaged in exploring its assets in the Permian Basin. The Company?s activities are primarily focused on the San Andres Formation, a conventional shelf margin deposit on the Central Basin Platform and Northwest Shelf. Its acreage is primarily located on contiguous blocks in Yoakum County, Texas, and Lea and Roosevelt Counties, New Mexico. The Company operates approximately 30,470 net acres and a total of 100 net producing wells.

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.

Riley Exploration Permian Inc has a Value Score of 84, which is considered to be undervalued.

Riley Exploration Permian Inc’s price-earnings ratio is 4.4 compared to the industry median at 4.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Riley Exploration Permian Inc more attractive for value investors.

Riley Exploration Permian Inc’s price-to-book ratio is lower than its peers. This could make Riley Exploration Permian Inc more attractive for value investors when compared to the industry median at 1.27.

You can read more about Riley Exploration Permian 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 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.

• APA Corp (US) stock has a Value Grade of A.
• Chevron Corporation stock has a Value Grade of B.
• Enerplus Corp stock has a Value Grade of A.
• Northern Oil and Gas Inc stock has a Value Grade of B.
• PHX Minerals Inc stock has a Value Grade of A.
• Pioneer Natural Resources Co stock has a Value Grade of B.
• Riley Exploration Permian Inc 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 Thursday, May 18
• Which Is a Better Investment, APA Corp (US) or Antero Resources Corp Stock?
• Which Is a Better Investment, APA Corp (US) or California Resources Corp Stock?
• Which Is a Better Investment, APA Corp (US) or CNX Resources Corp Stock?

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