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 Tuesday, May 23, 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 1.00 compared to the industry median at 1.54, 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 5.41 compared to the industry median at 4.70. 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 2.8, 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 0.36%. 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 1.35. 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 4.97. 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.

Abraxas Petroleum Corp’s Value Grade

Value Grade:

Abraxas Petroleum Corporation is an energy company. It is primarily engaged in the acquisition, exploration, development and production of oil and gas. Its oil and gas assets are in two operating regions, the Permian/Delaware Basin and the Rocky Mountain. Its properties in the Permian/Delaware Basin region are primarily located in Ward and Winkler Counties, Texas and produce oil and gas primarily from the Bone Spring and Wolfcamp formations. Its properties in the Rocky Mountain region are primarily located in Montana, which produce oil and gas primarily from the Bakken, Three Forks and Red River formations. Its estimated proved reserves are 16.8 million barrels of oil equivalent (MMBoe), of which 100% are classified as proved developed, approximately 57% are oil and approximately 97% of which are operated by the Company. Its daily net production is approximately 4,922 barrels of oil equivalent per day (Boepd), of which approximately 63% is oil.

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.

Abraxas Petroleum Corp has a Value Score of 89, which is considered to be undervalued.

Abraxas Petroleum Corp’s price-earnings ratio is 0.1 compared to the industry median at 4.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Abraxas Petroleum Corp more attractive for value investors.

Abraxas Petroleum Corp’s price-to-book ratio is higher than its peers. This could make Abraxas Petroleum Corp less attractive for value investors when compared to the industry median at 1.35.

You can read more about Abraxas 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.

Civitas Resources Inc’s Value Grade

Value Grade:

Civitas Resources, Inc. is an independent exploration and production company. The Company is focused on the acquisition, development, and production of oil and associated liquids-rich natural gas in the Rocky Mountain region, primarily in the Denver-Julesburg Basin of Colorado (the DJ Basin). The Company has interests in a total of 3,702 gross producing wells, of which 3,116 were horizontal. The Company also has total acreage position consisting of approximately 826,500 gross (525,900 net) acres. The Company?s midstream assets provide reliable gathering, treating, and storage for the Company?s operated production.

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.

Civitas Resources Inc has a Value Score of 94, which is considered to be undervalued.

Civitas Resources Inc’s price-earnings ratio is 4.5 compared to the industry median at 4.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Civitas Resources Inc more attractive for value investors.

Civitas Resources Inc’s price-to-book ratio is higher than its peers. This could make Civitas Resources Inc less attractive for value investors when compared to the industry median at 1.35.

You can read more about Civitas 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.

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 87, which is considered to be undervalued.

PHX Minerals Inc’s price-earnings ratio is 3.5 compared to the industry median at 4.7. 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 1.35.

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.

Paramount Resources Ltd (USA)’s Value Grade

Value Grade:

Paramount Resources Ltd. is a Canada-based energy company. The Company explores and develops both conventional and unconventional petroleum and natural gas. It also pursues longer-term strategic exploration and pre-development plays and holds a portfolio of investments in other entities. Its principal properties are located in Alberta and British Columbia. The Company's operations are organized into three regions. The Grande Prairie Region is the Karr and Wapiti Montney properties, located southeast of Grande Prairie, Alberta. It has approximately 230,000 gross acres of land in the Grande Prairie Region. The Kaybob Region includes the Kaybob and Ante Creek Montney oil developments and the Kaybob Smoky, Kaybob South and Kaybob North Duvernay developments. It has approximately 1.386 million gross acres of land in the Central Alberta & Other Region. The Company?s subsidiaries include Fox Drilling Limited Partnership, Cavalier Energy Inc. (Cavalier) and MGM Energy.

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.

Paramount Resources Ltd (USA) has a Value Score of 85, which is considered to be undervalued.

Paramount Resources Ltd (USA)’s price-earnings ratio is 5.1 compared to the industry median at 4.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Paramount Resources Ltd (USA) less attractive for value investors.

Paramount Resources Ltd (USA)’s price-to-book ratio is higher than its peers. This could make Paramount Resources Ltd (USA) less attractive for value investors when compared to the industry median at 1.35.

You can read more about Paramount Resources Ltd (USA)’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.

Ranger Oil Corp’s Value Grade

Value Grade:

Ranger Oil Corporation is an independent oil and gas company. The Company is engaged in the onshore development and production of crude oil, natural gas liquids (NGLs) and natural gas. The Company?s operations consist of drilling unconventional horizontal development wells and operating its producing wells in the Eagle Ford Shale (the Eagle Ford) in South Texas. It leases a contiguous position of approximately 187,700 gross (163,800 net) acres in the core liquids-rich area of the Eagle Ford in South Texas. The Company also leases field office facilities near its oil and gas assets in South Texas. Its operating wells are located in Eagle Ford Shale (the Eagle Ford) in Gonzales, Lavaca, and Fayette Counties in Texas.

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.

Ranger Oil Corp has a Value Score of 97, which is considered to be undervalued.

Ranger Oil Corp’s price-earnings ratio is 2.8 compared to the industry median at 4.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Ranger Oil Corp more attractive for value investors.

Ranger Oil Corp’s price-to-book ratio is lower than its peers. This could make Ranger Oil Corp fairly attractive for value investors when compared to the industry median at 1.35.

You can read more about Ranger Oil 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.

Talos Energy Inc’s Value Grade

Value Grade:

Talos Energy Inc. is a technically driven independent exploration and production company. The Company has its operations in the United States and offshore Mexico, both through upstream oil and gas exploration and production and the development of carbon capture and sequestration (CCS) opportunities. The Company operates through the exploration and production of oil, natural gas and natural gas liquid (NGLs) segment (Upstream Segment). It has operations across a range of Deepwater and shallow water assets in both the United States and Mexico. Its area of focus in the United States is the Gulf of Mexico Deepwater and its core areas are Green Canyon, Mississippi Canyon and Shelf and Gulf Coast. Green Canyon is a Deepwater region in the Central United States, Gulf of Mexico. Mississippi Canyon is a Deepwater region in the eastern portion of the Central United States, Gulf of Mexico. Its CCS portfolio includes multiple future project sites along the United States Gulf Coast.

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.

Talos Energy Inc has a Value Score of 88, which is considered to be undervalued.

Talos Energy Inc’s price-earnings ratio is 2.0 compared to the industry median at 4.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Talos Energy Inc more attractive for value investors.

Talos Energy Inc’s price-to-book ratio is higher than its peers. This could make Talos Energy Inc less attractive for value investors when compared to the industry median at 1.35.

You can read more about Talos 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.

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.
• Abraxas Petroleum Corp stock has a Value Grade of A.
• Civitas Resources Inc stock has a Value Grade of A.
• PHX Minerals Inc stock has a Value Grade of A.
• Paramount Resources Ltd (USA) stock has a Value Grade of A.
• Ranger Oil Corp stock has a Value Grade of A.
• Talos Energy 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 Tuesday, May 23
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, May 22
• Why Granite Ridge Resources Inc’s (GRNT) Stock Is Up 4.71%
• Why Highpeak Energy Inc’s (HPK) Stock Is Up 6.73%

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