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.

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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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 Wednesday, May 24, 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.

Advantage Energy Ltd’s Value Grade

Value Grade:

Advantage Energy Ltd. is a Canada-based low-carbon energy producer. The Company is focused on development and delineation of its Montney natural gas and liquids resource at Glacier, Wembley/Pipestone, Valhalla and Progress, Alberta. The Company's Montney assets are located from approximately 4-80 Kilometers (km) northwest of the city of Grande Prairie, Alberta. The Company’s land holdings consist of approximately 228 net sections (145,920 net acres) of liquids-rich Montney lands at Glacier, Valhalla, Progress and Pipestone/Wembley.

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.

Advantage Energy Ltd has a Value Score of 98, which is considered to be undervalued.

When you look at Advantage Energy Ltd’s price-to-sales ratio at 1.15 compared to the industry median at 1.56, this company has a lower price relative to revenue compared to its peers. This could make Advantage Energy Ltd’s stock more attractive for value investors.

Advantage Energy Ltd’s price-earnings ratio is 3.15 compared to the industry median at 4.73. This means it has a lower share price relative to earnings compared to its peers. This could make Advantage Energy Ltd more attractive for value investors.

Now, let’s assess Advantage Energy Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 1.8, when compared to the industry median of 2.8, 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. Advantage Energy Ltd’s shareholder yield is higher than its industry median ratio of 0.82%. 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. Advantage Energy Ltd’s price-to-book ratio is lower than its industry median ratio of 1.34. This could make Advantage Energy Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Advantage Energy Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Advantage Energy Ltd’s price-to-free-cash-flow ratio is higher than its industry median ratio of 5.08. This could make Advantage Energy Ltd less attractive because the higher P/FCF ratio indicates that Advantage Energy Ltd 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.

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 93, 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 1.34.

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.

Gulfport Energy Corp’s Value Grade

Value Grade:

Gulfport Energy Corporation is an independent natural gas-weighted exploration and production company. The Company is focused on the exploration, acquisition, and production of natural gas, crude oil and natural gas liquid (NGL) in the United States, with a primary focus in the Appalachia and Anadarko basins. Its principal properties are located in Eastern Ohio, targeting the Utica and in central Oklahoma targeting the South-Central Oklahoma Oil Province (SCOOP) Woodford and SCOOP Springer formations. The Utica is a hydrocarbon-bearing rock formation located in the Appalachian Basin of the United States and Canada. It has approximately 188,000 net reservoir acres located primarily in Belmont, Harrison, Jefferson and Monroe Counties in Eastern Ohio. The SCOOP play mainly targets the Devonian to Mississippian aged Woodford Shale. It has approximately 73,000 net reservoir acres located primarily in Garvin, Grady and Stephens 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.

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

Gulfport Energy Corp’s price-earnings ratio is 1.5 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 Gulfport Energy Corp more attractive for value investors.

Gulfport Energy Corp’s price-to-book ratio is lower than its peers. This could make Gulfport Energy Corp more attractive for value investors when compared to the industry median at 1.34.

You can read more about Gulfport Energy 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.

Mexco Energy Corp’s Value Grade

Value Grade:

Mexco Energy Corporation is an independent oil and gas company. The Company is engaged in the acquisition, exploration, development and production of crude oil, natural gas, condensate, and natural gas liquids (NGLs) located in the United States. The Company owns producing properties and undeveloped acreage in approximately 14 states. It acquires interests in producing and non-producing oil and gas leases from landowners and leaseholders in areas considered favorable for oil and gas exploration, development, and production. In addition, the Company may acquire oil and gas interests by joining in oil and gas drilling prospects generated by third parties. The Company may also employ a combination of the above methods of obtaining producing acreage and prospects. The two primary areas, in which the Company is focused are Delaware Basin located in the Western portion of the Permian Basin, and the Midland Basin located in the Eastern portion of 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.

Mexco Energy Corp has a Value Score of 74, which is considered to be undervalued.

Mexco Energy Corp’s price-earnings ratio is 5.0 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 Mexco Energy Corp less attractive for value investors.

Mexco Energy Corp’s price-to-book ratio is lower than its peers. This could make Mexco Energy Corp more attractive for value investors when compared to the industry median at 1.34.

You can read more about Mexco Energy 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.

Pedevco Corp’s Value Grade

Value Grade:

PEDEVCO Corp. is an oil and gas company focused on the acquisition and development of oil and natural gas assets. The Company's properties are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico (the Permian Basin) and in the Denver-Julesberg Basin (D-J Basin) in Colorado. The Company holds approximately 32,870 net Permian Basin acres located in Chaves and Roosevelt Counties, New Mexico, through its wholly owned operating subsidiary, Pacific Energy Development Corp. (PEDCO), which is referred to as Permian Basin Asset and approximately 11,580 net D-J Basin acres located in Weld and Morgan Counties, Colorado, through its wholly owned operating subsidiary, Red Hawk Petroleum, LLC (Red Hawk), which is referred to as D-J Basin Asset. It holds interests in 381 gross (377 net) wells in its Permian Basin Asset of which 42 are active producers, 16 are active injectors and two are active saltwater disposal wells, all of which are held by PEDCO.

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.

Pedevco Corp has a Value Score of 61, which is considered to be undervalued.

Pedevco Corp’s price-earnings ratio is 23.4 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 Pedevco Corp less attractive for value investors.

Pedevco Corp’s price-to-book ratio is higher than its peers. This could make Pedevco Corp less attractive for value investors when compared to the industry median at 1.34.

You can read more about Pedevco 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.

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.

• Advantage Energy Ltd stock has a Value Grade of A.
• Civitas Resources Inc stock has a Value Grade of A.
• Gulfport Energy Corp stock has a Value Grade of A.
• Mexco Energy Corp stock has a Value Grade of B.
• Pedevco Corp 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 Wednesday, May 24
• 7 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, May 23
• Why SandRidge Energy Inc’s (SD) Stock Is Down 11.70%
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, May 22

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