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 Monday, June 05, 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.

Chord Energy Corp’s Value Grade

Value Grade:

Chord Energy Corporation is an independent exploration and production company with assets in the North Dakota and Montana regions of the Williston Basin. The Company produces and markets crude oil, natural gas liquids (NGLs) and natural gas. It has approximately 963,009 net leasehold acres in the Williston Basin, of which approximately 99% is held by production. It focuses on the Middle Bakken and Three Forks formations, which are present across a substantial portion of its acreage. It has approximately 3,583 gross (2,742.8 net) operating producing wells, including 2,558.6 net operated producing wells in the Williston Basin. Its working interest for producing wells averaged 46% in total and 77% in the wells it operates. The Company has an average daily production of 119,785 net barrels of oil equivalent per day (Boepd), including average daily production of 171,880 net Boepd with crude oil production of approximately 95,992 barrels of oil per day (Bopd).

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.

Chord Energy Corp has a Value Score of 70, which is considered to be undervalued.

When you look at Chord Energy Corp’s price-to-sales ratio at 1.60 compared to the industry median at 1.58, this company has a higher price relative to revenue compared to its peers. This could make Chord Energy Corp’s stock less attractive for value investors.

Chord Energy Corp’s price-earnings ratio is 3.43 compared to the industry median at 4.66. This means it has a lower share price relative to earnings compared to its peers. This could make Chord Energy Corp more attractive for value investors.

Now, let’s assess Chord Energy Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 2.6, when compared to the industry median of 2.9, 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. Chord Energy Corp’s shareholder yield is lower than its industry median ratio of 0.35%. 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. Chord Energy Corp’s price-to-book ratio is lower than its industry median ratio of 1.36. This could make Chord Energy Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Chord Energy Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Chord Energy Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 5.24. This could make Chord Energy Corp less attractive because the higher P/FCF ratio indicates that Chord Energy Corp 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.

Crescent Point Energy Corp’s Value Grade

Value Grade:

Crescent Point Energy Corp. is a Canada-based oil and gas exploration company. The Company is focused on the development of oil resource plays based in Calgary, Alberta. Its crude oil and natural gas properties and related assets are located in the provinces of Saskatchewan, Alberta and the United States. Its operating areas include Viewfield area of southeastern Saskatchewan; Shaunavon resource play, which is located in southwest Saskatchewan; North Dakota assets, which are primarily located in Williams County focused on the development of the Bakken and Three Forks formations; Flat Lake play, which is a multi-zone resource play located in southeast Saskatchewan and is an extension of the Three Forks play in North Dakota, and Kaybob Duvernay play, which is situated in the heart of the condensate rich fairway, Central Alberta. Its wholly owned subsidiaries include Crescent Point Resources Partnership, Crescent Point Holdings Ltd. and Crescent Point U.S. Holdings Corp.

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.

Crescent Point Energy Corp has a Value Score of 98, which is considered to be undervalued.

Crescent Point Energy Corp’s price-earnings ratio is 7.5 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 Crescent Point Energy Corp less attractive for value investors.

Crescent Point Energy Corp’s price-to-book ratio is higher than its peers. This could make Crescent Point Energy Corp less attractive for value investors when compared to the industry median at 1.36.

You can read more about Crescent Point 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.

Magnolia Oil & Gas Corp’s Value Grade

Value Grade:

Magnolia Oil & Gas Corporation is an independent oil and natural gas company. The Company is engaged in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquid (NGL) reserves. Its oil and natural gas properties are located primarily in Karnes County and the Giddings area in South Texas, where the Company targets the Eagle Ford Shale and Austin Chalk formations. Its assets consist of a total leasehold position of 688,033 gross (482,015 net) acres, including 43,022 gross (23,259 net) acres in the Karnes area and 645,011 gross (458,756 net) acres in the Giddings area. The Karnes County Assets are located in Karnes, Gonzales, DeWitt, and Atascosa Counties, Texas, in the core of the Eagle Ford Shale. The acreage comprising the Karnes County Assets also includes the Austin Chalk formation overlying the Eagle Ford Shale. The Giddings Assets are located in Austin, Brazos, Burleson, Fayette, Lee, Grimes, Montgomery, and Washington Counties, 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.

Magnolia Oil & Gas Corp has a Value Score of 67, which is considered to be undervalued.

Magnolia Oil & Gas Corp’s price-earnings ratio is 4.7 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 Magnolia Oil & Gas Corp fairly attractive for value investors.

Magnolia Oil & Gas Corp’s price-to-book ratio is lower than its peers. This could make Magnolia Oil & Gas Corp more attractive for value investors when compared to the industry median at 1.36.

You can read more about Magnolia Oil & Gas 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.

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 1.36.

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.

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.

• Chord Energy Corp stock has a Value Grade of B.
• Crescent Point Energy Corp stock has a Value Grade of A.
• Magnolia Oil & Gas Corp stock has a Value Grade of B.
• Ranger Oil Corp stock has a Value Grade of A.

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 Monday, June 05
• 7 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, June 02
• Why Antero Resources Corp’s (AR) Stock Is Up 5.75%
• Why Berry Corporation (Bry)’s (BRY) Stock Is Up 7.38%

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