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, September 19, 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 78, which is considered to be undervalued.

When you look at APA Corp (US)’s price-to-sales ratio at 1.44 compared to the industry median at 1.86, 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 9.07 compared to the industry median at 6.20. 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 3.3, when compared to the industry median of 3.6, 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. APA Corp (US)’s shareholder yield is higher than its industry median ratio of 1.34%. 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 1.43. 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 6.31. 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.

Eca Marcellus Trust I’s Value Grade

Value Grade:

ECA Marcellus Trust I (the Trust) is a statutory trust. The Trust does not conduct any operations or activities. The Trust owns royalty interests in approximately 14 Producing Wells and royalty interests in over 52 horizontal natural gas development wells to be drilled to the Marcellus Shale formation (the PUD Wells) within the area of mutual interest (AMI), in which ECA holds approximately 9,300 acres, of which it owned all of the working interests, in Greene County, Pennsylvania. The Trust also holds royalty interests in over 40 development wells that are in production. The Trust subsidiaries include Greylock Production, LLC (Greylock Production), which serves as operator of the subject wells, and Greylock Midstream, LLC (Greylock Midstream), whose subsidiaries market and gather certain of the gas. The Bank of New York Mellon Trust Company, N.A. serves as Trustee.

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.

Eca Marcellus Trust I has a Value Score of 96, which is considered to be undervalued.

Eca Marcellus Trust I’s price-earnings ratio is 2.2 compared to the industry median at 6.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Eca Marcellus Trust I more attractive for value investors.

Eca Marcellus Trust I’s price-to-book ratio is higher than its peers. This could make Eca Marcellus Trust I less attractive for value investors when compared to the industry median at 1.43.

You can read more about Eca Marcellus Trust I’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.

VAALCO Energy, Inc.’s Value Grade

Value Grade:

VAALCO Energy, Inc. is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil, natural gas and natural gas liquids. The Company?s segments include segments Gabon and Equatorial Guinea. It holds 58.8% participating interest in the Etame Marin block, located offshore Gabon in West Africa. The Etame Marin block covers an area of approximately 46,200 gross acres located 20 miles offshore in water depths of approximately 250 feet. The operations of all segments include exploration for and production of hydrocarbons where commercial reserves have been found and developed. The Company owns an interest in an undeveloped block offshore Equatorial Guinea, West Africa. The Company conducts its operating activities in Egypt, Canada, and offshore Gabon. In Egypt, its interests are spread across two regions: the Eastern Desert, which contains the West Gharib, West Bakr and Northwest Gharib merged concessions, and the Western Desert.

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.

VAALCO Energy, Inc. has a Value Score of 62, which is considered to be undervalued.

VAALCO Energy, Inc.’s price-earnings ratio is 11.3 compared to the industry median at 6.2. This means that it has a higher price relative to its earnings compared to its peers. This makes VAALCO Energy, Inc. less attractive for value investors.

VAALCO Energy, Inc.’s price-to-book ratio is higher than its peers. This could make VAALCO Energy, Inc. less attractive for value investors when compared to the industry median at 1.43.

You can read more about VAALCO 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.

Matador Resources Co’s Value Grade

Value Grade:

Matador Resources Company is an independent energy company. The Company is engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company operates through two business segments: exploration and production and midstream. The exploration and production segment is engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States and is focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The midstream segment conducts midstream operations in support of its exploration, development and production operations and provides natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties.

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.

Matador Resources Co has a Value Score of 71, which is considered to be undervalued.

Matador Resources Co’s price-earnings ratio is 8.0 compared to the industry median at 6.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Matador Resources Co less attractive for value investors.

Matador Resources Co’s price-to-book ratio is lower than its peers. This could make Matador Resources Co more attractive for value investors when compared to the industry median at 1.43.

You can read more about Matador 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.

Primeenergy Resources Corp’s Value Grade

Value Grade:

PrimeEnergy Resources Corporation is an independent oil and natural gas company engaged in acquiring, developing, and producing oil and natural gas. It owns leasehold, mineral and royalty interests in producing and non-producing oil and gas properties across the United States, primarily in Oklahoma, and Texas. It operates approximately 630 active wells and owns non-operating interests and royalties in approximately 800 additional wells. It provides well-servicing support operations, site-preparation and construction services for oil and gas drilling and reworking operations, both in connection with its activities and providing contract services for third parties. It maintains an acreage position of approximately 16,940 gross acres in the Permian Basin of West Texas and eastern New Mexico, which is located in Reagan, Upton, Martin, and Midland counties. In Oklahoma, it is focused on the development of its reserves in Canadian, Grady, Kingfisher, Garfield, Major, and Garvin 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.

Primeenergy Resources Corp has a Value Score of 80, which is considered to be undervalued.

Primeenergy Resources Corp’s price-earnings ratio is 8.3 compared to the industry median at 6.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Primeenergy Resources Corp less attractive for value investors.

Primeenergy Resources Corp’s price-to-book ratio is lower than its peers. This could make Primeenergy Resources Corp more attractive for value investors when compared to the industry median at 1.43.

You can read more about Primeenergy Resources 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.

SilverBow Resources Inc’s Value Grade

Value Grade:

SilverBow Resources, Inc. is an independent oil and gas company. The Company is focused on acquiring and developing assets in the Eagle Ford Shale and Austin Chalk located in South Texas where it has assembled approximately 180,000 net acres across five operating areas. It designs and manages the development of a well and supervises operation and maintenance activities on a day-to-day basis. Its operating areas include Webb County Gas, Western Condensate, Southern Eagle Ford, Central Oil and Eastern Extension. It has a gas gathering agreements with Howard Energy Partners providing for the transportation of its Eagle Ford and Austin Chalk production on the pipeline from its Fasken, Rio Bravo, La Mesa and Northern Webb areas to the Kinder Morgan Texas Pipeline, Eagle Ford Midstream or Howard's Impulsora Pipeline. It has gas processing and gathering agreements with Targa Resources Corp. and DCP South Central Texas, LLC for a majority of its natural gas production in the AWP area.

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.

SilverBow Resources Inc has a Value Score of 85, which is considered to be undervalued.

SilverBow Resources Inc’s price-earnings ratio is 1.9 compared to the industry median at 6.2. This means that it has a lower price relative to its earnings compared to its peers. This makes SilverBow Resources Inc more attractive for value investors.

SilverBow Resources Inc’s price-to-book ratio is higher than its peers. This could make SilverBow Resources Inc less attractive for value investors when compared to the industry median at 1.43.

You can read more about SilverBow 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.

U.S. Energy Corp.’s Value Grade

Value Grade:

U.S. Energy Corp. is an independent energy company. It is focused on the acquisition and development of oil and natural gas producing properties in the continental United States. Its properties and operations are in the Rockies region (Montana, Wyoming and North Dakota), the Mid-Continent (Oklahoma, Kansas and North and East Texas), West Texas, South Texas and Gulf Coast regions. It participates in oil and natural gas projects as both a non-operating working interest owner through exploration and development agreements with various oil and natural gas exploration and production companies and as an operator. It is also pursuing potential acquisitions of exploration, development and production-stage oil and natural gas properties or companies. It owns working interests in a geographically and geologically diverse portfolio of oil-weighted prospects in varying stages of exploration and development. Its oil and natural gas leases covered over 314,550 gross acres and 170,196 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.

U.S. Energy Corp. has a Value Score of 92, which is considered to be undervalued.

U.S. Energy Corp.’s price-to-book ratio is higher than its peers. This could make U.S. Energy Corp. less attractive for value investors when compared to the industry median at 1.43.

You can read more about U.S. 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.

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 B.
• Eca Marcellus Trust I stock has a Value Grade of A.
• VAALCO Energy, Inc. stock has a Value Grade of B.
• Matador Resources Co stock has a Value Grade of B.
• Primeenergy Resources Corp stock has a Value Grade of B.
• SilverBow Resources Inc stock has a Value Grade of A.
• U.S. Energy Corp. 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, September 19
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, September 18
• Why Permian Basin Royalty Trust’s (PBT) Stock Is Up 5.23%
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, September 15

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