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 Monday, October 16, 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.

Petrolia Energy Corp’s Value Grade

Value Grade:

Petrolia Energy Corporation is engaged in oil and gas exploration, development, and production. The Company's Slick Unit Dutcher Sand (SUDS) field is located in Creek County, Oklahoma. It is approximately 1,670 acres and the SUDS East unit is approximately 860 acres. Its Twin Lakes San Andres Unit (TLSAU) field is located in Chaves County, New Mexico. The Company has a 25% working interest in approximately 41,526 acres in the Luseland, Hearts Hill, and Cuthbert fields, located in Southwest Saskatchewan and Eastern Alberta, Canada. The Company has a 50% working interest in approximately 28,000 acres located in the Utikuma Lake area in Alberta, Canada. The property is an oil-weighted asset producing a total of approximately 500 Barrels Per Day (bpd) of light oil. The Company's subsidiary, Askarii Resources LLC, is a private Texas-based oil and gas service company.

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.

Petrolia Energy Corp has a Value Score of 95, which is considered to be undervalued.

When you look at Petrolia Energy Corp’s price-to-sales ratio at 0.09 compared to the industry median at 1.88, this company has a lower price relative to revenue compared to its peers. This could make Petrolia Energy Corp’s stock more attractive for value investors.

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. Petrolia Energy Corp’s shareholder yield is lower than its industry median ratio of 1.26%. 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.

Lastly, let’s take a look at Petrolia 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. Petrolia Energy Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 6.39. This could make Petrolia Energy Corp more attractive because the lower P/FCF ratio indicates that Petrolia 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.

BP Prudhoe Bay Royalty Trust’s Value Grade

Value Grade:

BP Prudhoe Bay Royalty Trust is a grantor trust. The property of the Trust consists of an overriding royalty interest (the Royalty Interest), and cash and cash equivalents held by the Trustee from time to time. The Royalty Interest entitles the Trust to a royalty on approximately 16.4246% of the lesser of the first 90,000 barrels of the average actual daily net production of crude oil and condensate per quarter from the working interest of Hilcorp North Slope, LLC (HNS) in the Prudhoe Bay oil field located on the North Slope in Alaska or the average actual daily net production of crude oil and condensate per quarter from that working interest. The Prudhoe Bay field is one of four contiguous North Slope oil fields that are operated by HNS and are known collectively as the Prudhoe Bay Unit. The trustees of the Trust are The Bank of New York Mellon Trust Company, N.A and BNY Mellon Trust of Delaware, a Delaware banking corporation.

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.

BP Prudhoe Bay Royalty Trust has a Value Score of 70, which is considered to be undervalued.

BP Prudhoe Bay Royalty Trust’s price-earnings ratio is 2.3 compared to the industry median at 5.9. This means that it has a lower price relative to its earnings compared to its peers. This makes BP Prudhoe Bay Royalty Trust more attractive for value investors.

BP Prudhoe Bay Royalty Trust’s price-to-book ratio is lower than its peers. This could make BP Prudhoe Bay Royalty Trust more attractive for value investors when compared to the industry median at 1.46.

You can read more about BP Prudhoe Bay Royalty Trust’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.

North European Oil Royalty Trust’s Value Grade

Value Grade:

North European Oil Royalty Trust (the Trust) is a grantor trust which, on behalf of the owners of units of beneficial interest in the Trust (the unit owners), holds overriding royalty rights covering gas and oil production in certain concessions or leases in the Federal Republic of Germany. The rights are held under contracts with local German exploration and development subsidiaries of ExxonMobil Corp. (ExxonMobil) and the Royal Dutch/Shell Group of Companies (Royal Dutch/Shell Group). Under these contracts, the Trust receives various percentage royalties on the proceeds of the sales of certain products from the areas involved. Its royalties are received for sales of gas well gas, oil well gas, crude oil, condensate and sulfur. The Trust conducts no active business operations and is restricted to collection of income from royalty rights and distribution to unit owners of the net income after payment of administrative and related expenses.

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.

North European Oil Royalty Trust has a Value Score of 64, which is considered to be undervalued.

North European Oil Royalty Trust’s price-earnings ratio is 3.7 compared to the industry median at 5.9. This means that it has a lower price relative to its earnings compared to its peers. This makes North European Oil Royalty Trust more attractive for value investors.

North European Oil Royalty Trust’s price-to-book ratio is lower than its peers. This could make North European Oil Royalty Trust more attractive for value investors when compared to the industry median at 1.46.

You can read more about North European Oil Royalty Trust’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 81, which is considered to be undervalued.

Primeenergy Resources Corp’s price-earnings ratio is 7.6 compared to the industry median at 5.9. 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 higher than its peers. This could make Primeenergy Resources Corp less attractive for value investors when compared to the industry median at 1.46.

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.

Viper Energy Partners LP’s Value Grade

Value Grade:

Viper Energy Partners LP owns, acquires, and exploits oil and natural gas properties in North America. The Company is focused on owning and acquiring mineral and royalty interests in oil-weighted basins, primarily the Permian Basin. The Permian Basin consists of approximately 75,000 square miles centered around Midland, Texas. The Company?s assets consist of mineral and royalty interests underlying 775,180 gross acres and 26,315 net royalty acres in the Permian Basin. The estimated proved oil and natural gas reserves of its assets are approximately 148,900 thousand barrels of crude oil equivalent (MBOE). Of these reserves, approximately 72% were classified as proved developed producing reserves. The Company's proved undeveloped reserves include approximately 525 gross horizontal well locations. Its proved reserves include approximately 53% oil, 23% natural gas liquids and 24% natural gas.

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.

Viper Energy Partners LP has a Value Score of 67, which is considered to be undervalued.

Viper Energy Partners LP’s price-earnings ratio is 13.0 compared to the industry median at 5.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Viper Energy Partners LP less attractive for value investors.

Viper Energy Partners LP’s price-to-book ratio is lower than its peers. This could make Viper Energy Partners LP more attractive for value investors when compared to the industry median at 1.46.

You can read more about Viper Energy Partners LP’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.

• Petrolia Energy Corp stock has a Value Grade of A.
• BP Prudhoe Bay Royalty Trust stock has a Value Grade of B.
• North European Oil Royalty Trust stock has a Value Grade of B.
• Primeenergy Resources Corp stock has a Value Grade of A.
• Viper Energy Partners LP 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 Monday, October 16
• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, October 13
• Is Vista Energy SAB de CV - ADR (VIST) Stock a Good Investment?
• Which Is a Better Investment, Antero Resources Corp or Vista Energy SAB de CV - ADR Stock?

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