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 Wednesday, November 08, 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.

Battalion Oil Corp’s Value Grade

Value Grade:

Battalion Oil Corporation is an independent energy company. The Company is engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States. The Company?s principal properties consist of leasehold interests in developed and undeveloped oil and natural gas properties and the reserves associated with these properties. The Company owns interests in developed and undeveloped oil and natural gas acreage in Texas locations. The Company?s working interests in approximately 40,375 net acres in the Delaware Basin in Pecos, Reeves, Ward and Winkler Counties, Texas. The Company has approximately 103 operated wells producing in this area in addition to minor working interests in 13 non-operated 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.

Battalion Oil Corp has a Value Score of 96, which is considered to be undervalued.

When you look at Battalion Oil Corp’s price-to-sales ratio at 0.34 compared to the industry median at 1.84, this company has a lower price relative to revenue compared to its peers. This could make Battalion Oil Corp’s stock more attractive for value investors.

Battalion Oil Corp’s price-earnings ratio is 0.87 compared to the industry median at 6.23. This means it has a lower share price relative to earnings compared to its peers. This could make Battalion Oil Corp more attractive for value investors.

Now, let’s assess Battalion Oil Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 2.2, when compared to the industry median of 4.2, 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. Battalion Oil Corp’s shareholder yield is lower than its industry median ratio of 0.71%. 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. Battalion Oil Corp’s price-to-book ratio is lower than its industry median ratio of 1.33. This could make Battalion Oil Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Battalion Oil Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Battalion Oil Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 7.18. This could make Battalion Oil Corp more attractive because the lower P/FCF ratio indicates that Battalion Oil 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.

Devon Energy Corp’s Value Grade

Value Grade:

Devon Energy Corporation is an independent energy company. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas and natural gas liquids. The Company?s oil and gas properties include the Delaware Basin, Anadarko Basin, Williston Basin, Eagle Ford, and Powder River Basin. The Delaware Basin operates approximately 16 rigs that offer exploration and development opportunities from geologic reservoirs, including the Wolfcamp, Bone Spring, Avalon, and Delaware formations. The Company's Anadarko Basin is located primarily in Oklahoma?s Canadian, Kingfisher and Blaine counties. It operates approximately four rig programs associated with this joint venture. The Williston Basin is located on the Fort Berthold Indian Reservation in North Dakota, and its operations are focused on the oil-prone Bakken and Three Forks formations. The Eagle Ford operations are located in Texas DeWitt and Karnes 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.

Devon Energy Corp has a Value Score of 75, which is considered to be undervalued.

Devon Energy Corp’s price-earnings ratio is 6.2 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 Devon Energy Corp fairly attractive for value investors.

Devon Energy Corp’s price-to-book ratio is lower than its peers. This could make Devon Energy Corp more attractive for value investors when compared to the industry median at 1.33.

You can read more about Devon 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.

EOG Resources Inc’s Value Grade

Value Grade:

EOG Resources, Inc. (EOG) is an independent (non-integrated) crude oil and natural gas company. The Company is engaged in exploration, development, production and marketing crude oil, natural gas liquids (NGLs) and natural gas primarily in producing basins in the United States of America, The Republic of Trinidad and Tobago (Trinidad), the Sultanate of Oman and other international areas. Its operations are all crude oil, NGLs and natural gas exploration and production related. Its operations are focused on the productive basins in the United States with a focus on crude oil and, to a lesser extent, liquids-rich natural gas plays. The Company has operations in offshore Trinidad and Oman, as well as it is executing an abandonment and reclamation program in Canada.

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.

EOG Resources Inc has a Value Score of 64, which is considered to be undervalued.

EOG Resources Inc’s price-earnings ratio is 9.1 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 EOG Resources Inc less attractive for value investors.

EOG Resources Inc’s price-to-book ratio is lower than its peers. This could make EOG Resources Inc more attractive for value investors when compared to the industry median at 1.33.

You can read more about EOG 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 95, which is considered to be undervalued.

Gulfport Energy Corp’s price-earnings ratio is 1.4 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 Gulfport Energy Corp more attractive for value investors.

Gulfport Energy Corp’s price-to-book ratio is higher than its peers. This could make Gulfport Energy Corp less attractive for value investors when compared to the industry median at 1.33.

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.

Obsidian Energy Ltd’s Value Grade

Value Grade:

Obsidian Energy Ltd. is a Canada-based exploration and production company. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. It has a portfolio of assets producing around 32,000 barrels of oil equivalent (boe) per day. Its operating areas include Cardium, Peace River and Viking areas of Alberta. Its Cardium asset is a fully delineated and de-risked asset. It is focused on manufacturing repeatable low-decline and high-netback light-oil wells across its Cardium land base. The Viking is a light oil, horizontal development play located in central Alberta. Its operations are focused in the Esther area. Peace River is a stable, cold-flow, base production asset. It operates on a contiguous and an acreage within the heart of the Peace River Oilsands region.

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.

Obsidian Energy Ltd has a Value Score of 95, which is considered to be undervalued.

Obsidian Energy Ltd’s price-earnings ratio is 1.3 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 Obsidian Energy Ltd more attractive for value investors.

Obsidian Energy Ltd’s price-to-book ratio is higher than its peers. This could make Obsidian Energy Ltd less attractive for value investors when compared to the industry median at 1.33.

You can read more about Obsidian Energy Ltd’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.

Range Resources Corp’s Value Grade

Value Grade:

Range Resources Corporation is an independent natural gas and natural gas liquids producer with operations focused on projects in the Appalachian Basin. It is engaged in the exploration, development and acquisition of natural gas and oil properties in the United States. Its principal area of operations is the Marcellus Shale in Pennsylvania. Its natural gas and oil operations are concentrated in the Appalachian region of the United States, in the Marcellus Shale in Pennsylvania. Its properties consist of interests in developed and undeveloped natural gas and oil leases. It owns over 1,428 net producing wells in Pennsylvania. Its reserves are primarily in the Marcellus Shale formation but also include the Utica and Upper Devonian formations. It has approximately 894,000 gross acres under lease. Its subsidiaries include Range Resources-Appalachia, LLC, Range Resources-Pine Mountain, LLC, Range Production Company, LLC, Range Resources-Midcontinent, LLC and Range Resources-Louisiana, Inc.

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.

Range Resources Corp has a Value Score of 64, which is considered to be undervalued.

Range Resources Corp’s price-earnings ratio is 6.1 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 Range Resources Corp more attractive for value investors.

Range Resources Corp’s price-to-book ratio is lower than its peers. This could make Range Resources Corp more attractive for value investors when compared to the industry median at 1.33.

You can read more about Range 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.

Southwestern Energy Co’s Value Grade

Value Grade:

Southwestern Energy Company is an independent energy company. The Company operates through two segments: Exploration and Production (E&P;) and Marketing. It is engaged in the business of exploration and production of natural gas as well as associated natural gas liquids (NGLs) and oil in its core positions in the Appalachia and Haynesville natural gas basins in the United States. It is focused on the development of unconventional natural gas reservoirs located in Pennsylvania, West Virginia, Ohio and Louisiana. Its operations in Pennsylvania, West Virginia and Ohio (Appalachia) are primarily focused on the Marcellus Shale, the Utica and the Upper Devonian unconventional natural gas and liquids reservoirs. Its operations in Louisiana (Haynesville) are focused on the Haynesville and Bossier natural gas reservoirs. It operates a fleet of drilling rigs and has leased two pressure pumping spreads with a total capacity of 69,000 horsepower along with additional supporting pump down equipment.

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.

Southwestern Energy Co has a Value Score of 89, which is considered to be undervalued.

Southwestern Energy Co’s price-earnings ratio is 1.5 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 Southwestern Energy Co more attractive for value investors.

Southwestern Energy Co’s price-to-book ratio is higher than its peers. This could make Southwestern Energy Co less attractive for value investors when compared to the industry median at 1.33.

You can read more about Southwestern Energy 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.

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.

• Battalion Oil Corp stock has a Value Grade of A.
• Devon Energy Corp stock has a Value Grade of B.
• EOG Resources Inc stock has a Value Grade of B.
• Gulfport Energy Corp stock has a Value Grade of A.
• Obsidian Energy Ltd stock has a Value Grade of A.
• Range Resources Corp stock has a Value Grade of B.
• Southwestern Energy Co 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 Wednesday, November 08
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, November 07
• Why Amplify Energy Corp’s (AMPY) Stock Is Down 6.08%
• Why Antero Resources Corp’s (AR) Stock Is Down 4.21%

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