On March 18, Tortoise Capital senior portfolio manager Rob Thummel appeared on CNBC’s ‘Squawk on the Street’ to discuss his outlook on the energy sector. He believes that natural gas is positioned to lead growth in the future within the energy sector. This natural gas demand is driven by electricity and energy exports. Thummel noted that the energy and tech sectors are converging due to advancements like AI and data centers. Electricity demand fuels natural gas consumption, while US energy exports help meet global needs for low-cost and low-carbon energy. He also highlighted that the US is now emerging as the largest exporter of LNG, even though it was an LNG importer just years ago. He anticipates that the US LNG exports will soon 2x in volume over time. Thummel also expects Europe and other countries to prioritize energy security and diversify their supply sources. This will ensure reliance on US energy exports.
Thummel emphasized a focus on energy infrastructure companies while discussing his specific investment strategies as they tend to be stable and have high dividend yields even in uncertain market conditions. He thinks that the certainty provided by energy infrastructure investments in an otherwise volatile market should not be neglected. Such companies generate substantial annual cash flows while maintaining disciplined financial practices.
Thummel thinks that the energy sector trades at a discount to historical valuations despite its fundamentals. This offers the potential for high returns. With that being said, we’re here with a list of the 11 best undervalued energy stocks to invest in now.
A vast oil and gas rig silhouetted in the sunset, capturing the power of Swift Energy Company.
Our Methodology
We used the Finviz stock screener to compile a list of the top energy stocks that had a forward P/E ratio under 15 as of April 10. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11 Best Undervalued Energy Stocks to Invest in Now
11. Shell (NYSE:SHEL)
Forward P/E Ratio as of April 10: 8.23
Number of Hedge Fund Holders: 54
Shell (NYSE:SHEL) is an energy and petrochemical company that operates through Integrated Gas, Upstream, Marketing, Chemicals & Products, and Renewables & Energy Solutions segments. It explores and extracts crude oil and natural gas liquids, along with natural gas to produce liquefied natural gas or convert it into gas-to-liquid products, and operates upstream and midstream infrastructure to deliver gas to market.
The company’s Integrated Gas segment has a strong emphasis on LNG. The total sales volumes for LNG reached 15.5 million tonnes in 2024, with liquefaction volumes at 7.1 million tonnes. Shell (NYSE:SHEL) is expanding its global presence in LNG infrastructure with projects like LNG Canada and Prelude FLNG.
In February, the company awarded a $70 million contract to Noble for the use of its semi-submersible rig, called Noble Developer, in the Americas. This 180-day contract included mobilization and demobilization and is expected to commence in Q3 2026. Instances like the Pavilion acquisition and the Ruwais LNG project in Abu Dhabi also highlight the company’s commitment to making expansions in the global LNG market.
10. Canadian Natural Resources Ltd. (NYSE:CNQ)
Forward P/E Ratio as of April 10: 11.65
Number of Hedge Fund Holders: 54
Canadian Natural Resources Ltd. (NYSE:CNQ) acquires, explores, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids in Western Canada, the UK sector of the North Sea, and Offshore Africa. It offers light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil), and synthetic crude oil (SCO).
In 2024, the company’s Oil Sands Mining & Upgrading segment achieved a record annual production of 472,245 barrels per day. The company’s acquisitions boosted the value of this segment’s assets. Notably, the acquisition of an additional working interest in the Albion Mines will consolidate 100% ownership and add ~93,500 barrels per day of long-life and zero-decline production. It’s targeted for completion by Q2 2025,
Since acquiring an initial interest in these assets in 2017, Canadian Natural Resources Ltd. (NYSE:CNQ) has focused on optimization. This resulted in a 30% increase in production at Albion Mines, which equated to 70,000+ barrels per day. The company also achieved a 30% reduction in per-unit operating costs, which translated to ~$10 per barrel savings and an incremental margin of $800 million based on 2024 production.
9. Devon Energy Corp. (NYSE:DVN)
Forward P/E Ratio as of April 10: 6.85
Number of Hedge Fund Holders: 55
Devon Energy Corp. (NYSE:DVN) explores, develops, and produces oil, natural gas, and natural gas liquids. It operates in the Delaware Basin located in southeast New Mexico and west Texas, Eagle Ford located in North America, Anadarko Basin located in western Oklahoma, Williston Basin located in North Dakota, and Powder River Basin located in Wyoming.
The company is enhancing its Eagle Ford position to maximize returns and drive growth. It recently finalized an agreement with BPX to dissolve its partnership in the Blackhawk field, which consolidates the company’s control over ~46,000 net acres in DeWitt County. The Eagle Ford asset holds about 550 of the company’s 700 remaining undrilled locations.
The venture was dissolved because of the anticipated reduction in D&C costs by over $2 million per well. Devon Energy Corp.’s (NYSE:DVN) Q4 2024 production outperformance was also driven by the timing and productivity of its Eagle Ford wells. The 2025 outlook emphasizes Eagle Ford’s importance, with a projected production of 383,000 BOE per day, while the overall company target for the year stands at 815,000 BOE per day.
8. TechnipFMC (NYSE:FTI)
Forward P/E Ratio as of April 10: 12.59
Number of Hedge Fund Holders: 56
TechnipFMC (NYSE:FTI) engages in energy projects, technologies, systems, and services businesses. It has two segments: Subsea and Surface Technologies. It mainly offers the design, engineering, procurement, manufacturing, fabrication, installation, and life of field services for subsea systems, subsea field infrastructure, and subsea pipeline systems which are used in oil & natural gas production and transportation.
In 2024, Subsea inbound orders reached $10.4 billion, which marked the 4th consecutive year with a book-to-bill ratio greater than one. The Subsea segment benefits from the company’s integrated model, iEPCI, and its configurable product architecture, Subsea 2.0. iEPCI orders grew ~25% year-over-year due to client projects across 6 offshore basins. Subsea 2.0 also saw adoption, with Subsea 2.03 orders outpacing total Subsea 3 awards by over 50% year-over-year. This product enables increased manufacturing capacity without additional capital expenditures.
Subsea revenue grew 22% year-over-year in 2024. For 2025, TechnipFMC (NYSE:FTI) anticipates Subsea revenue to reach $8.6 billion, which represents a 10% growth. With $20.2 billion in Subsea orders secured in the past two years, the company is confident in exceeding $10 billion of inbound orders in the current year.
7. EOG Resources Inc. (NYSE:EOG)
Forward P/E Ratio as of April 10: 10.56
Number of Hedge Fund Holders: 62
EOG Resources Inc. (NYSE:EOG) explores, develops, produces, and markets crude oil, natural gas liquids, and natural gas in producing basins in the US, the Republic of Trinidad and Tobago, as well as internationally.
The company is developing its emerging South Texas Dorado dry natural gas play. This is a low-cost natural gas asset that is being developed by the company that aligns with the growing demand in the North American markets, particularly the Texas Gulf Coast LNG sector. In 2024, the company made strides in Dorado and achieved a 15% increase in drilled feet per day and completed lateral feet per day.
For 2025, EOG Resources Inc. (NYSE:EOG) plans to operate one full-time drilling rig in Dorado to capitalize on the asset’s low-cost gas potential. The company’s strategy in Dorado includes its infrastructure development, which features the 36-inch Verde pipeline. This pipeline came into service in Q4 and provides access to Gulf Coast market centers.
6. Antero Resources Corp. (NYSE:AR)
Forward P/E Ratio as of April 10: 10.62
Number of Hedge Fund Holders: 66
Antero Resources Corp. (NYSE:AR) is an independent oil and natural gas company that develops, produces, explores, and acquires natural gas, NGLs, and oil properties in the US. It operates in three segments: Exploration & Production, Marketing, and Equity Method Investment in Antero Midstream.
The company’s Liquids and NGLs marketing segment achieved record differentials and premium pricing in 2024. The company realized a $1.41 per barrel premium over Mont Belvieu for its C3 plus NGLs, which was the highest in the company’s history. This was amplified in Q4, with premiums averaging $3.09 per barrel. For 2025, the company anticipates even higher annual export premiums and projects a range of $1.50 to $2.50 per barrel premium to Mont Belvieu prices for its C3 plus NGLs.
Antero Resources Corp.’s (NYSE:AR) domestic marketing efforts also contribute to its strong pricing. It sells products to key distributors and end-users, which ensures premium pricing. In 2025, the company has notably secured favorable pricing for almost all domestic propane sales and a substantial portion of export sales. A long-term butane contract, which was previously priced at a steep discount, has also been renegotiated to nearly Mont Belvieu flat pricing.
5. Occidental Petroleum Corp. (NYSE:OXY)
Forward P/E Ratio as of April 10: 12.58
Number of Hedge Fund Holders: 68
Occidental Petroleum Corp. (NYSE:OXY) engages in acquiring, exploring, and developing oil and gas properties in the US and internationally. It operates through three segments that include Oil and Gas, Chemical, and Midstream and Marketing.
The company’s Permian Basin operations drive its US oil production and overall growth. In 2024, the company achieved record quarterly US production. This was driven by high operability and improved well performance across the Delaware and Midland Basins within the Permian region. The acquisition of CrownRock also enhanced the company’s scale and high-margin inventory in the Midland Basin.
For 2025, Occidental Petroleum Corp. (NYSE:OXY) expects the Permian Basin to grow with production projected to increase by over 15%. This is attributed to a full year of CrownRock contributions and modest growth across legacy positions. CrownRock assets alone are expected to average over 170,000 BOE per day, which represents more than 5% growth. Over 75% of the company’s oil and gas capital is allocated to its US onshore portfolio, with a substantial portion dedicated to the Permian.
4. Schlumberger (NYSE:SLB)
Forward P/E Ratio as of April 10: 10.31
Number of Hedge Fund Holders: 80
Schlumberger (NYSE:SLB) is an energy company that operates through four divisions: Digital & Integration, Reservoir Performance, Well Construction, and Production Systems. It provides field development & hydrocarbon production, carbon management, and integration of adjacent energy systems, along with other related products and services.
The company’s Digital & Integration segment saw substantial growth in 2024, particularly in its Digital business, which experienced a 20% revenue improvement year-on-year. This was driven by the increasing adoption of digital solutions within the energy sector. Digital revenue reached $2.44 billion in 2024, with contributions from Cloud, AI, and Edge technologies, which grew by ~35%.
In Q4, Digital & Integration revenue was up by 6% sequentially due to a 10% growth in Digital revenue. The general demand for the company’s digital products and services is accelerating as customers use cloud computing, AI, and digital operations for enhanced efficiency and shortened cycle times.
Believing in the company’s long-term potential, Ariel Focus Fund stated the following regarding Schlumberger Limited (NYSE:SLB) in its Q4 2024 investor letter:
“Also in the quarter, we initiated a position in Schlumberger Limited (NYSE:SLB), the largest oilfield services company in the world by revenue. SLB provides equipment, services, and digital tools to help oil and gas producers operate more efficiently, including reservoir characterization, rig and well construction and production enhancement. We believe the company’s scale and technical expertise serves as a key differentiator. Weak near-term demand, an oil glut, falling commodity prices and concerns about future spending amid a global shift to renewable energies presented an attractive entry point. We believe there are tailwinds supporting rising demand over the medium-term, as national oil companies invest in long-cycle projects to grow capacity and address the natural decline of production. Additionally, we expect SLB will continue to evolve their capabilities to help clients with rising energy needs going forward.”
3. Chevron Corp. (NYSE:CVX)
Forward P/E Ratio as of April 10: 12.92
Number of Hedge Fund Holders: 81
Chevron Corp. (NYSE:CVX) engages in integrated energy and chemicals operations and operates in the Upstream and Downstream segments. The Upstream segment explores, develops, and produces crude oil and natural gas. The Downstream segment refines crude oil into petroleum products, markets crude oil, refined products, & lubricants, and manufactures & markets renewable fuels.
In 2024, the company’s Permian Basin operations exceeded expectations with production growth of about 18% compared to the year-ago period, which was another record for Permian production. Over the past 5 years, the company has delivered a CAGR of 16% in the Permian, which has been achieved through optimized pad and drilling designs, as well as completion improvements such as triple frac techniques.
This allows the company to reach these production levels with 40% fewer company-operated rigs than previously planned. Chevron Corp. (NYSE:CVX) now expects Permian production to reach one million barrels of oil equivalent per day in 2025. The Permian portfolio delivers superior returns due to royalty-advantaged acreage across all sub-basins, which contributes to both the top and bottom lines.
2. ConocoPhillips (NYSE:COP)
Forward P/E Ratio as of April 10: 10.98
Number of Hedge Fund Holders: 86
ConocoPhillips (NYSE:COP) explores, produces, transports, and markets crude oil, bitumen, natural gas, LNG, and natural gas liquids. Its segments include Alaska, Lower 48, Canada, Europe, Middle East & North Africa, Asia Pacific, and International. Its portfolio includes unconventional plays, conventional assets, global LNG developments, oil sands assets, and an inventory of global exploration prospects.
The company’s Lower 48 segment delivered a 5% production growth year-over-year for the full year 2024. This contributed to the company’s overall 4% production growth. In Q4, the Lower 48 produced 1,308,000 barrels of oil equivalent per day. By basin, the production breakdown was 833,000 barrels in the Permian, 296,000 barrels in the Eagle Ford, and 151,000 barrels in the Bakken.
The acquisition of Marathon in late November 2024 also enhanced the Lower 48 portfolio and added high-quality and low-cost supply inventory. ConocoPhillips (NYSE:COP) expects to achieve over $1 billion of run-rate synergies by the end of 2025. A substantial portion of this is already reflected in the capital guidance. The company also plans to reduce capital spending in the Lower 48 by ~$1.4 billion.
1. Exxon Mobil Corp. (NYSE:XOM)
Forward P/E Ratio as of April 10: 13.77
Number of Hedge Fund Holders: 104
Exxon Mobil Corp. (NYSE:XOM) manufactures, trades, transports, and sells crude oil, natural gas, petroleum products, petrochemicals, and other specialty products. It’s also pursuing lower-emission and other business opportunities, such as carbon capture and storage, hydrogen, lower-emission fuels, Proxxima systems, carbon materials, and lithium.
The acquisition of Pioneer assets has strengthened the company’s position in the Permian basin. In 2024, the company achieved record production from both its Heritage ExxonMobil assets and the newly acquired Pioneer assets. The combined strength of these assets is projected to yield an average of more than $3 billion per year in synergies. Production is expected to increase from 1.5 million oil-equivalent barrels per day at the end of 2024 to 2.3 million barrels per day by 2030. This represents ~50% growth.
The Permian Basin is a key contributor to Exxon Mobil Corp.’s (NYSE:XOM) overall upstream portfolio, which achieved the highest-ever production from its advantaged assets and the highest liquid production from its overall portfolio in more than 40 years. The company’s focus on low-cost supply, low emissions intensity, and high returns in the Permian ensures that this segment will continue to drive growth.
While we acknowledge the growth potential of Exxon Mobil Corp. (NYSE:XOM), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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