8 Most Undervalued Oil Stocks To Buy According To Analysts

04. Riley Exploration Permian, Inc. (NYSE:REPX)

Upside Potential: 61%

Forward Price to Earnings (P/E) ratio: 4.12

Number of Hedge Fund Holders: 17

Riley Exploration Permian, Inc. (NYSE:REPX) is a promising addition to our list of 8 most undervalued Oil stocks to buy according to analysts, with a forward P/E ratio of just 4.12 as of October 14, 2024. The stock offers an attractive upside potential of 61%, with a target price of $47.17 compared to the current share price of $29.23. As an independent oil and gas producer, Riley focuses on high-potential areas in Texas and New Mexico, specifically the Northwest Shelf and Yeso trend of the Permian Basin.

Riley Exploration Permian, Inc. (NYSE:REPX) recent Q2 2024 earnings highlight several key strengths that make it a compelling undervalued play. The company reported free cash flow of $38 million for the quarter and $62 million year-to-date, showcasing robust financial health. Over the last 12 months, free cash flow reached $126 million, reflecting Riley Exploration Permian, Inc. (NYSE:REPX) efficient operations and cash management strategies. This cash flow performance was further boosted by reduced lease operating expenses of $8.50 per barrel of oil equivalent (Boe), down by $0.50 from the prior quarter.

In addition to operational efficiency, Riley Exploration Permian, Inc. (NYSE:REPX) completed a strategic $18.1 million acquisition in Eddy County, New Mexico, enhancing its production portfolio. The company achieved total equivalent production of 21.3 MBoe per day, a 5% increase quarter-over-quarter, with oil production rising 4%. The outlook remains strong, with management forecasting a 13% increase in oil production for the year and over 20% reduction in spending, positioning the company for sustainable growth.

Riley Exploration Permian, Inc. (NYSE:REPX) has also been actively managing its debt, reducing it by $75 million over the past year and lowering its credit facility utilization from 66% to 43%. With an adjusted EBITDAX margin improving to 70% and a consistent dividend payout—marking its 22nd consecutive quarter—Riley is balancing growth with shareholder returns.

Despite some challenges, including softer natural gas prices and midstream fees, Riley Exploration Permian, Inc. (NYSE:REPX) ability to control costs and secure favorable service pricing indicates operational resilience. The company’s forward-looking plans, including expanding its joint venture to generate electricity for ERCOT, add further growth opportunities. With a solid financial foundation and an undervalued stock price, Riley Exploration Permian, Inc. (NYSE:REPX) offers a compelling investment case.