In this article, we will take a look at 8 most undervalued oil stocks to buy according to analysts.
The energy sector is buzzing with change in 2024, creating a mix of exciting opportunities and new challenges for investors. As the world embraces renewable energy sources and oil prices stabilize, the market finds itself at a fascinating crossroads. Oil is no longer the untouchable giant it once was, but it’s far from fading away. Instead, it’s adapting to new realities, with smart investors eyeing undervalued oil stocks that still hold potential amidst this evolving landscape.
Brent crude oil prices are expected to hover around $82 per barrel, slightly up from $81 in 2023. This points to a return to pre-pandemic price levels, thanks to OPEC+ strategically limiting production to maintain supply-demand equilibrium. At the same time, retail gasoline prices should stay stable at around $3.30 per gallon, offering some predictability in fuel costs. Meanwhile, U.S. crude oil production is on the rise, with output expected to jump from 12.9 million barrels per day in 2023 to 13.3 million barrels per day in 2024. All signs indicate that the U.S. is gearing up to remain a key player in the global oil game.
While the U.S. economy is forecasted to grow by 2.6% in 2024, energy companies are under pressure to strike a balance between boosting production and addressing environmental concerns. The world’s demand for energy continues to rise, and geopolitical tensions add another layer of unpredictability to the market. Political unrest in countries like Libya, for instance, has raised concerns about potential disruptions in global oil supply. But even with these uncertainties, the fundamentals of the oil industry remain solid, and analysts believe that strategic production cuts by OPEC+, coupled with strong demand from developing nations, will keep oil stocks attractive.
Interestingly, oil and gas companies are ramping up their investments to meet future demand. A report by the International Energy Forum and S&P Global Commodity Insights suggests that upstream investments will need to grow by $135 billion annually to ensure a stable supply by 2030. With North America and Latin America expected to take the lead in capital expenditures, the industry is witnessing a resurgence in investment activity. Brazil and Guyana, in particular, are emerging as major contributors, reinforcing the importance of the Americas in the global oil supply chain.
Despite the rise of renewable energy, oil remains indispensable for the foreseeable future. The current environment offers a sweet spot for investors looking to take advantage of undervalued oil stocks. While these stocks often carry higher risks due to their smaller market caps, they also come with significant upside potential. As global oil consumption continues to grow, driven by the energy needs of both developed and emerging economies, savvy investors are positioning themselves to benefit from this ongoing demand.
In this dynamic setting, the search for hidden gems in the oil sector becomes even more exciting. The eight undervalued oil stocks highlighted in this article reflect both the resilience of traditional energy markets and the opportunities arising from a changing global landscape. For those looking to navigate the energy transition while still capitalizing on the growth of oil demand, these stocks present an intriguing opportunity.
A rig pumping oil in the midst of a sun-baked desert.
Our Methodology
For this article, we use stock screeners to identify nearly 20 stocks in the oil industry that have a buy or better rating from analysts with a forward Price to Earnings (P/E) ratio of less than 15 and price target above current market price as of October 14, 2024. Next, we narrowed our list to 8 stocks with the highest upside potential. We also mentioned the number of hedge fund holdings for each stock as well. The hedge fund sentiment was taken from Insider Monkey’s Q2 database of 912 hedge funds. The eight undervalued oil stocks are listed in ascending order of their upside potential.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
08. Amplify Energy Corp. (NYSE:AMPY)
Upside Potential: 44%
Forward Price to Earnings (P/E) ratio: 5.14
Number of Hedge Fund Holders: 13
Amplify Energy Corp. (NYSE:AMPY) is an intriguing choice for investors looking at undervalued oil stocks. With a forward P/E ratio of 5.14 as of October 14, the stock appears undervalued compared to industry peers, especially given its upside potential of 44%. Analysts have set a target price of $10, offering a significant increase from its current share price of $6.95.
Based in Houston, Texas, Amplify Energy Corp. (NYSE:AMPY) operates across multiple oil-rich regions in the U.S., including Oklahoma, East Texas, and offshore Southern California. It holds a diverse portfolio of working interests in both producing wells and undeveloped assets, allowing the company to capitalize on market opportunities efficiently. In its Q2 2024 earnings report, Amplify Energy Corp. (NYSE:AMPY) posted solid financial performance, generating $30.7 million in adjusted EBITDA and $9.2 million in free cash flow—both surpassing expectations.
A key factor driving Amplify Energy Corp. (NYSE:AMPY) appeal is its participation in high-return, non-operated development projects, particularly in East Texas and the Eagle Ford. Management has revised its annual guidance upward based on strong operational results and strategic investments. Notably, the company’s Beta development program is a standout. In June, Amplify successfully drilled and brought online the A50 well, which outperformed forecasts by producing over 650 barrels of oil per day, even two months into operation. This well cost $4.2 million to drill, and with current oil prices, management anticipates a quick payback within just four months.
Amplify Energy Corp. (NYSE:AMPY) is also making strides toward operational efficiency. The company is in the final phase of electrification at its Beta platform, which will reduce diesel costs, emissions, and operational risks. These upgrades, slated for completion by the end of 2024, position Amplify for long-term cost savings. Additionally, Amplify Energy Corp. (NYSE:AMPY) partnership in new wells within the Haynesville Shale signals further growth potential in 2025 and beyond.
With prudent capital investments, robust free cash flow, and strategic participation in high-return projects, Amplify Energy Corp. (NYSE:AMPY) presents a compelling value opportunity. The combination of strong financial performance, asset development, and operational efficiencies makes this stock an attractive choice for those seeking to tap into the upside of the energy sector.
07. Civitas Resources, Inc. (NYSE:CIVI)
Upside Potential: 54%
Forward Price to Earnings (P/E) ratio: 5.51
Number of Hedge Fund Holders: 52
Civitas Resources, Inc. (NYSE:CIVI), an exploration and production company, specializes in oil and natural gas operations across the Denver-Julesburg Basin and the broader Rocky Mountain region. As of October 14, the stock stands out with a forward P/E ratio of just 5.51, signaling significant undervaluation. Analysts suggest an upside potential of 54%, with a target price of $82.07 compared to the current price of $53.46—making it a solid candidate for our list of undervalued oil stocks.
In its second-quarter 2024 earnings call, Civitas Resources, Inc. (NYSE:CIVI) reported impressive progress, largely driven by its entry into the Permian Basin, a strategic move that bolstered production to 185,000 barrels of oil equivalent (BOE) per day. This achievement not only diversified its portfolio but also added capital flexibility. The integration of these assets exceeded expectations, with production running ahead of schedule, well costs reduced, and operating costs falling below $9 per BOE.
Operational efficiency is one of Civitas Resources, Inc. (NYSE:CIVI) key strengths. The company reported a 2.5% reduction in cash operating expenses compared to the first quarter, contributing to healthier margins despite weaker natural gas prices. Additionally, the company has reduced well costs by 10% year-to-date in the Midland Basin, boosting returns by 12% and lowering breakeven levels by 7%. These efficiencies extend across basins, with improved service optimization and standardized facilities supporting long-term sustainability.
Civitas Resources, Inc. (NYSE:CIVI) remains committed to shareholder value, having returned $275 million in Q2 through dividends and buybacks. A new $500 million share repurchase plan underscores management’s confidence in the company’s growth prospects. Furthermore, with $900 million in projected free cash flow for the second half of 2024, the company aims to maintain its focus on both shareholder returns and balance sheet strength.
Looking ahead, Civitas Resources, Inc. (NYSE:CIVI) has raised its production forecast and continues to target high-quality development areas. With a proven track record of operational excellence and a compelling valuation compared to peers, Civitas Resources, Inc. (NYSE:CIVI) is well-positioned to deliver robust returns, making it a strong pick among undervalued oil stocks.
06. Borr Drilling Limited (NYSE:BORR)
Upside Potential: 59%
Forward Price to Earnings (P/E) ratio: 5.64
Number of Hedge Fund Holders: 11
Borr Drilling Limited (NYSE:BORR) stands out as an attractive buy among undervalued oil stocks, offering a unique investment opportunity with strong financial metrics. As of October 14, 2024, the stock has a forward P/E ratio of just 5.64, indicating that it is trading at a steep discount compared to industry peers. With a target price of $8.43, the stock presents an upside potential of 59% from its current share price of $5.29.
Borr Drilling Limited (NYSE:BORR) is a global player in offshore shallow-water drilling, specializing in operating jack-up rigs for oil and gas companies. The company’s fleet includes 24 modern rigs, positioning it favorably in a market facing supply constraints. With no new rigs ordered in the last decade and 30% of the global fleet over 35 years old, Borr Drilling Limited (NYSE:BORR) young and premium rigs are well-positioned to benefit from higher utilization and day rates.
The company’s Q2 2024 financial performance reflects this strong market position. Borr Drilling Limited (NYSE:BORR) reported $271.9 million in operating revenue, a 16% increase from Q1, driven by higher day rates and strong contract activity. Adjusted EBITDA rose 17% quarter-over-quarter to $136.4 million, underscoring efficient operations and high rig utilization. Furthermore, the company reported a net income of $31.7 million for the quarter, more than doubling from Q1, signaling improved profitability.
Borr Drilling Limited (NYSE:BORR) liquidity is solid, with $344 million available through cash and credit facilities. This financial strength supports ongoing investments and shareholder returns, as evidenced by the recent quarterly dividend of $0.10 per share. Additionally, the company continues to secure high-value contracts, such as the recent long-term deal for the Arabia I rig in Brazil, which is expected to enhance revenue visibility through 2025.
Borr Drilling Limited (NYSE:BORR) strategy of locking in accretive contracts, combined with a robust backlog and a tight rig market, creates a favorable environment for future growth. With 73% of its 2025 capacity already contracted, Borr Drilling Limited (NYSE:BORR) offers strong revenue visibility and the potential for share price appreciation, making it a compelling addition to any portfolio focused on undervalued oil stocks.
05. Obsidian Energy Ltd. (NYSE:OBE)
Upside Potential: 59%
Forward Price to Earnings (P/E) ratio: 2.93
Number of Hedge Fund Holders: 11
Obsidian Energy Ltd. (NYSE:OBE), headquartered in Calgary, Canada, stands out as a compelling investment in the oil sector. With a forward P/E ratio of just 2.93 as of October 14, and an impressive 59% upside based on a target price of $9.76 compared to the current price of $6.12, Obsidian makes a solid case for inclusion in the list of undervalued oil stocks. Specializing in the exploration and production of oil and natural gas in Western Canada, the company has grown significantly since rebranding from Penn West Petroleum in 2017.
The second quarter of 2024 was a turning point for Obsidian Energy Ltd. (NYSE:OBE), delivering its highest production levels since 2016. Production increased by 15% year-over-year to 35,773 boe/d, driven by the strategic Peace River Clearwater acquisition and active drilling programs. This acquisition alone contributed 1,700 boe/d to the company’s output and added valuable reserves and land, boosting future development potential in the Clearwater and Bluesky formations.
Despite facing temporary production blockades, Obsidian Energy Ltd. (NYSE:OBE) generated funds from operations (FFO) of $115.2 million ($1.51 per share), up 32% from the previous year. Higher oil prices and expanded production capacity were key drivers behind this performance. While increased royalties and transportation costs impacted margins slightly, the company’s ability to maintain cost control resulted in reduced net operating costs to $13.83 per boe, compared to $15.06 last year.
Obsidian Energy Ltd. (NYSE:OBE) capital spending reached $59.2 million in the quarter, supporting new well completions and the tie-in of promising fields at Peace River. Notably, the company has maintained an aggressive share buyback program, repurchasing 0.8 million shares in Q2 and reducing outstanding shares by 6.9 million since 2023.
The company’s debt levels increased to $432.5 million following the Peace River acquisition, but management plans to use free cash flow for debt reduction and further share repurchases. With expanding production and stabilized cash flows, Obsidian’s net debt-to-FFO ratio is expected to improve in the coming quarters.
In summary, Obsidian Energy Ltd. (NYSE:OBE) combination of undervaluation, growing production, disciplined capital management, and long-term development plans makes it a prime candidate for investors seeking undervalued oil stocks with significant upside.
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.
03. Ring Energy, Inc. (NYSE:REI)
Upside Potential: 83%
Forward Price to Earnings (P/E) ratio: 3.49
Number of Hedge Fund Holders: 11
Ring Energy, Inc. (NYSE:REI) is an attractive pick for our list of 8 most undervalued Oil stocks to buy according to analysts, boasting a forward P/E ratio of 3.49 as of October 14, 2024. With a target price of $3.00 and the stock currently trading at $1.64, it offers an impressive 83% upside potential. Headquartered in The Woodlands, Texas, Ring Energy, Inc. (NYSE:REI) focuses on acquiring, developing, and producing oil and natural gas across a strategic land base of 56,711 net developed acres and 2,668 net undeveloped acres. Its operations are centered in key Texas counties such as Andrews, Gaines, and Ward, along with additional assets in Lea County, New Mexico—prime locations in the prolific Permian Basin, which accounts for nearly half of the U.S. daily oil production.
Ring Energy, Inc. (NYSE:REI) Q2 2024 results highlight the company’s solid financial and operational performance. The company reported net income of $22.4 million, translating to $0.11 per diluted share, with adjusted net income slightly higher at $23.4 million, or $0.12 per share. Total sales volumes came in at 19,786 barrels of oil equivalent per day (BOEPD), a 4% increase from the previous quarter, driven by robust oil production averaging 13,623 barrels per day—a 2% jump from Q1 and exceeding prior guidance.
The company’s ability to generate cash is another strong point, posting $37 million in adjusted free cash flow during the first half of 2024—up 60% year-over-year. This growth was partly fueled by the strategic acquisition of Founders in August 2023, which has strengthened Ring’s foothold in the oil market. Operationally, Ring Energy, Inc. (NYSE:REI) also completed 11 wells in Q2, keeping pace with its production targets and enhancing future output potential.
Ring Energy, Inc. (NYSE:REI) market confidence is rising, with hedge fund interest increasing to 11 holders by the end of Q2, up from nine in the previous quarter. With the U.S. Energy Information Administration forecasting an 8% rise in Permian Basin crude output in 2024, Ring Energy, Inc. (NYSE:REI) focus on high-value formations aligns perfectly with broader market trends. As the company scales production and maintains operational efficiency, it stands out as a compelling choice among undervalued oil stocks with significant upside potential.
02. GeoPark Limited (NYSE:GPRK)
Upside Potential: 84%
Forward Price to Earnings (P/E) ratio: 2.53
Number of Hedge Fund Holders: 15
GeoPark Limited (NYSE:GPRK) stands out among undervalued oil stocks with a forward P/E ratio of just 2.53 as of October 14, signaling a significant buying opportunity. Analysts see an 84% upside, with a target price of $15.33 compared to its current share price of $8.32. This makes GeoPark an appealing pick for investors looking for a bargain in the oil and gas sector.
Operating across Chile, Colombia, Brazil, Argentina, Ecuador, and other Latin American regions, GeoPark Limited (NYSE:GPRK) specializes in exploring and producing oil and gas reserves. The company has a strong reputation for managing operations efficiently, and its Q2 2024 earnings report reinforces its robust fundamentals.
For the second quarter ending June 30, 2024, GeoPark Limited (NYSE:GPRK) reported a 14% jump in revenue to $190 million, driven by favorable oil prices. Adjusted EBITDA rose 15% to $128 million, reflecting an impressive EBITDA margin of 67%. Despite currency-related tax adjustments, the company posted a net profit of $25.7 million or $0.50 per share, showcasing sound financial health.
GeoPark Limited (NYSE:GPRK) operational efficiency is evident from its capital expenditure management. The company invested $49 million in the quarter, generating nearly three times that amount in adjusted EBITDA. The return on average capital employed over the past 12 months stood at a remarkable 38%. Meanwhile, GeoPark maintained a healthy cash position of $66 million after repurchasing shares, paying taxes, acquiring new assets, and distributing dividends.
Strategically, GeoPark Limited (NYSE:GPRK) recent acquisition of the Vaca Muerta assets is expected to boost production. The newly acquired Mata Mora Norte Block alone is contributing 12,500 barrels per day, and further exploration in the Llanos basin offers promising growth opportunities. The company’s ongoing exploration activities are also expected to ramp up production levels heading into 2025.
GeoPark Limited (NYSE:GPRK) has demonstrated its commitment to shareholder returns, distributing $7.5 million in dividends during the quarter and repurchasing $43.7 million in shares. With strong cash flow, disciplined capital management, and strategic growth initiatives, GeoPark Limited (NYSE:GPRK) is well-positioned to capitalize on future opportunities, making it a compelling choice for investors seeking undervalued oil stocks with long-term potential.
01. Imperial Petroleum Inc. (NASDAQ:IMPP)
Upside Potential: 103%
Forward Price to Earnings (P/E) ratio: 2.29
Number of Hedge Fund Holders: 6
Imperial Petroleum Inc. (NASDAQ:IMPP) is gaining attention from investors as a top contender among undervalued oil stocks. With a forward P/E ratio of just 2.29 as of October 14, the stock appears deeply undervalued. Trading at $3.94 per share, analysts have set a target price of $8, indicating an impressive upside potential of 103%. Given its promising fundamentals, Imperial Petroleum Inc. (NASDAQ:IMPP) is worth a close look for anyone seeking hidden value in the oil sector.
Founded in 2021 and based in Athens, Greece, the company provides essential transportation services to oil producers, refineries, and commodities traders. Imperial Petroleum Inc. (NASDAQ:IMPP) operates a diversified fleet that includes six medium-range product tankers, one Aframax tanker, two Suezmax tankers, and two handysize dry bulk carriers. The fleet’s total capacity stands at 791,000 deadweight tons, enabling the company to transport not just crude and refined oil but also edible oils, chemicals, and other commodities.
The company delivered a solid financial performance in Q2 2024. It reported $20 million in profits for the quarter, marking its second-best performance to date. Revenues grew 14% compared to Q1 2024, demonstrating the company’s ability to leverage high tanker rates and efficiently manage its fleet. Although some seasonal challenges were anticipated, such as reduced market activity in the summer, Imperial Petroleum Inc. (NASDAQ:IMPP) strategy of maintaining 81% operational utilization ensured steady earnings. The company’s spot activity has been particularly successful, with tight conditions west of the Suez Canal supporting stronger rates.
Imperial Petroleum Inc. (NASDAQ:IMPP) financial strength is underscored by a robust balance sheet. The company remains debt-free, providing it with significant flexibility to seize growth opportunities. As of June 2024, it held $130 million in cash, which has since grown to around $190 million, offering a solid cushion for fleet expansion. New vessel acquisitions planned for 2025 will further enhance the company’s earning capacity.
With global oil demand expected to rise, driven by the U.S., China, and India, and constrained tanker supply supporting rates, Imperial Petroleum Inc. (NASDAQ:IMPP) is well-positioned for growth. The stock’s combination of low valuation and strong fundamentals makes it a compelling choice among undervalued oil stocks.
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