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3 Undervalued Oil Stocks as WTI Approaches US$60

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Reading time: 4 min.

The three Canada-listed undervalued oil stocks on our list trade at a discount to peers on a forward cash flow basis

SmallCapPower | November 24, 2017: With WTI oil prices up 11.6% month over month, driven most recently by the temporary shut down of the Keystone pipeline, we look at three energy stocks that are undervalued on a forward cash flow basis compared to peers. The undervalued oil stocks on our list trade at a discount to their peer average Forward Price to Cash Flows (NTM) multiple of 5.52x.

Baytex Energy Corp. (TSX:BTE) – $3.96
Oil & Gas

Baytex Energy is an Oil & Gas company based in Calgary, Alberta. The Company focuses on the acquisition, development and production of assets in the western Canadian sedimentary basin and Texas, United States. Baytex’s operations are at Peace River and Lloydminster in Alberta, and Eagle Ford in Texas.

  • Market Cap: $932 Million
  • Forward Price to Cash Flow Per Share (NTM): 3.0x
  • Peer average: 5.52x
  • Month over Month Return: 23.4%

Gear Energy Ltd. (TSX:GXE) – $0.79
Oil & Gas

Gear Energy is an oil-focused producer with assets in Canada. The Company’s focus lies on exploration and production at properties in Alberta and Western Saskatchewan. Combined, Gears operations contribute an average production of ~7,300 barrels of oil equivalent (86% liquids).

  • Market Cap: $154 Million
  • Forward Price to Cash Flow Per Share (NTM): 3.01x
  • Peer average: 5.52x
  • Month over Month Return: 8.2%

PetroShale Inc. (TSXV:PSH) – $1.80
Oil & Gas

PetroShale is a Canada-based oil producer with assets in North Dakota, United States. The Company’s operations are located within the Bakken/Three Forks region (North Dakota), where its production currently averages 2,500 boe/d (84% liquids). In addition to existing wells, PetroShale offers significant growth opportunities with fully-funded planned drilling activities of 5.2 net wells over the next year.

  • Market Cap: $269 Million
  • Forward Price to Cash Flow Per Share (NTM): 4.23x
  • Peer average: 5.52x
  • Month over Month Return: 10.4%

Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.

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