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International E&P Industry: Your Guide to 3 Resilient Stocks
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The Zacks Oil and Gas - Exploration and Production - International industry is navigating increasingly choppy waters. A major concern is the idea of "peak demand, which paints a cloudy picture for the long term. Several factors, including slower growth in demand, a faster shift toward renewable energy sources, and a surge in oil supply from countries outside of OPEC, are putting pressure on oil prices. Adding to this, China's oil demand seems to be peaking earlier than anticipated. The recent de-escalation in geopolitical tensions has taken some of the "war premium" out of oil prices. As a result, the industry's revenue growth looks uncertain. Earnings estimates for many companies keep sliding. This is testing the strength of producers, especially those who need higher prices to break even. However, it's not all bad news. A few companies truly stand out in this challenging environment. Think Vermilion Energy (VET - Free Report) , VAALCO Energy (EGY - Free Report) and Capricorn Energy (CRNCY - Free Report) . They have diverse assets, generate strong cash flows, and manage capital wisely. Their ability to handle the ups and downs of oil prices makes them stocks to focus on in an otherwise unpredictable market.
Industry Overview
The Zacks Oil and Gas - International E&P industry consists of companies primarily operating outside the United States and focused on the exploration and production (E&P) of oil and natural gas. These firms find hydrocarbon reservoirs, drill oil and gas wells, and produce and sell these materials to be refined later into products such as gasoline, fuel oil, distillate, etc. The economics of oil and gas supply and demand is the fundamental driver of this industry. In particular, a producer’s cash flow is determined by realized commodity prices. In fact, all E&P companies are vulnerable to historically volatile prices in the energy markets. A change in realizations affects their returns on drilling inventory and causes them to alter production growth rates. These operators are also exposed to exploration risks where drilling results are uncertain.
4 Key Investing Trends to Watch in the Oil and Gas - International E&P Industry
IEA’s Peak Demand Forecast Adds Structural Headwinds: The IEA’s firm stance on oil demand peaking by 2030 is a psychological blow for the sector. Slowing demand growth, particularly with China’s consumption expected to peak by 2027, adds long-term pressure on crude prices. Accelerating electric vehicle adoption, LNG-fueled freight, and structural shifts in global economies amplify this trend. For E&P companies reliant on constant demand growth, this forecast signals a tough road ahead, potentially shrinking valuations and dampening long-term investment sentiment.
Supply Outpaces Demand Amid Macro Uncertainty: The near-term looks oversupplied. Goldman Sachs highlights an expected surge in non-OPEC production (excluding U.S. shale), driven by new projects in Saudi Arabia and Qatar. Combined with growing natural gas liquids output, supply is set to outpace sluggish demand growth. The IEA also echoes this, forecasting that oil markets will be well-supplied through 2030 unless disrupted by major geopolitical events. This imbalance threatens to keep Brent prices below $60, squeezing E&P cash flows significantly.
Geopolitical Ceasefires Are Unwinding the War Premium: The recent efforts toward a ceasefire between Israel and Iran have dramatically eased the tension that had been driving oil prices up. Brent crude, which had shot up by nearly 20% due to fears of conflict, has now quickly reversed course. Should these ceasefire agreements hold, even loosely, we could see continued downward pressure on oil prices. This would further reduce earnings for E&P companies. While risks certainly remain, the market's quick shift toward de-escalation clearly shows how vulnerable oil prices are to major geopolitical news. This leaves oil producers exposed to sudden, sharp drops in price.
Long-Term Supply Discipline Could Balance Markets: Despite ongoing talks about "peak demand" for oil, a period of sustained lower prices could actually force producers, especially those with higher operating costs, to scale back their operations. We're already seeing a slowdown in U.S. shale growth. In fact, Goldman Sachs has even suggested that shale production might peak sooner than expected if oil prices stay weak. This potential reduction in supply, combined with the likely intervention from OPEC, could gradually tighten the oil market over time. For E&P companies that have been disciplined, with efficient assets and strong financial health, this scenario sets the stage for fatter profit margins in the future once prices stabilize.
Zacks Industry Rank Reflects Bearish Outlook
The Zacks Oil and Gas – International E&P industry is an eight-stock group within the broader Zacks Oil - Energy sector. It currently carries a Zacks Industry Rank #227, which places it in the bottom 7% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates challenging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are becoming pessimistic about this group’s earnings growth potential. As a matter of fact, the industry’s earnings estimates for 2025 have gone down 115.7% in the past year.
Despite the dull near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector & S&P 500
The Zacks Oil and Gas - International E&P industry has fared worse than the broader Zacks Oil - Energy Sector as well as the Zacks S&P 500 composite over the past year.
The industry has declined 51.1% over this period compared with the broader sector’s decrease of 3%. Meanwhile, the S&P 500 has gained 10.7%.
One-Year Price Performance
Industry's Current Valuation
Since oil and gas companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. This is because the valuation metric takes into account not just equity but also the level of debt. For capital-intensive companies, EV/EBITDA is a better valuation metric because it is not influenced by changing capital structures and ignores the effect of non-cash expenses.
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the industry is currently trading at 4.85X, significantly lower than the S&P 500’s 17.16X. It is, however, slightly above the sector’s trailing 12-month EV/EBITDA of 4.78X.
Over the past five years, the industry has traded as high as 9.60X, as low as 2.51X, with a median of 4.32X.
Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio (Past Five Years)
3 Oil and Gas - International E&P Stocks to Watch
Vermilion Energy: Vermilion Energy is a globally diversified oil and gas producer focused on growth and income. With assets spanning Canada, Europe, and Australia, the Zacks Rank #3 (Hold) company benefits from exposure to multiple markets and price benchmarks. About 25% of its production comes from outside Canada, enhancing geographic and regulatory diversity.
Vermilion Energy targets free cash flow generation through acquiring, developing and optimizing producing assets. Its operations center around liquids-rich natural gas and light oil, complemented by conventional opportunities in Europe and Australia. Notably, over the past 30 days, the Zacks Consensus Estimate for Vermilion Energy’s 2025 earnings has moved up 271%. The Zacks Consensus Estimate for 2025 earnings of the company indicates 154.6% growth. Vermilion Energy’s shares have lost around 35% in a year.
Price and Consensus: VET
VAALCO Energy: VAALCO Energy is a Houston-based independent energy company with a diverse portfolio across Gabon, Egypt, Côte d'Ivoire, Equatorial Guinea, Nigeria, and Canada. Over 90% of its 20-25kboe/d production is oil-weighted. VAALCO focuses on developing, producing, and acquiring oil and gas assets, primarily in Africa and Canada.
Its portfolio includes offshore and onshore assets, alongside exploration acreage in Gabon and Côte d'Ivoire, and development projects in Equatorial Guinea, driving growth and long-term value creation. This Zacks #3 Ranked firm has a Value Score of A. VAALCO Energy’s current market cap is roughly $386 million. It has a trailing four-quarter earnings surprise of roughly 26.7%, on average. VAALCO Energy’s shares have lost around 41% in a year.
Price and Consensus: EGY
Capricorn Energy: Capricorn Energy is a UK-based independent oil and gas producer with operations focused on Egypt’s Western Desert. The company shifted its strategy in 2021, exiting UK North Sea assets while acquiring around 40kboe/d of onshore Egyptian production from Shell.
Known for its historic oil discovery in India’s Rajasthan in 2004, Capricorn has returned over $5.5 billion to its shareholders. Now cash flow-driven, it continues to prioritize development and production while undergoing strategic board-led transformation. Valued at around $243 million, #3 Ranked CRNCY has a Value Score of B. Capricorn Energy’s shares have gone up around 55% in a year.
Price and Consensus: CRNCY
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International E&P Industry: Your Guide to 3 Resilient Stocks
The Zacks Oil and Gas - Exploration and Production - International industry is navigating increasingly choppy waters. A major concern is the idea of "peak demand, which paints a cloudy picture for the long term. Several factors, including slower growth in demand, a faster shift toward renewable energy sources, and a surge in oil supply from countries outside of OPEC, are putting pressure on oil prices. Adding to this, China's oil demand seems to be peaking earlier than anticipated. The recent de-escalation in geopolitical tensions has taken some of the "war premium" out of oil prices. As a result, the industry's revenue growth looks uncertain. Earnings estimates for many companies keep sliding. This is testing the strength of producers, especially those who need higher prices to break even. However, it's not all bad news. A few companies truly stand out in this challenging environment. Think Vermilion Energy (VET - Free Report) , VAALCO Energy (EGY - Free Report) and Capricorn Energy (CRNCY - Free Report) . They have diverse assets, generate strong cash flows, and manage capital wisely. Their ability to handle the ups and downs of oil prices makes them stocks to focus on in an otherwise unpredictable market.
Industry Overview
The Zacks Oil and Gas - International E&P industry consists of companies primarily operating outside the United States and focused on the exploration and production (E&P) of oil and natural gas. These firms find hydrocarbon reservoirs, drill oil and gas wells, and produce and sell these materials to be refined later into products such as gasoline, fuel oil, distillate, etc. The economics of oil and gas supply and demand is the fundamental driver of this industry. In particular, a producer’s cash flow is determined by realized commodity prices. In fact, all E&P companies are vulnerable to historically volatile prices in the energy markets. A change in realizations affects their returns on drilling inventory and causes them to alter production growth rates. These operators are also exposed to exploration risks where drilling results are uncertain.
4 Key Investing Trends to Watch in the Oil and Gas - International E&P Industry
IEA’s Peak Demand Forecast Adds Structural Headwinds: The IEA’s firm stance on oil demand peaking by 2030 is a psychological blow for the sector. Slowing demand growth, particularly with China’s consumption expected to peak by 2027, adds long-term pressure on crude prices. Accelerating electric vehicle adoption, LNG-fueled freight, and structural shifts in global economies amplify this trend. For E&P companies reliant on constant demand growth, this forecast signals a tough road ahead, potentially shrinking valuations and dampening long-term investment sentiment.
Supply Outpaces Demand Amid Macro Uncertainty: The near-term looks oversupplied. Goldman Sachs highlights an expected surge in non-OPEC production (excluding U.S. shale), driven by new projects in Saudi Arabia and Qatar. Combined with growing natural gas liquids output, supply is set to outpace sluggish demand growth. The IEA also echoes this, forecasting that oil markets will be well-supplied through 2030 unless disrupted by major geopolitical events. This imbalance threatens to keep Brent prices below $60, squeezing E&P cash flows significantly.
Geopolitical Ceasefires Are Unwinding the War Premium: The recent efforts toward a ceasefire between Israel and Iran have dramatically eased the tension that had been driving oil prices up. Brent crude, which had shot up by nearly 20% due to fears of conflict, has now quickly reversed course. Should these ceasefire agreements hold, even loosely, we could see continued downward pressure on oil prices. This would further reduce earnings for E&P companies. While risks certainly remain, the market's quick shift toward de-escalation clearly shows how vulnerable oil prices are to major geopolitical news. This leaves oil producers exposed to sudden, sharp drops in price.
Long-Term Supply Discipline Could Balance Markets: Despite ongoing talks about "peak demand" for oil, a period of sustained lower prices could actually force producers, especially those with higher operating costs, to scale back their operations. We're already seeing a slowdown in U.S. shale growth. In fact, Goldman Sachs has even suggested that shale production might peak sooner than expected if oil prices stay weak. This potential reduction in supply, combined with the likely intervention from OPEC, could gradually tighten the oil market over time. For E&P companies that have been disciplined, with efficient assets and strong financial health, this scenario sets the stage for fatter profit margins in the future once prices stabilize.
Zacks Industry Rank Reflects Bearish Outlook
The Zacks Oil and Gas – International E&P industry is an eight-stock group within the broader Zacks Oil - Energy sector. It currently carries a Zacks Industry Rank #227, which places it in the bottom 7% of 244 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates challenging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are becoming pessimistic about this group’s earnings growth potential. As a matter of fact, the industry’s earnings estimates for 2025 have gone down 115.7% in the past year.
Despite the dull near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it’s worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Underperforms Sector & S&P 500
The Zacks Oil and Gas - International E&P industry has fared worse than the broader Zacks Oil - Energy Sector as well as the Zacks S&P 500 composite over the past year.
The industry has declined 51.1% over this period compared with the broader sector’s decrease of 3%. Meanwhile, the S&P 500 has gained 10.7%.
One-Year Price Performance
Industry's Current Valuation
Since oil and gas companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. This is because the valuation metric takes into account not just equity but also the level of debt. For capital-intensive companies, EV/EBITDA is a better valuation metric because it is not influenced by changing capital structures and ignores the effect of non-cash expenses.
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the industry is currently trading at 4.85X, significantly lower than the S&P 500’s 17.16X. It is, however, slightly above the sector’s trailing 12-month EV/EBITDA of 4.78X.
Over the past five years, the industry has traded as high as 9.60X, as low as 2.51X, with a median of 4.32X.
Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio (Past Five Years)
3 Oil and Gas - International E&P Stocks to Watch
Vermilion Energy: Vermilion Energy is a globally diversified oil and gas producer focused on growth and income. With assets spanning Canada, Europe, and Australia, the Zacks Rank #3 (Hold) company benefits from exposure to multiple markets and price benchmarks. About 25% of its production comes from outside Canada, enhancing geographic and regulatory diversity.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Vermilion Energy targets free cash flow generation through acquiring, developing and optimizing producing assets. Its operations center around liquids-rich natural gas and light oil, complemented by conventional opportunities in Europe and Australia. Notably, over the past 30 days, the Zacks Consensus Estimate for Vermilion Energy’s 2025 earnings has moved up 271%. The Zacks Consensus Estimate for 2025 earnings of the company indicates 154.6% growth. Vermilion Energy’s shares have lost around 35% in a year.
Price and Consensus: VET
VAALCO Energy: VAALCO Energy is a Houston-based independent energy company with a diverse portfolio across Gabon, Egypt, Côte d'Ivoire, Equatorial Guinea, Nigeria, and Canada. Over 90% of its 20-25kboe/d production is oil-weighted. VAALCO focuses on developing, producing, and acquiring oil and gas assets, primarily in Africa and Canada.
Its portfolio includes offshore and onshore assets, alongside exploration acreage in Gabon and Côte d'Ivoire, and development projects in Equatorial Guinea, driving growth and long-term value creation. This Zacks #3 Ranked firm has a Value Score of A. VAALCO Energy’s current market cap is roughly $386 million. It has a trailing four-quarter earnings surprise of roughly 26.7%, on average. VAALCO Energy’s shares have lost around 41% in a year.
Price and Consensus: EGY
Capricorn Energy: Capricorn Energy is a UK-based independent oil and gas producer with operations focused on Egypt’s Western Desert. The company shifted its strategy in 2021, exiting UK North Sea assets while acquiring around 40kboe/d of onshore Egyptian production from Shell.
Known for its historic oil discovery in India’s Rajasthan in 2004, Capricorn has returned over $5.5 billion to its shareholders. Now cash flow-driven, it continues to prioritize development and production while undergoing strategic board-led transformation. Valued at around $243 million, #3 Ranked CRNCY has a Value Score of B. Capricorn Energy’s shares have gone up around 55% in a year.
Price and Consensus: CRNCY