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Which 3 International E&P Stocks Look Most Resilient Now?
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The Zacks Oil and Gas - Exploration and Production - International industry faces a challenging backdrop, weighed down by oversupply risks, volatile commodity prices, and a weakening demand outlook. Rising U.S. inventories and cautious global consumption trends point to soft earnings visibility for producers, while inflationary pressures continue to push drilling and service costs higher. These headwinds leave many operators struggling to balance growth ambitions with financial discipline, particularly in an environment where earnings forecasts have steadily deteriorated. Yet, it isn’t all gloom. Natural gas and LNG expansion remain powerful structural tailwinds, providing longer-term demand visibility less tied to oil’s price swings. This creates opportunities for disciplined players with diversified portfolios and strong cash generation. Within this group, Vermilion Energy ((VET - Free Report) ), VAALCO Energy ((EGY - Free Report) ) and Capricorn Energy ((CRNCY - Free Report) ) stand out. Each offers differentiated exposure and resilience, giving investors
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 are the fundamental drivers of this industry. 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
Oversupply Risks Cloud the Outlook: A major challenge for the International E&P industry is the looming threat of oversupply. With OPEC+ gradually easing production cuts and the International Energy Agency projecting stronger supply growth than demand, the balance looks fragile. Rising U.S. crude inventories only reinforce concerns that consumption is not keeping pace. If global supply consistently outpaces demand, prices could remain under pressure, compressing margins for producers. This environment makes it harder for operators to commit capital to new drilling, especially when earnings visibility weakens.
Weakening U.S. Demand Signals Trouble: Softening U.S. demand poses another headwind for the industry. Rising crude inventories in the world’s largest oil consumer highlight weaker-than-expected seasonal consumption. This trend raises concerns about whether economic growth is slowing and whether refiners will require fewer barrels in the months ahead. For E&P firms, weaker domestic demand means fewer buyers for their production, reduced pricing leverage, and a heavier reliance on export markets. If the trend persists, it could exacerbate volatility in cash flows and investment planning.
Natural Gas and LNG Drive Structural Growth: Amid near-term volatility, natural gas continues to emerge as a bright spot for the industry. Global demand for LNG is expanding, driven by Asian markets and Europe’s push to secure cleaner and more reliable supplies. With major liquefaction projects coming online from 2026 onward, upstream producers are poised to benefit from a durable call on gas volumes. This shift provides longer-term visibility into drilling activity and contract stability, offering a structural growth driver less exposed to oil’s price swings.
Rising Cost Pressures Erode Margins: The industry is grappling with persistent cost inflation, ranging from labor shortages to higher equipment and service expenses. Drilling, completion, and maintenance costs are climbing at a time when commodity prices remain volatile, squeezing profitability for producers. Even companies with strong balance sheets face challenges sustaining free cash flow under these conditions. Unless inflationary pressures ease or crude prices rebound meaningfully, E&P margins could narrow further, leaving less flexibility for shareholder distributions or reinvestment.
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 #178, which places it in the bottom 27% of 245 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 111.1% 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 lost more than 40% over this period compared with the broader sector’s increase of 3.9%. Meanwhile, the S&P 500 has gained 17.8%.
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 5.84X, significantly lower than the S&P 500’s 18.34X. It is, however, above the sector’s trailing 12-month EV/EBITDA of 5.13X.
Over the past five years, the industry has traded as high as 9.60X, as low as 2.62X, with a median of 4.41X.
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 an international oil and gas producer balancing growth with income. The Zacks Rank #3 (Hold) company’s portfolio stretches across Canada, Europe and Australia, giving it access to varied markets and price benchmarks. Roughly a quarter of production comes from outside Canada, providing both geographic reach and regulatory diversification. 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 60 days, the Zacks Consensus Estimate for Vermilion Energy’s 2025 earnings has moved up 210.3%. The Zacks Consensus Estimate for 2025 earnings of the company indicates 509.1% growth. Vermilion Energy’s shares have lost around 18% in a year.
Price and Consensus: VET
VAALCO Energy: VAALCO Energy, headquartered in Houston, is an independent oil and gas company with operations spanning Gabon, Egypt, Côte d'Ivoire, Equatorial Guinea, Nigeria and Canada. With more than 90% of output weighted toward oil, VAALCO concentrates on acquiring, developing, and producing energy assets, with a strong emphasis on African and Canadian markets.
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 B. VAALCO Energy’s current market cap is roughly $446 million. It has a trailing four-quarter earnings surprise of roughly 1.7%, on average. VAALCO Energy’s shares have lost around 27% 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 40,000 barrels of oil-equivalent per day 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 a strategic board-led transformation. Valued at just over $200 million, #3 Ranked Capricorn Energy’s shares have gone up around 3% in a year.
Price and Consensus: CRNCY
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Which 3 International E&P Stocks Look Most Resilient Now?
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 are the fundamental drivers of this industry. 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
Oversupply Risks Cloud the Outlook: A major challenge for the International E&P industry is the looming threat of oversupply. With OPEC+ gradually easing production cuts and the International Energy Agency projecting stronger supply growth than demand, the balance looks fragile. Rising U.S. crude inventories only reinforce concerns that consumption is not keeping pace. If global supply consistently outpaces demand, prices could remain under pressure, compressing margins for producers. This environment makes it harder for operators to commit capital to new drilling, especially when earnings visibility weakens.
Weakening U.S. Demand Signals Trouble: Softening U.S. demand poses another headwind for the industry. Rising crude inventories in the world’s largest oil consumer highlight weaker-than-expected seasonal consumption. This trend raises concerns about whether economic growth is slowing and whether refiners will require fewer barrels in the months ahead. For E&P firms, weaker domestic demand means fewer buyers for their production, reduced pricing leverage, and a heavier reliance on export markets. If the trend persists, it could exacerbate volatility in cash flows and investment planning.
Natural Gas and LNG Drive Structural Growth: Amid near-term volatility, natural gas continues to emerge as a bright spot for the industry. Global demand for LNG is expanding, driven by Asian markets and Europe’s push to secure cleaner and more reliable supplies. With major liquefaction projects coming online from 2026 onward, upstream producers are poised to benefit from a durable call on gas volumes. This shift provides longer-term visibility into drilling activity and contract stability, offering a structural growth driver less exposed to oil’s price swings.
Rising Cost Pressures Erode Margins: The industry is grappling with persistent cost inflation, ranging from labor shortages to higher equipment and service expenses. Drilling, completion, and maintenance costs are climbing at a time when commodity prices remain volatile, squeezing profitability for producers. Even companies with strong balance sheets face challenges sustaining free cash flow under these conditions. Unless inflationary pressures ease or crude prices rebound meaningfully, E&P margins could narrow further, leaving less flexibility for shareholder distributions or reinvestment.
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 #178, which places it in the bottom 27% of 245 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 111.1% 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 lost more than 40% over this period compared with the broader sector’s increase of 3.9%. Meanwhile, the S&P 500 has gained 17.8%.
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 5.84X, significantly lower than the S&P 500’s 18.34X. It is, however, above the sector’s trailing 12-month EV/EBITDA of 5.13X.
Over the past five years, the industry has traded as high as 9.60X, as low as 2.62X, with a median of 4.41X.
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 an international oil and gas producer balancing growth with income. The Zacks Rank #3 (Hold) company’s portfolio stretches across Canada, Europe and Australia, giving it access to varied markets and price benchmarks. Roughly a quarter of production comes from outside Canada, providing both geographic reach and regulatory diversification. 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 60 days, the Zacks Consensus Estimate for Vermilion Energy’s 2025 earnings has moved up 210.3%. The Zacks Consensus Estimate for 2025 earnings of the company indicates 509.1% growth. Vermilion Energy’s shares have lost around 18% in a year.
Price and Consensus: VET
VAALCO Energy: VAALCO Energy, headquartered in Houston, is an independent oil and gas company with operations spanning Gabon, Egypt, Côte d'Ivoire, Equatorial Guinea, Nigeria and Canada. With more than 90% of output weighted toward oil, VAALCO concentrates on acquiring, developing, and producing energy assets, with a strong emphasis on African and Canadian markets.
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 B. VAALCO Energy’s current market cap is roughly $446 million. It has a trailing four-quarter earnings surprise of roughly 1.7%, on average. VAALCO Energy’s shares have lost around 27% 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 40,000 barrels of oil-equivalent per day 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 a strategic board-led transformation. Valued at just over $200 million, #3 Ranked Capricorn Energy’s shares have gone up around 3% in a year.
Price and Consensus: CRNCY