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Interested in oil & gas drilling stocks? For ideas on where to look, today we focused on O & G companies whose fundamentals suggest that they're undervalued from a price-multiple standpoint. We narrowed our search to companies that industry analysts consider to be 'Buy' worthy. We came up with a short, but intriguing list of companies worth researching more.

Interested in gaining exposure to oil & gas companies? Do you prefer stocks that analysts rate as 'Buy'? Looking for undervalued stocks? We ran a screen you might find useful.

The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.

The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecasted earnings instead. While this number might not be as accurate because it uses "forecasted" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.

We first looked for oil & gas stocks. We then looked for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). Next, we then screened for businesses that are undervalued from a price-multiple valuation standpoint (P/BV<1)(forward P/E<10). We did not screen out any market caps.

Do you think these stocks have more value to price in? Use our screened list as a starting point for your own analysis.

1) Lone Pine Resources Inc. (LPR)

Sector:Basic Materials
Industry:Independent Oil & Gas
Market Cap:$212.75M
Beta:-

Lone Pine Resources Inc. has a Analysts' Rating of 2.20, a Price/Book Value Ratio of 0.46, and a Forward Price/Earnings Ratio of 3.79. The short interest was 1.28% as of 06/27/2012. Lone Pine Resources Inc. engages in the exploration, development, and production of oil and gas properties in Canada. As of December 31, 2011, the company owned interests in approximately 57,382 net acres in the Evi field located in the Peace River Arch area of northern Alberta; approximately 157,779 net acres in the Deep Basin, including the Narraway/Ojay fields and the Wild River field located in Alberta and British Columbia; approximately 240,320 net acres in the Utica Shale located in Quebec; and approximately 52,995 net acres in the Liard Basin located in the Northwest Territories. It also had approximately 401 billion cubic feet equivalent of estimated proved reserves.

2) Harvest Natural Resources Inc. (HNR)

Sector:Basic Materials
Industry:Independent Oil & Gas
Market Cap:$334.46M
Beta:2.01

Harvest Natural Resources Inc. has a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.87, and a Forward Price/Earnings Ratio of 5.30. The short interest was 19.12% as of 06/27/2012. Harvest Natural Resources, Inc., an independent energy company, engages in the acquisition, exploration, development, production, and disposition of oil and natural gas properties. It primarily holds interests in the Bolivarian Republic of Venezuela; exploration acreage, including in onshore of West Sulawesi, Indonesia; offshore of Gabon; in onshore of Oman; and in offshore of the People's Republic of China.

3) Miller Energy Resources, Inc. (MILL)

Sector:Basic Materials
Industry:Independent Oil & Gas
Market Cap:$185.73M
Beta:2.45

Miller Energy Resources, Inc. has a Analysts' Rating of 2.00, a Price/Book Value Ratio of 0.63, and a Forward Price/Earnings Ratio of 7.79. The short interest was 28.31% as of 06/27/2012. Miller Energy Resources, Inc. engages in the exploration, production, and drilling of oil and natural gas resources in the United States. It primarily holds interests in approximately 699,402 gross acres of oil and gas leases and exploration licenses located in South central Alaska's Cook Inlet and Susitna Basins, and the Appalachian region of eastern Tennessee. The company was formerly known as Miller Petroleum, Inc.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.

Source: 3 Oil & Gas Stocks Trading On The Cheap Despite Analyst Bullishness