3 International E&P Stocks Offering Bright Spots for Investors

The Zacks 

 industry is navigating a mixed operating environment. Firm crude and European gas prices are supporting producer cash flows as geopolitical tensions and tight regional supplies keep energy markets relatively strong. However, rising costs, currency movements and limited drilling equipment are making projects more expensive, while heavier taxes in some regions can weaken returns and redirect investment elsewhere. Exploration uncertainty adds another layer of risk. The industry’s Zacks Rank places it in the bottom half of Zacks industries, pointing to a cautious near-term outlook despite strong one-year price performance. Its valuation also remains below both the broader sector and the S&P 500, suggesting that investors should be selective rather than broadly bullish. Even so, individual opportunities remain. EnQuest PLC

, Kosmos Energy

and Harbour Energy

stand out through strong earnings growth expectations, portfolio development opportunities and disciplined investment strategies.

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. 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.

3 Key Investing Trends to Watch in the Oil and Gas - International E&P Industry

Rising Costs Are Making Some Projects More Expensive: The industry is facing pressure from inflation, currency movements and a tighter market for drilling equipment and services. These factors can raise the cost of running existing fields as well as developing new ones. A stronger local currency can also increase expenses for international producers that report their results in U.S. dollars. Meanwhile, limited availability of drilling rigs may make it harder to secure equipment at attractive rates. If these cost pressures continue, part of the benefit from stronger oil and gas prices could be lost, particularly for projects that already have relatively high operating or development costs.

High Taxes Can Make Some Oil and Gas Regions Less Attractive: International producers can choose where they invest, so government tax policies play an important role in deciding which projects move forward. When taxes rise, or fiscal rules become less favorable, a project may offer weaker returns even if it has good oil or gas resources. Companies can then shift their spending toward countries where costs and taxes are lower. This creates a risk for regions with less competitive policies because drilling and development spending may gradually decline. For investors, changing tax rules can therefore affect future production growth and the amount of money that producers are willing to invest in certain markets.

Firm Energy Prices Are Supporting Producers: Oil and gas producers are currently benefiting from a stronger pricing environment. Middle East tensions have kept oil prices elevated and volatile, while European gas prices remain firm as the region works to rebuild storage ahead of winter. Higher selling prices generally mean producers earn more from the same level of output, supporting cash flow and financial flexibility. This can make it easier to repay debt, fund future drilling and return money to shareholders. As long as geopolitical uncertainty and tight gas supplies persist, commodity prices could remain supportive for the international exploration and production industry.

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 #171, which places it in the bottom 30% of 246 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates fairly dull 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.

Despite the dim 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 Outperforms Sector & S&P 500

The Zacks Oil and Gas - International E&P industry has fared better than the broader Zacks Oil – Energy sector as well as the Zacks S&P 500 composite over the past year.

The industry has gone up 54.6% over this period compared with the broader sector’s increase of 34.1% and the S&P 500’s gain of 20.8%.

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), the industry is currently trading at 5.35X, significantly lower than the S&P 500’s 17.91X. It is also below the sector’s trailing 12-month EV/EBITDA of 5.92X.

Over the past five years, the industry has traded as high as 9.28X, as low as 2.80X, with a median of 4.64X.

Trailing 12-Month Enterprise Value-to EBITDA (EV/EBITDA) Ratio (Past Five Years)

3 Oil and Gas - International E&P Stocks to Watch

EnQuest: EnQuest is an independent energy company focused on getting more value from mature oil and gas assets. Its core production operations are in the UK North Sea, Malaysia and Vietnam, supported by experience in extending field life, managing reservoirs and carrying out decommissioning. The Zacks Rank #2 (Buy) company also operates the Sullom Voe Terminal in Shetland and has a growing footprint across South East Asia.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its strategy combines disciplined investment in existing fields with selective acquisitions and geographic diversification. EnQuest is expanding in Vietnam, Brunei and Indonesia while pursuing growth in the UK. Through Veri Energy, it is also exploring ways to repurpose existing infrastructure for decarbonization and renewable-energy projects.

The Zacks Consensus Estimate for 2026 earnings of the company indicates 283.3% growth. EnQuest’s shares have moved up 121.7% in a year.

Price and Consensus: ENQUF

Kosmos Energy: Kosmos Energy’s portfolio centers on offshore oil and gas assets and projects in Ghana, Mauritania and Senegal, and the Gulf of America. Jubilee in Ghana remains an important oil asset, while Greater Tortue Ahmeyim adds LNG exposure. The Zacks #2 Ranked company is also developing further opportunities through Tiberius and the Trailblazer prospect in the Gulf of America.

Its current strategy centers on lifting production from core assets, lowering operating costs and reducing debt while keeping near-term development spending controlled. Kosmos is also preparing longer-term drilling at Jubilee and TEN, advancing GTA expansion and domestic gas opportunities, and using partnerships to share capital needs on larger projects.

The Zacks Consensus Estimate for 2026 earnings of the company indicates 161.6% growth. Kosmos Energy’s shares have moved up 58.9% in a year.

Price and Consensus: KOS

Harbour Energy: Harbour Energy is a large, diversified oil and gas producer with operations centered on Norway, the UK, Argentina, the United States and Mexico. Its portfolio combines established producing assets with a pipeline of shorter-cycle projects, giving the Zacks Rank #3 (Hold) company exposure to oil, European gas and longer-term development opportunities. Management is increasingly directing investment toward lower-cost, lower-tax areas while maintaining production at scale.

Growth plans include new and expanding projects in Norway, Argentina and the Gulf of America, alongside development options at Mexico’s Zama and Kan fields. Harbour also emphasizes operational control, capital discipline and financial resilience, with acquisitions used selectively to strengthen portfolio quality.

The Zacks Consensus Estimate for 2026 earnings of the company indicates 393.8% growth. Harbour Energy’s shares are up 12.7% in a year.

Price and Consensus: HBRIY

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This article originally published on Zacks Investment Research (zacks.com).

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