“Lower for longer” has become a tagline for the unrelenting nature of this most recent downturn in oil and gas commodity prices. Energy stocks bear the same dour outlook. Crude oil’s late-year funk in 2015 and a re-setting of expectations for this year have kept a firm lid on share prices in the sector.

The “half-full’ers” sense opportunity in these times, however. They are scouring the upstream group for companies resilient to the downturn’s pressures and with the most promise for upside when the commodity price cycle reverses.

Some would argue that in this environment, nearly every oil and gas stock is undervalued. Still, selected E&Ps are better-positioned than others to rebound and reward patient investors.

We asked analysts for some top picks of undervalued energy stocks. Here are some of their favorites, and why:

Solid balance sheet

Carrizo Oil & Gas Inc. is unusually diversified for a small-cap, with its roughly 215,000 net acres spread across the Eagle Ford, Niobrara, Marcellus and Utica shales and the Permian’s Delaware Basin. That could change, however, and the result wouldn’t necessarily be a bad thing.

“Over the last couple of years, Carrizo has really focused and homed in on the Eagle Ford,” said Daniel Katzenberg, senior research analyst with Robert W. Baird & Co. “They are in the black-oil window of the Eagle Ford, and over the last two years, operationally they have probably done as good a job as any E&P out there.”

Katzenberg said early results led some investors to believe Carrizo was more lucky than good, benefiting mainly from its high-quality acreage. “But after 36 months of very strong operational performance, I think they have really grown into being one of the more credible operating energy companies out there.”

The company would also like to expand in the Permian, Katzenberg said, and issued equity twice in 2015 to raise capital to accomplish that goal. “I’ve covered them for a long time and they have never issued equity before. It’s not something that they generally like to do, but they were very optimistic and excited about the opportunity to buy acreage in the Delaware Basin.”

He doesn’t expect more equity raises, so “having that in their rear view, I think they are pretty well-financed from this point forward.”

At some point, Katzenberg said, Carrizo may sell off its Niobrara, Marcellus and Utica properties, which total just over 100,000 acres. The company has joint venture partners on these properties that help it minimize risk and future capital commitments. Still, the company’s balance sheet doesn’t require divestitures: Net debt sits at about three times EBITDA.

“The balance sheet is strong, so they are not forced to do any asset sales to pay down debt, like you see at a lot of E&P companies,” he said. “I think they will wait until they get an attractive offer, and then they will absolutely pull the trigger. Then, at that point, they would take those proceeds and they would like to buy more in the Permian.”

Industry stalwart

Past performance doesn’t guarantee future results, but EOG Resources Inc.’s track record suggests it’s one of the better-positioned E&P companies in this weak environment, said Michael Scialla, analyst with Stifel Nicolaus & Co.

“It’s really been a stalwart in the industry,” he said. “It’s been an industry leader throughout the whole evolution of shale plays, and even prior to that. It’s really prided itself on being a first-mover into a lot of these plays, so it hasn’t sunk a lot of capital into capturing land positions like a lot of the competitors that have been followers.”

That has translated into some of the top profits in the industry, Scialla said, by any number of measures. The company had the best ROI for the 2010 to 2014 period of any large-cap company that Stifel follows, he said.

The company isn’t resting on that first-mover advantage, however: Scialla said EOG has gotten remarkably more efficient, drilling three times as many wells in 2015 as it did in 2011 with the same number of rigs. The wells are more productive, too. “So if you look at how much production they are getting per rig, it’s more like five times,” he said.

Analysts see potential in these upstream stocks.

EOG captured “the best stuff in the oil window” of the Eagle Ford play, starting in Gonzales County, and has put up better results in the western part of the Eagle Ford than many competitors, Scialla said. While the Eagle Ford makes up the bulk of the company’s assets, EOG has a position in the Bakken in Mountrail County, North Dakota, and has started drilling “some of the best wells” in the Permian Basin. All told, EOG has an inventory of more than 12,000 drilling locations, most of which it says work below $50 per barrel.

Investors have divided E&P stocks into “haves and have-nots,” Scialla said, and since EOG is one of the former (its debt is just 1.1 times EBITDA), its shares have held up better than most. Yet the stock still trades at a discount of roughly 30% to his “very conservative” NAV estimate of $100. EOG “has been getting better wells, cheaper wells, and as they do that, our NAV will continue to go up. But even if they aren’t able to improve at all, we see at least 20% upside in the stock from the current levels.”

Hidden potential

Jones Energy Inc. isn’t in any of the “hot areas” of drilling in North America, Richard Tullis, energy equity analyst with Capital One Securities, will freely admit. It could still be one of the hotter stocks of 2016, though, because of its focus on costs and emphasis on hedging production.

Jones operates mostly in the Cleveland play in the Anadarko Basin. The company had driven its well costs down to $2.6 million per well late last year, versus the $4 million per well Tullis modeled in 2014. In addition, “they’ve done a pretty good job driving down operating costs, and a lot of those efficiencies we expect will stick around even if we do hopefully move into a higher commodity environment down the road,” Tullis said.

At the same time, Jones has hedged production to a greater degree than many of its peers. For 2016, more than three-quarters of Jones’ estimated oil production is hedged at $79 per barrel, and about three-quarters of its estimated natural gas production is hedged at close to $4 per Mcf. Among peers, “the hedge books, on average, drop off considerably from 2015 to 2016, so they are in a fairly good position as far as the revenues being relatively safe based on our production estimate.”

Being out of the hot spots has enabled Jones to report some cool acquisition costs. While companies operating in the investor-favored Permian Basin are often paying more than $20,000 per acre, Jones has been paying less than $1,000 per acre in the Cleveland in recent deals. “That bodes well for the future, given that we have a rebound and given that drilling pace picks up,” Tullis said.

Tullis sees significant upside potential, with Jones trading at less than half his $10 NAV estimate. “It’s primarily a matter of investors coming around to appreciate the cost structure that’s in place, and that they’re still getting reasonable rates of return in the Cleveland despite it not being in a really hot play. That’s this company’s focus area; they have been drilling in this area for more than 20 years, so they know the lay of the land and what makes it work.”

Fast online

With all the talk of the shale revolution and U.S. energy independence, investors have had their pick of companies focused exclusively on domestic opportunities. That’s meant that Noble Energy Inc., a company with an international portfolio of projects complementing its U.S. shale holdings, has typically traded at a discount to the E&P group.

Given its performance, though, investors simply aren’t giving Noble enough credit, Stifel’s Scialla said. “They have been a terrific operator in really every area where they have operated. They had some projects in the Gulf of Mexico come online here recently that they turned around in three years or less from discovery to online day. Even though they were little satellite discoveries, it still speaks well of their ability to execute. Most of those similar types of discoveries would take companies five years or more to bring online.”

Investors greeted Noble’s 2014 acquisition of Rosetta Resources with skepticism, particularly as the timing proved too early, given the deal came well before oil prices bottomed. But, said Scialla, “they are getting some terrific wells on the Rosetta properties. There are some wells that are producing up to 6,000 barrels of oil equivalent per day (boe/d), twice what they were advertising and about four times what we were modeling.”

The Rosetta deal gave Noble properties in the Eagle Ford and Delaware basins, on top of Noble’s high-quality Niobrara play. Unfortunately, Noble’s misadventures in Israel have offset, at least temporarily, the benefits of its U.S. properties. Noble made discoveries in an offshore play in Israel, but the Israeli government “threw a roadblock” into their development, Scialla said. Two top-ranking officials resigned before the project ultimately obtained approval.

“Even had they not really had the issue in Israel, it probably still would’ve sold at a discount,” Scialla said, because of investors’ perception of the company’s political risk in operating outside the U.S. Then, “that kind of played out with the whole Israeli fiasco.”

At the end of the third quarter, Noble Energy’s debt sat at 2.7 times its trailing EBITDA—not as strong as some, but “they still have some growth and momentum behind them … the Rosetta acquisition, plus these three Gulf of Mexico projects, two of which are online now and another one coming online early next year, are going to allow them to maintain the net debt to EBITDA ratio and maybe even lower it next year.”

Play on the Permian

Many investors think the most promising of the U.S. shale plays is the Permian Basin, since the Eagle Ford and Bakken are further along on their development curves. Robert Baird & Co.’s Katzenberg suggests Pioneer Natural Resources Co. is a top pick among Permian players.

“The reason that we like Pioneer, and why we think it is still undervalued, is that it has just a gigantic resource upside in the Permian Basin,” Katzenberg said. “There is a lot of upside potential from acreage and resource discovery there. And Pioneer has potentially as much as 800,000 or 900,000 net acres in the play. It’s a huge footprint for an independent E&P company. That’s ultimately what we suggest investors look for in an E&P stock: many, many years of drilling inventory, so that you know that they can continue to grow production and resources over the years.”

Pioneer has properties in a number of plays but has been selling off noncore assets over the past five years to focus on the Permian, while retaining its position in the Eagle Ford. Pioneer did sell its Eagle Ford midstream business for $1 billion, but Katzenberg thinks speculation of Pioneer selling its Eagle Ford upstream business is premature, at least until the Permian assets generate more cash flow in a few years.

Katzenberg estimates Pioneer’s net debt at less than two times EBITDA, versus an average of five times in the small-cap group he covers. Among U.S. companies, “historically any time we moved above three times, people got nervous about the balance sheet. But given where we have gone over the last 12 months, four times seems to be the benchmark. So Pioneer is very far from it.”

The primary pushback from investors eyeing Pioneer is the cost of developing the Permian assets. “They are spending a lot of money to develop this huge footprint that they have, and they are outspending their cash flow. So that is the one concern that people have on Pioneer: When will they be able to have a development plan where cash flow and spending match up? And we do believe they will get there … as Pioneer builds out its infrastructure and gets more familiar with its acreage, it will move on to that development mode, and that’s when you’ll start seeing positive returns.”

Dry gas simplicity

Rice Energy Inc., a small Pennsylvania company operating in the Marcellus and Utica shales, is a “gassy” stock, in the classification of Capital One Securities, with nearly all of its value dependent on natural gas prices. Rice’s shares have been cut in half over the past 12 months to levels below those of its peers, reflecting a deeply pessimistic forecast for natural gas pricing.

“The way that I value Rice as a company, it appears as though today’s share price infers a long-term gas price expectation of just over $3 per Mcf,” said Capital One Securities energy equity analyst Brian Velie. Although natural gas prices were around $2 in late 2015, Capital One has modeled a long-term price of $4 beginning in 2019 and flat thereafter, which it calls “on the aggressive side of average.” That yields a NAV estimate for Rice of $26 per share, nearly two-and-a-half times the stock’s market price.

Even at $3.50—“something that folks would be a little bit more comfortable with today”—Rice is one of few gassy companies with “a good amount” of upside from current share prices, Velie said.

Another part of the Rice story that Velie finds appealing, perhaps counter intuitively, is that it doesn’t participate in the NGL boom, being effectively 100% dry gas. “Some of the pressure recently—and it’s only gotten worse over the past few quarters—is pricing pressure on NGLs. Finding a way to get NGLs out has become an issue and will continue to be an issue for the near term. Rice is simple in the sense that it’s just dry gas, it’s a little easier to handle and there’s a little less complexity to that story.”

In Rice’s peer group of eight gassy companies that Capital One Securities follows, Rice trades below the median on an EV/EBITDA basis, while at the same time having one of the better balance sheets. Capital One Securities puts Rice’s net debt at 3.1 times its 2016 EBITDA estimate, while a number of other gassy mid- and small-caps have ratios of six to eight times net debt to EBITDA.

“With the drumbeat of lower-for-longer, a lot of my recommendations are going to be predicated on the idea that a company has to be able to withstand that scenario,” Velie says. “It just doesn’t make sense to me to take that risk right now, because I think there are names that are both undervalued on any reasonable long-term pricing assumption and also have the balance-sheet strength to make it through what might be a tough couple of years.”