What happened

Shares of independent oil and gas driller Apache Corporation (NASDAQ:APA) fell 20.6% in October, according to data provided by S&P Global Market Intelligence. That more than wiped out the stock's gains for the year: Shares of Apache are now down more than 10% so far in 2018.

So what

Although the drop was big, it wasn't that far out of line with the overall oil and gas exploration and production industry. As measured by the SPDR S&P Oil and Gas Exploration and Production ETF (is that a mouthful or what?), the overall oil and gas drilling industry had a rough month, with the ETF's shares down 16.7%.

A row of oil pumps in a desert landscape

Apache Corporation has underperformed the stock market lately, but October was particularly bad for the oil and gas industry player. Image source: Getty Images.

This was due primarily to a marked drop in oil prices during October. At the start of the month, both Brent crude and WTI crude spot prices were sitting at their highest levels since 2014. But then, thanks in part to concerns about oversupply, those prices dropped. They dropped so much that October became the worst month for oil prices in more than two years.

That spooked investors, who sold off oil and gas shares pretty much across the board. Offshore rig stocks, oilfield services stocks, and drillers were all feeling the hit; Apache was no exception.

Couple that with softening in the overall market -- the S&P 500 was down 6.9% for the month -- and Apache's drop isn't surprising. Apache's stock has been more volatile than peer stocks lately, and seems to swing more wildly when the market makes big moves, as with the market correction in February.

Now what

As the month ended, Apache reported its third-quarter earnings, which were solid but not spectacular. The market was unimpressed -- or perhaps more concerned about oversupply than impressed -- and the driller's shares have bounced around between $36 and $38 per share since. That looks incredibly cheap from a valuation perspective, at a trailing price-to-earnings ratio of about 16, especially considering the sheer volume of Apache's valuable Permian Basin assets.

Inevitably, oil prices are going to have a bad month here or there. When they do, investors will bid down energy stocks. But oil prices are still far higher than they were during the oil-price slump of 2014-2017, and Apache much more profitable. Even though this drop happened in October, smart investors shouldn't let themselves get spooked.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.