The price of crude oil has been all over the place in recent years. That's causing most investors to avoid the sector. However, crude has recovered some of its lost ground over the past year thanks to continued production curtailments by OPEC and a drilling slowdown in the U.S.

Despite those positive developments, sentiment in the sector remains negative, which is why most oil stocks haven't recovered even though their operations and financial profiles have significantly improved. That's leading several to trade at insanely cheap levels, especially considering the free cash flow they're on track to produce this year given that crude prices are near $60 a barrel these days. Two of those dirt cheap free cash flow machines are Devon Energy (NYSE:DVN) and Diamondback Energy (NASDAQ:FANG), especially compared to rival Concho Resources (NYSE:CXO).

$20 bills and a calculator with an oil pump in the background.

Image source: Getty Images.

Transformation complete

Devon Energy has spent the past several years sharpening its focus on its top low-cost, oil-rich U.S. shale positions. That led the energy company to jettison several assets, including its low-margin gas assets in the U.S. and its Canadian operations. The oil producer recently completed that transformation, which has it on track to thrive at a much lower oil price.

In 2020, Devon only needs oil to average $48 per barrel to fund its growth program -- which will expand its oil output by about 7% to 9% -- and fund its dividend. With crude bouncing between $55 and $60 a barrel, the company is on track to generate a boatload of free cash flow this year. At $55 a barrel, Devon could produce $400 million in free cash, with that number rising to $675 million if oil averages $60.

Given Devon's current market capitalization of around $9.7 billion, the company trades at 14 to 24 times its free cash flow (FCF), or an FCF yield of between 4% and 7%. Those are attractive levels for an oil producer since the industry has historically struggled to produce excess cash after funding growth. That's why it plans to use those funds to continue buying back its dirt cheap stock.

Reaching an inflection point

Diamondback Energy has spent the past several years building a leading business in the oil-rich Permian Basin. The company spent billions of dollars to acquire land and drill more wells to grow its scale. It has now reached a large enough size to leverage costs so that it can expand its oil production by 10% to 15% while also covering its dividend on the cash flows it can produce on $45 oil. As such, it's on track to deliver a gusher of free cash flow this year, given where crude prices are these days.

In Diamondback's view, it can generate between $675 million and $950 million in excess cash in 2020 if crude ranges between $55 and $60 a barrel. With the company's current market cap around $14.4 billion, it trades at 15 to 21 times FCF, or an FCF yield of between 5% and 7%. Again, those are attractive levels for an oil producer, which is why Diamondback expects to use these funds to keep buying back its cheap shares.

Same story, higher valuation

To put the cheapness of Devon and Diamondback into perspective, we'll compare them to rival Concho Resources. This oil producer has also spent the past few years building out a large-scale position in the Permian Basin. It, too, has reached an inflection point where it should start producing significant free cash flow in 2020.

In the company's view, it can generate enough cash at $50 oil to support its dividend as well as fund the new wells needed to grow its oil production at a double-digit rate with room to spare. Concho projects that its free cash flow would be around $350 million if oil averaged $50 a barrel, and rise to $750 million if crude averaged $60 a barrel this year.

Given Concho's current market cap of $18 billion, it trades at 24 to 51 times free cash, or a cash flow yield between 2% and 4%. With Devon and Diamondback trading at about 15 times projected free cash flow at $60 oil, compared to 24 times by Concho, they're significantly cheaper than this peer even though they offer similar growth profiles.

Cheap cash flow from the oil patch

With sentiment remaining negative across the oil patch, value-conscious investors can find some pretty compelling valuations, which is rare in this red-hot stock market. While most oil stocks trade at attractive values, some like Devon and Diamondback are ridiculously cheap, given their growth prospects and the amount of free cash flow that they expect to produce this year. That makes them intriguing options for investors who are hunting for value.