The oil market fell into complete disarray following the decision by Russia and OPEC to start a price war. The oil price decline seen on the first business day following OPEC's announcement that it would materially cut the prices it charges was nothing short of brutal.

The ultimate goal of this war, however, is to kill the U.S. shale boom, not to permanently push oil prices lower. Whether the effort is successful or not remains to be seen, but the near-term pain for investors is likely to be very real. And this might just be an opportunity for contrarians to pick up some incredible bargains, if they stick to the companies built to survive in a highly cyclical commodity market like oil. Here are three to look at today.

1. Still drilling for now

ExxonMobil (NYSE:XOM) is one of the largest integrated energy majors on planet Earth. It has been using weak oil prices to invest on the cheap in new production, with plans to spend as much as $35 billion a year through 2025. A big chunk of that has been earmarked for onshore U.S. oil investment. Management estimates that this investment can make a 10% return with oil as low as $35 a barrel, a proposition that is going to be tested.

A man looking at a line crashing through the floor beneath him

Image source: Getty Images

One of the key benefits here is that Exxon owns assets across the upstream (drilling), midstream (pipeline), and downstream (chemicals and refining) sides of the business. So, in theory, it can benefit from low oil prices even as they hamper other areas of its business.

But the real reason to like Exxon today is its financial strength. With a financial debt to equity ratio of around 0.15 times, it has one of the least leveraged balance sheets in the oil space. European peers tend to rely on large cash balances to offset the risk of more leveraged balance sheets, which isn't quite as comforting when times get tough. The oil price collapse may cause Exxon to pull back, but it has the financial strength to keep investing for the future if it wants to by increasing its leverage. This dynamic also supports its ability to continue paying its hefty 8%-yielding dividend. 

That's exactly what the oil giant did during the last deep downturn in mid-2014, when oil dropped from over $100 a barrel to the $30 range. A repeat of that period isn't going to be pretty for Exxon, or any other oil player, but this company will survive and thrive again when oil prices eventually recover.

2. Even safer?

The key to remember here is that neither Russia nor OPEC really wants oil to trade hands at $30. They would prefer much higher prices. What they are trying to do is kill off the weakest players in the U.S. oil business. That's why sticking with a financially strong giant like Exxon makes sense. But you can find an even stronger name without too much effort: Chevron (NYSE:CVX)

For starters, Chevron's financial debt to equity ratio is roughly 0.12 times. That's even less leverage than historically conservative Exxon. And while Chevron is investing heavily in the onshore U.S. energy space -- like Exxon, it believes it can make money there even with low oil prices -- it has been pulling back on spending overall. Its plans call for roughly $20 billion a year in capital investment over the near term. That sounds like a lot, but management is happily explaining that this sum is actually less, relative to cash flow, than any of its peers. 

XOM Financial Debt to Equity (Quarterly) Chart

XOM Financial Debt to Equity (Quarterly) data by YCharts

So you get a financially strong oil company that was already operating more conservatively on the exploration front than any of its peers. Add in a hefty 6% dividend yield and there's a lot to like here. The key is that both Chevron and Exxon have the capacity to take on more debt to sustain their investment plans and pay dividends through a brief period of oil price weakness -- which was exactly the playbook they used the last time oil plumbed the $30 range. 

3. Moving it around

The last name to look at is Enterprise Products Partners (NYSE:EPD), a midstream limited partnership. It is one of the largest and most diversified players in the domestic midstream space, with a portfolio of vital infrastructure assets that would be difficult, if not impossible, to replicate. It also happens to be one of the most conservative names, with a financial debt to EBITDA ratio of around 3.4 times. That's at the low end of its peer group, which is the norm for Enterprise. 

The last time oil prices dropped to the $30 range Enterprise was able to keep paying and increasing its distribution without any problems. This time is unlikely to be all that different, noting that its distribution coverage in 2019 was a robust 1.7 times. That's plenty of leeway for a headwind like this, especially given that roughly 85% of the company's gross margin is tied to fee-based contracts. Remember, oil is likely to keep flowing from operating wells even if a driller goes bankrupt, meaning the pipelines that carry oil and gas will still be needed. The owner of the wells might change and maybe contracts will get renegotiated, but the services Enterprise offers are vital and necessary. 

The bigger problem for Enterprise is likely to be growth. If low energy prices lead to a pullback in U.S. drilling, then spending across the entire domestic midstream sector could grind to a halt. That would be bad, but not the end of the world. Enterprise, meanwhile, is strong enough to stick it out and, perhaps, shift its growth plans toward acquisitions. In the meantime, investors willing to think long-term can grab a fat 10% yield. 

Not for the faint of heart

If you are a truly conservative investor, buying an oil- and natural gas-related stock may not be for you. That said, the fog of the price war between Russia and OPEC is causing even great companies to trade hands at incredibly cheap levels. Exxon, Chevron, and Enterprise are well run and fiscally conservative. They have all survived through periods in which oil prices were as low as they are today. Each is highly likely to survive this difficult period, and thrive again when oil prices rise. And if you are stout of heart, you can pick up some high yields while the world waits for oil prices to get back to more normal levels.