OPEC is calling for stable oil prices. Domestic supplies are at 1975 levels. Cash, funneled into the integrated oil giants, has transformed their formerly debt-laden operations into cash-rich enterprises. There is no shortage of demand on the horizon. So, where are the best values?

Our search need not lead to Royal Dutch/Shell, represented by two trading stocks, Royal Dutch (NYSE:RD) and Shell Transport (NYSE:SC). After revising reserves down by 3.9 billion barrels last week, Royal Dutch fell to a modest 13 times earnings due to uncertainty at its sister company Shell.

Canada's Imperial Oil (NYSE:IMO) sells for 11.6 times trailing earnings and an affordable 7.8 times cash flow. The company has almost as much cash and marketable securities as debt, and purchased 11 million of its own shares during the first nine months of 2003. The company is reporting record sales and earnings even with the strong Canadian dollar. Plainly, Imperial is a solid oil company with a great balance sheet.

If you like to invest where Warren Buffett's Berkshire Hathaway (NYSE:BRKA) does, try PetroChina (NYSE:PTR). It trades at 11 times earnings and an extremely low 3.2 times cash flow. The shares have been weak in part because BP (NYSE:BP) announced that it will sell its 2% stake -- the stock has fallen from a January high of $63.70 to around $50 today. With the BP sale now completed, the selling pressure should abate.

Now that ChevronTexaco (NYSE:CVX) has announced that its reserves are not in jeopardy of a Shell-style revision, its compelling valuation speaks volumes. At 13 times earnings and a reasonable 6.6 times cash flow, the stock yields a respectable 3.4%. Although the company has $13.2 billion in total debt, it also has cash and marketable securities of $5.2 billion and operating cash flow of $12.9 billion. This, too, is a solid company with a great balance sheet.

Before concluding that oil prices will eventually fall and that today's low price-earnings ratios are a reflection of that, consider this: The oil business requires gigantic capital commitments. Today's high oil and natural gas prices are funneling capital into these companies even as they are making large LNG investments and searching for oil in expensive deep sea locations.

If oil prices drop back to $20 a barrel soon, many of the best oil companies will have the strongest balance sheets (based on debt to capital and other financial measures) that they have had in years.

And remember, it was only the beginning of this year that publications such as Time magazine cautioned that by summer we'd see a glut of oil and $20 a barrel. It didn't happen. Demand for oil is strong -- and will get stronger with an economic recovery. Furthermore, it is unclear when Iraqi oil will flow freely again.

That's a lot of factors to consider. Rather than try to time the oil market, investors should consider the value that is building on the best oil company's balance sheets -- and then find the best bet for their investment dollar.

W.D. Crotty owns stock in ChevronTexaco and Berkshire Hathaway. You can e-mail W.D. at wdcrotty@fool.com or join him on The Motley Fool's Oil & Gas discussion board. For a 30-day free trial to the discussion boards, click here.