Montreal, Canada

The disastrous oil spill in the Gulf of Mexico has smashed out many large-cap oil stocks worldwide since May. Oil drillers have declined even harder.

Put options on British Petroleum ADR (NYSE-BP) over the next six months show high volume and open interest around a $7.50 strike – speculators are betting there's a chance the British energy giant might decline another 75%. That's hard to believe. But until that well is finally capped, it's hard to say what lies ahead in terms of clean up expenses and liabilities for BP shareholders.

Amid the carnage for oil investors, big bargains are beckoning for long-term value investors.

A panic in the market or, in this case, a specific sector of the market, usually opens the door to some distressed opportunities. Some oil drillers, which have little or no operations in the Gulf of Mexico have been slaughtered since late May; these companies won't be adversely impacted by the new moratorium on Gulf drilling. One in particular trading near its 52-week low, has tremendous free cash-flow and commands 20% of its gross revenues from the Gulf. Most of its operations are in the North Sea, Iraq, Nigeria and other countries in the offshore oil-belt.

One of my favorite oil majors is ENI SpA SA of Italy (NYSE-E). This large-cap European giant has been an open position in my Commodity Trend Alert (CTA) service since 2001 and has gained a cumulative 167%, including dividends.

ENI is Europe's most profitable oil major and has a major presence in North Africa – a region where most American and British companies don't drill or hunt for oil. The stock is 13.5% above its 52-week low, trades at 11.8 times trailing earnings and yields an effective 9.8% trailing 12-month pay-out. That ranks among the juiciest dividends among European oil majors and far more than American oil companies. In fact, ENI has historically raised its dividend yield almost every year since the beginning of 2000.

Though I certainly wouldn't touch BP at these prices – even after a crash – I would be hunting for international oil companies at these lower prices. Europe offers some of the best bargains now for yield-hungry investors – especially dollar-based investors following a drubbing for the EUR. Other companies sporting relatively high yields include Statoil ASA of Norway (NYSE-STO), Total ADR of France (NYSE-TOT) and Canadian Oil Sands Trust in Toronto (TSX-COS), which should benefit enormously as the United States continues to shift to safe, easily accessible and reliable Canadian oil following the Gulf disaster.