With my Magic Eight Ball on the fritz, I can’t tell you precisely when oil prices will rebound. But collapsing share prices in the oil and gas sector mean that there may be bargains to be found amidst the rubbish. BP (LSE: BP) and Petrofac Limited (LSE:PFC) present two intriguing possibilities for value investors with a long time horizon.

Oil services provider Petrofac has weathered the storm quite well lately and saw shares rise by 10% over the past year. Petrofac’s lack of diversification through its focus on National Oil Companies (NOCs) in the Middle East and Africa has proved to be a boon as crude prices have dropped. While other servicing companies have seen revenues shrink precipitously, Petrofac’s order book grew 14% year-on-year for the first half of 2015 as customers such as Saudi Arabia, Iraq and Kuwait continued to pump oil to protect market share.

Petrofac would do well to maintain this narrow onshore NOCs focus as its Laggan-Tormore project for Total off the Shetland Islands has racked up $400m in losses and was responsible for pushing the company into the red for the first half of 2015. With this project coming to a close, the company is doubling-down on the higher margin onshore engineering projects that accounted for two-thirds of revenue last year.

With $1bn in net debt remaining level through 2015, and $850m in cash, Petrofac’s balance sheet should reassure investors. The $20.9bn backlog in orders also means that revenue will continue to grow through 2016 and there should be no further debt added to the books. With the shares trading at 8 times expected earnings and a dividend forecast to yield 4.9% in 2016, I believe Petrofac is a bargain buy for investors going forward.

Take a look

At the opposite end of the spectrum from Petrofac, BP is beginning to look like a share that investors would do well to add to their watch lists. BP’s significant downstream refining operations provided $2.3bn in underlying profits during the latest reported quarter. While further charges from the Gulf of Mexico oil spill wiped out profits for most of 2015, the end to these payouts is looking increasingly near.

BP has rebalanced for sustained low oil prices quicker than rivals and 80% of current proposed projects will break even at crude prices under $60 per barrel. This $60 p/b target is necessary for the company to balance free cash flow and expenses by 2017, but a gearing ratio of 20% means the company has room to borrow if prices don’t rebound that quickly.

Meanwhile, BP’s dividend yield of 7.8% appears to be safe for the time being as refining profits and significantly reduced capex spending provide sufficient cash cover. The elephant in the room remains oil spill-related payouts. Once these are wound down, BP will be solidly profitable even with crude prices under $60 p/b. Shares are currently priced at 15 times 2016 earnings, so it’s not exactly a bargain bin pick-up. But with dividend yields nearing 8% I definitely have BP on my watch list.

BP's dividend certainly outpaces the average FTSE 100 yield, but investing in an oil producer when crude prices could very well continue trending downwards is not for the faint-of-heart. For investors seeking income in safer sectors, the Motley Fool has just released a report on our favourite Top Income Share.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Petrofac. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.