Today’s update from Victoria Oil & Gas (LSE: VOG) is upbeat and shows that the company is making encouraging progress. For example, in the first half of the year its revenue increased by 63% to $18.9m as two new gas-fired power stations came online and new industrial users were signed up.

This helped to increase adjusted EBITDA (earnings before interest, depreciation and amortisation) by over 400% and improved the company’s net cash position, which now stands at $6.3m versus $5.1m in May 2015. And with Victoria Oil & Gas’s subsidiary Gaz du Cameroun having maintained almost all customers within a contract price bracket of between $9 and $16 per mmbtu, it appears to be relatively well insulated from the turmoil in the oil market.

As such, Victoria Oil & Gas could be of interest to less risk-averse investors. Its improving profitability and strong net cash position will be of considerable appeal and a key reason for its 33% outperformance of the FTSE 100 since the turn of the year. However, with the oil and gas market being relatively cheap, there may be better risk/reward ratios on offer elsewhere since Victoria Oil & Gas remains a small and higher-risk play.

Growing appeal

One stock that continues to have huge appeal in the long run is BP (LSE: BP). It offers a very sound asset base that few other oil and gas stocks can match. And at a time when there are real doubts surrounding the long-term sustainability of numerous explorers and producers, this could help investor sentiment in BP to improve. And with its shares having outperformed the FTSE 100 by 1% since the turn of the year, there’s the scope for further index-beating performance in the coming years.

In additional to capital gain potential, BP also offers an excellent income return. Its shares currently yield 7.8% and in the next financial year profits are expected to fully cover dividend payments. While this doesn’t guarantee that dividends will be maintained moving forward, it does show that BP’s appeal as an income play may be stronger than the market is currently pricing-in.

Look elsewhere… for now?

Meanwhile, shares in Cairn Energy (LSE: CNE) have also beaten the FTSE 100 this year, being up by over 3% year-to-date. Clearly, some of this performance is due to improved investor sentiment towards the wider oil and gas sector, but Cairn continues to have a bright long-term future. For example, it has a significant net cash balance of $603m and recently announced the purchase of an additional stake in the Kraken development in the North Sea.

However, with there being the potential for a further fall in the oil price over the medium term, it may be prudent to focus on oil and gas companies that are profitable. With Cairn not expected to have a black bottom line in each of the next two financial years, there may be better options elsewhere. That’s especially the case when companies such as BP offer high levels of profitability and good value, as demonstrated by its sky-high yield.

Of course, finding the best stocks at the lowest prices can be challenging when work and other commitments get in the way.

That's why the analysts at The Motley Fool have written a free and without obligation guide called 10 Steps To Making A Million In The Market.

It's a step-by-step guide that could make a real difference to your financial future and allow you to retire early, pay off your mortgage, or even build a seven-figure portfolio.

Click here to get your free and without obligation copy - it's well-worth a read!

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