Brent crude slumped from around $110 a barrel two years ago to below $30 in January — a whopping 75% decline. However, we’ve seen a pretty strong recovery in recent months, with Brent now flirting with $50.

Many companies will benefit from this, but for the biggest gains should we be looking to a FTSE 100 giant such as BP (LSE: BP), a mid-cap oil company such as Tullow (LSE: TLW), or perhaps a small-cap equipment specialist such as Hunting (LSE: HTG)?

Blue-chip prospect

During oil’s 75% decline, BP’s shares fell a relatively modest 28%. Conversely, while oil has risen 70% from its January low, BP’s shares have rallied a less spectacular 17%.

BP’s heavyweight blue-chip status, scope for reining-in investment and cutting operating costs, profitable refining operations mitigating upstream losses, and headroom to increase borrowings have all contributed to its shares being less volatile than the oil price.

It currently offers a dividend yield of 7.4%, with finance director Brian Gilvary saying last month that the dividend is “the first priority within our financial frame,” and that levers can be further pulled to support the dividend should oil prices remain low.

BP’s high yield, and a price-to-earnings (P/E) ratio of under 14 based on next year’s forecast earnings, suggest it could deliver a superior investment return than some other blue chips in highly-rated, low-yielding sectors. But is BP the best oil bet?

Up with events?

Shares of FTSE 250 firm Tullow have been far more volatile than BP’s, and much closer to the decline and rise of the oil price. Tullow’s shares fell 71% as oil declined 75% but have soared 111% as oil has recovered from its January low.

The company is riskier than BP for a number of reasons, including its operations being focused on Africa and the importance of the success of its TEN Project from which first oil is expected in July/August. Tullow also carries a lot of debt — around $4.5bn at the last reckoning — but does have free cash and unused debt headroom of $1.3bn.

It trades on a 2017 forecast P/E of 20, compared with BP’s 14, so the market appears to have factored-in the improving oil price by pushing up the mid-cap firm’s with that huge rise since the January low. The valuation seems up with events for the time being, although the long-term outlook could still be bright.

Big winner potential

Oil equipment firm Hunting was demoted from the FTSE 250 to the FTSE SmallCap index as its shares sank 70% as oil declined 75%. While Hunting’s downward move was of a similar magnitude to Tullow’s and the oil price, it hasn’t shared in the big recovery since January. Its shares are just 12% up from the low.

The reason for the relatively poor performance was a trading update last Thursday. It reported a further deterioration in market conditions, poor near-term trading visibility, and said it’s in negotiations with its lenders to amend some bank covenants.

However, the balance sheet remains strong and the covenants relate to EBITDA ratios. I don’t see this as being a huge problem with Hunting’s “supportive lending group, comprising five banks”. Clearly, though, there’s heightened uncertainty and risk, which would only increase if it turned out to be over-optimistic for management to “anticipate the trading environment to stabilise in the latter part of 2016”.

However, for investors prepared for the risk, Hunting could be the biggest winner in my view, if things pan out favourably.

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