I believe there is a severe mispricing of many oil stocks that are now below/around a $1. The market is being too pessimistic as it once was in 2008. It is unlikely the entire group of mid/small cap oil companies will ALL go down under. Even if some do, or most, the following trade idea will likely still be profitable.
Looking back at the financial crisis of 2008, many prominent large cap companies turned into penny stocks especially in the banking and automotive industry. Not all stocks survived. For example, General Motors ($GM) share holders eventually got wiped out. However, Ford ($F) recovered, giving exponential returns (eventually making new 10-year highs). Thus, a pair trade would of been extremely profitable (purchasing both stocks and holding simultaneously). Similarly, in the financial sector, Citigroup ($C) and Bank of America ($BAC) had an epic recovery eventually.
The thesis of this trade is that the Market is being too pessimistic when it comes to these oil companies as a whole failing and the share holders getting wiped out completely. Thus, giving them no chance to profit once oil prices eventually stabilize. In some of the worst cases within the last year, a few companies that have already restructured through bankruptcy were able to retain some equity to their shareholders (beware many got wiped out as well). Therefore it is not always game over when filling for bankruptcy (I do not recommend in this type of speculation, just stating a fact).
As per my thesis, I believe an incredibly profitable trade would be to purchase a basket of distressed oil stocks (the more stocks purchased the better in increasing your chances of holding some that will survive long term). Those that survive will likely give at least 10X in returns, with the expectation that these will be held for a very long time (possibly 5-10 years out).