On the heels of Wednesday’s Energy Information Administration inventory report that showed a surprise surge in U.S. crude supplies, investors might be tempted to invest in the sector’s bigger names that can better weather market volatility.

However, at least one analyst isn’t buying that narrative.

“I think that’s a bit of a myth,” Nima Billou, energy analyst at Veritas Investment Research, told BNN on Wednesday.

“There was something that was a bit concerning in the report,” he said. “All three products – both crude, distillate and gasoline – are at the upper end of their ranges for five-year inventory levels or are at record levels in terms of crude… That speaks to longer-term weakness.”

Billou said that he and his firm had reviewed top names like Imperial Oil (IMO.TO) and Suncor (SU.TO). He said he’s worried Suncor’s financial position is “deteriorating” amid a “heavy spend period.”  Billou added Imperial looks expensive and he’s concerned about the profitability of its Kearl oil sands project.

So what’s the alternative?

“If you want a large, safe company, I’d actually go for the ‘weaker sisters’, if you will, of that group,” he said. “There are a number of high-quality names that can generate money [with oil prices hitting] US$30, $35, $40 and at $60, so they can endure the low period and high period.”

Here is Billou’s breakdown of some of the more attractive energy plays right now:

Vermilion Energy (VET.TO)

“Vermilion has never adjusted its dividend, it has an excellent international strategy and they’re able to grow production with sort of a minimal capital investment and they’re going to generate enough free cash flow to feed their budgets.”

Crescent Point Energy (CPG.TO)

“Crescent Point, as well, you’ve got a $50 [oil] price level for next year, that’s what they’ve assumed. They’re going to generate a couple extra hundred million in excess free cash flow when – I don’t think if... - two years from now, oil [hits] 55, 60 bucks.”

Husky Energy (HSE.TO)

“They’ve improved their debt situation, they’ve recently sold midstream assets and they’re levered to much higher oil prices in terms of heavy oil production.“

Cenovus Energy (CVE.TO)

“Cenovus has a fantastic balance sheet, as well and there’s upside in that name and again, they’re levered to higher oil prices.”

However, Billou did offer a prognostication in terms of a worst-case scenario.

“The only caveat to all this in the near-term is if you do have a global recession, if you believe in it, then we think that [oil] prices will stagnate at US$45 for another year and that will be disastrous for the entire sector,” he said.

“But,” he added, “I think two years from now – looking beyond that point – it’s an inevitability that oil prices are higher.”