(FORTUNE Magazine) – With crude prices rising so fast, oil and gas stocks are going up too. But selecting the best ones is as tricky as predicting the moves of Saddam Hussein. One safe way to cash in on oil now and build a portfolio to weather most contingencies is to invest in natural resource mutual funds. The five in the table (see page 36) are the best of the lot. They have performed well both this year and over the past three, when oil was in the doldrums. Few are heavily invested in companies that stand to be hurt by Mideast war. The most specialized fund on the list is the Fidelity Select Energy Services Portfolio. It is 85% invested in energy service companies, which can only benefit from the need to drill more wells or rebuild rigs. Even before the invasion of Kuwait, oil exploration had been on an upswing. Over the past 12 months the number of drilling rigs operating in the U.S. has increased 9%, to 1,055. Portfolio manager David Neisser prefers companies that do lots of business overseas because that's where the most promising exploration takes place. Though a few untouched spots remain in North America, primarily in still- protected areas offshore and in Alaska, most of the U.S. has been punched full of more holes than a dart board in a roughneck's bar. Developing already proven sites in the Gulf of Mexico and the North Sea will benefit McDermott International, Neisser's biggest holding. The company fabricates and installs offshore production platforms and now has a backlog of more than $2 billion, vs. $650 million last year. Neisser expects the company, which lost money in the year ended last March, to break even this year and earn $1.50 a share in fiscal 1992. Its stock has risen 31% since January. Ernst von Metzsch, manager of Vanguard Specialized Energy Portfolio, likes oil field service stocks too, but they make up just 12% of his more widely diversified selection of oil and gas stocks. Some 40% of his holdings are in integrated producers like Texaco, his biggest position at 4.2%. Von Metzsch favors stocks of big companies that pump a lot of their own oil, as Texaco does, because earnings respond quickly to higher prices. For every dollar-a- barrel rise in crude, Texaco's profits go up 50 cents a share. Von Metzsch also likes the company because its stock has been under a cloud ever since the Pennzoil settlement, making it a cheap bet for a play on rising oil. His earnings expectations: $5 per share this year and $6.50 in 1991. The rest of his portfolio includes independent explorers, refiners, and a number of small Canadian companies with huge natural gas reserves. For a purer play on oil and gas producers, the Fidelity Select Energy Portfolio is the best choice, especially if you believe in making big bets. At present almost one-eighth of the portfolio consists of two stocks, Phillips Petroleum and Kerr-McGee. Fund manager Frank Bracken likes them because they can increase production without costly exploration -- and do so outside of the volatile Middle East. Both own large fields in the North Sea that, when fully developed, could increase production by 20% for Phillips and 40% for Kerr- McGee by 1995. Adds Bracken: ''The stocks are misunderstood. Phillips is viewed as a chemicals company, though only 14% of its cash flow comes from chemicals. Kerr-McGee has had management problems, but the company has been successfully selling off non-key assets.'' Shares of both trade at a discount of more than 25% from the industry norm of five to six times cash flow. Like many of his peers, Jerry Mill, manager of the Financial Strategic Energy Portfolio, holds shares of independent explorers and oil producers. But his special focus is on natural gas stocks. Says Mill: ''While oil prices have doubled, natural gas prices haven't moved. As we head into the heating season, figuring out that natural gas prices will rise is like falling off a log.'' Mill's biggest holding, 5% of his portfolio, is Associated Natural Gas, a Denver pipeline and marketing company that, uniquely, gets a cut of the revenues from the gas wells it serves as well as payment for delivering the gas. The company could benefit from a repeat of last winter's shortage of natural gas liquids. Mill expects earnings to be up to 85 cents this year from 17 cents, and to reach $1.60 next year. Another believer in Big Oil is the Putnam Energy-Resources Trust. Among its major holdings are Atlantic Richfield and Royal Dutch/Shell. Manager Ronald Clark believes that Arco's stock, presently $135 a share, could leap to over $150 if oil settles at $25 a share, based on projected per share earnings of $14 next year. Arco, which pumps the majority of its crude from Prudhoe Bay in Alaska, is the least dependent of any of the American producers on Middle East crude. Royal Dutch/Shell, notes Clark, has the potential to escape Middle Eastern dependency by developing fields it already owns in the North Sea and new fields in the U.S.S.R. (see The Soviet Union). The company is well positioned to do that because it has virtually no debt.

CHART: NOT AVAILABLE CREDIT: SOURCE: MORNINGSTAR CAPTION: OIL STOCKS THAT PAY Oil and gas is booming again. The natural resource funds listed below are chock full of energy-related stocks like McDermott, maker of the offshore platform bound for the Gulf of Mexico at left. New drilling will keep McDermott and others rolling for years.