This article might help you out:
http://www.joshuakennon.com/lets-talk-about-investing-in-oil-stocks-and-the-oil-majors/The price fall is interesting to see. If watching it is causing you heartburn, just look up the dividend payment date, only check the price then, and look at how many shares your reinvested dividend bought. As the price of the stock tanks, the number of shares you get with the dividend goes up (usually, dividend cuts can happen also), so by looking at that number instead of the price number, you see your investment growing.
And since you weren't buying money, you were buying an ownership stake in the company, that's what is actually happening. The day-to-day valuation of a piece of property you own is useless information. It matters what it costs the day you buy it, and the day you sell it. The price going down while you're buying is a good thing.
And if you were investing according to an asset allocation, rebalancing wouldn't mean selling at a loss unless the rest of your portfolio also tanked. If this went down and others went up, you sell the others locking in the win, and you buy the losers, taking advantage of the lower price.
It's possible that oil companies will stay down over the long haul, but there's some reason to be optimistic. Right before Christmas we saw the first tanker loaded with crude destined for foreign ports leave the US in 40 years. It strikes me as exceedingly stupid to sell the stuff when prices are crazy low, but if prices recover, the U.S. producers are likely to see awesome returns.
Right now, some oil companies are folding, and the more stable ones are gobbling up the assets at steeply discounted rates. Employees are being laid off and expansion plans halted to the extent the capital can be recaptured. These are some of the most cutthroat businesses in the world, and they have no loyalty to any particular type of process or product. They will go where the money is and they will succeed because they are great at it.
It depends greatly on the choice you made with respect to which oil companies though. There are absolutely companies out there on the brink of bankruptcy, so blanket advice to just hold on or to buy more should be ignored.
I hold most of the US majors and will continue to do so. But it is overall less than 1% of my portfolio (just for fun). The other 99% is in index funds.