I know you can tap into where the stock oil sending unit is with a "T". However, On my dads ranger we decided to use a sandwhich adapter. These are most commonly used for oil coolers. We plan on Turbo'ing his 2.3 so figure we can use the adapter for the gauge, turbo lines and an oil cooler down the road.
Here are some pics. First we drilled it with an 11/32" bit, then tapped with 1/8-27 NPT pipe tap. Screwed in the brass fitting. We used some blue locktite on the stud extender piece, we don't plan on taking the adapter off.