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An Underwater Company That's on the Rise

Perhaps you'll agree that all Foolish portfolios should contain at least a modicum of energy representation. And even more specifically, at least one oil-field services stock is especially appropriate for inclusion in today's world.

Why not latch onto a company whose share prices has risen by about 52% since June, that is the big enchilada in its area of the services sector, and that stands to benefit materially from the rapid movement of the quest for oil offshore? There is such a company. Indeed, it's Oceaneering International (NYSE: OII  ) , which has morphed from a Houston-based diving company at its founding in the 1960s to a sophisticated purveyor of systems and support for drilling operations in the offshore, including in ultra-deep waters.

Oceaneering's foursome
The company operates through four separate segments: subsea projects, subsea products, asset integrity, and remotely operated vehicles (ROVs). Because services functions can be arcane, even for longtime energy investors, let me provide a glimpse at the roles of each of Oceaneering's units.

The subsea projects unit is involved in a host of installation, inspection, repair and maintenance, and plug and abandonment functions. The primary locus of its operation remains the Gulf of Mexico. The subsea products segment provides a myriad of sophisticated engineered equipment for offshore exploration and production activities. Included are built-to-order subsea hardware, workover and control systems, and blowout preventer control systems.

The segment also remains the only manufacturer of a full range of crucial subsea umbilical systems. Oceaneering's asset integrity unit is the industry leader in the provision of progressively more indispensible inspection and integrity operations for underwater systems and equipment.

The sinking robots
However, Oceaneering has become best known for its ROVs. These nearly 9,000-pound aquatic robots constitute a vital part of 150,000-pound packages. They function dependably in 10,000-foot depths of water amid 5,000 psi of pressure. They're operated by three-person crews whose "office" is a 20-foot-long computerized control room that sits atop the rig floor.

After providing video and sonar reconnaissance of the sea floor prior to the initiation of drilling, the ROVs remain functional throughout the drilling process. Beyond that, they become especially valuable in times of accidents or other operational mishaps. Indeed, Oceaneering ROVs were crucial to the monitoring and ultimately the control of the BP (NYSE: BP  ) and Transocean (NYSE: RIG  ) 2010 Macondo explosion and four-month gusher in the Gulf of Mexico.

At the conclusion of 2012, Oceaneering operated a fleet of 289 ROVs, up year over year from 267 units. Obviously, as deepwater drilling and subsea completions increase in the U.S. Gulf of Mexico, Brazil's Santos Basin, offshore Angola, and in the South China Sea, the demand for ROVs -- along with Oceaneering's other products and services -- will expand apace.

Awaiting those new floaters
That demand is also correlated to the total size of the world's deepwater drilling fleet, which continues to expand steadily. At the conclusion of 2012, there were 93 new "floaters" on order, 64 of which will not be employed by Petrobras (NYSE: PBR  ) in Brazil. Of those 64 rigs, ROV contracts have been let on 17, with 13 going to Oceaneering. Garnering a comparable percentage of the remaining 47 units would benefit Oceaneering materially. London-based Subsea 7 SA (UNKNOWN: SUBC.DL  ) is perhaps Oceaneering's most significant ROV competitor, with a fleet about half as large as that of the Houston company.

As but one major example of the increasing global importance of subsea systems and completions, you likely noted that during November oil-field services kingpin Schlumberger (NYSE: SLB  ) and Cameron International (UNKNOWN: CAM.DL  ) , a provider of flow equipment products and equipment, formed a joint venture, which they're calling OneSubsea. The venture is 60% owned by Cameron, and its charter is the manufacture and development of products, systems, and services for the subsea oil and gas market.

The Foolish bottom line
Considering all this, it's difficult to dispute Oceaneering's position in the figurative sweet spot of the world's progressively more challenging quest for oil and gas. On that basis, it's clearly a company that merits steady monitoring by Foolish energy investors.

National Oilwell Varco is another significant beneficiary of the rapid pace of deepwater rig construction. This company is a leading provider of equipment and components used in drilling and production operations, and poised to profit in a big way from it. To get the name and detailed analysis of this company that will prosper for years to come, check out the special free report: "The Only Energy Stock You'll Ever Need." Don't miss out on this limited-time offer and your opportunity to discover this under-the-radar company before the market does. Click here to access your report -- it's totally free.

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