2018 is turning out to be an excellent year for oil stocks. Since the start of 2018, the two most commonly quoted oil benchmark prices -- Brent and WTI -- are up 17% and 13%, respectively, and they are taking the prospects of many oil stocks with them. Three companies that stand out as rather impressive performers so far this year are independent oil producer Marathon Oil (MRO 0.14%) and oil services companies Oceaneering International (OII 2.91%) and Noble Corporation (NEBLQ). All three stocks are up more than 30% year to date, which I'm sure comes as a welcome sight after the past few years.

What's more impressive, though, is that all three of these oil stocks look like they could gain significantly more. Here's why things have been working in these three's favor recently and why we can expect even greater things from Marathon, Oceaneering, and Noble in the future. 

Offshore oil rig superimposed over stock chart.

Image source: Getty Images.

Getting more for the same amount of spending

With oil prices rising sharply in recent months, many oil and gas producers have said they intend to increase their production guidance. Most of the time, though, that means the company will increase its capital spending. That increase in spending has also been a result of higher input costs, which are climbing as a higher percentage of crews and equipment get utilized in the continental United States. 

What makes Marathon rather unique is that the company's most recent drilling results have allowed it to increase its production guidance while maintaining its capital spending plans. In its second-quarter earnings report, management noted that results from all four of its resource plays in the U.S. were better than expected and led to it beating previous production guidance. 

Getting more out of the same amount of spending is going to become increasingly important as oil services costs rise and pipeline infrastructure bottlenecks persist. According to Marathon's most recent update, it expects to grow production by 25% to 30% in 2018 at current spending levels, and its cash return on capital investment will improve by 65% as long as domestic prices stay around $65 per barrel. For reference, WTI, the domestic benchmark price for crude oil, just clocked in at $72 a barrel. 

Marathon has struggled to produce earnings in the past year because of lower oil prices and asset writedowns, so it doesn't have a price-to-earnings ratio. However, it does trade at an enterprise value–to–EBITDA ratio of 7.7. If oil prices are indeed on the rise and Marathon Oil is getting better returns out of each new barrel, then this oil stock could have much more room to run. 

Brent Crude Oil Spot Price Chart

Brent Crude Oil Spot Price data by YCharts.

Offshore spending coming back

Neither Noble nor Oceaneering International is going to benefit directly from higher oil prices. What matters more to them is when producers spend money on exploring and developing offshore reservoirs. Oceaneering's primary revenue drivers are its fleet of remotely operated submersible vehicles (ROVs) used to do subsea installation and maintenance and its suite of subsea products that make up the infrastructure on the seafloor for an offshore reservoir. Noble owns and leases its fleet of offshore rigs used primarily for well exploration, appraisal, and development.

Over the past few years, both of these companies have suffered because spending on offshore development projects dried up quickly. Developing an offshore field takes years and requires lots of up-front capital. So most producers elected to either spend on shorter-lead-time projects like shale wells or sometimes not spend anything at all.

That is starting to change, though, as oil prices rise and many of the large integrated oil companies begin to spend on new production. Another offshore rig company, Transocean, anticipates producers will sanction 87 new offshore development projects by the end of 2019. Considering that Noble has several available rigs that can handle some of the most technically demanding jobs and that more than 60% of offshore platforms use an Oceaneering ROV, these companies should benefit from this bump in spending. 

We have already started to see this happen at Noble. It recently reactivated a previously idle rig to start a contract with ExxonMobil on its behemoth offshore discovery in Guyana. Oceaneering has also announced several supply agreements with producers since the most recent quarter that reflect the pending uptick in capital going to offshore companies. 

With a much more favorable market for offshore oil services and equipment, investors can likely expect a rebound in revenue and earnings from these long-suffering energy stocks. It also helps that they are still trading well below their historical price to tangible book values.

NE Price to Tangible Book Value Chart

NE Price to Tangible Book Value data by YCharts.

Prospects for oil are looking way up

With Brent crude reaching $80 a barrel and signs that it could go even higher, it's looking like an opportune time to invest in oil. These elevated oil prices will pay off handsomely for disciplined oil producers that preserve the cost-conscious attitude that kept them afloat during the most recent crash. Conversely, oil services providers like Oceaneering and Noble are likely going to benefit from an ultimate increase in development spending. Wall Street has been hesitant to dive back into these stocks after the most recent crash, which makes their valuations still look incredibly attractive.