If you tuned in to any media outlets this past year, you likely heard how much oil the world is producing, with OPEC pushing through its 30 million barrels per day production cap in addition to the United States reaching 30-year highs in oil production.

With excess supply in the short term, some analysts are questioning the long-term viability of expensive and dangerous deep water drilling. A number of investment banks have downgraded the biggest offshore drillers, including Transocean (NYSE:RIG), Ensco (OTC:VAL) and Noble Corp. (OTC:NEBLQ), sending all three lower this past quarter. 

RIG 3 Month Total Returns Chart

Source: YCharts

Again, shortsightedness is extremely dangerous, and today's discounted share price offers opportunities for buy-and-hold investors. The recent downgrades for large offshore drillers sight short-term softness in the deep water vessel market, suggesting utilization rates among older ships will be lower for the first half of 2014. As for the over supply of oil, Steven Kopits from Douglas-Westwood consultancy, reminds us that history has shown excess oil is quickly absorbed, with the supply-and-demand balance in crude oil consistently reverting back to its equilibrium. Spending in the offshore drilling market is estimated to double by 2020, and oil prices are still hovering around the $100-per-barrel mark. While some traders are buying into short-term fear, investors looking for oil investments have an opportunity to buy solid companies at a discount.  

This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.