Few sectors contained more promise during the recent global GDP expansion than drillers and oil servicers. However, few sectors became more oversold than the aforementioned, as well, during the oil bust in 2008.

Further, while one should not expect oil to return to the $140-range anytime soon, the notion that oil will remain in the $40-50 range for a long time is equally slim. And that makes the case for Oceaneering International (NYSE: OII).

"We see smooth seas ahead for deepsea driller Oceaneering International (NYSE: OII)," says Richard Moroney.

The editor of the blue chip advisory, Dow Theory Forecasts, explains, "Most of the world's untapped oil reserves lie under the ocean floor, and oil producers are spending an increasing portion of their capital budgets on deepwater drilling."

"While oil prices don't directly affect Oceaneering International's profits and cash flows, they do move the stock. Oil prices fell by two-thirds in the second half of 2008, pushing Oceaneering shares under $20 for the first time since July 2005.

"Many experts believe that oil prices are at unsustainably low prices now, and they expect a sharp rise in the commodity price as supply and demand come back into line again," says turnaround expert George Putnam.

In The Turnaround Letter, he suggests, "If oil does begin to rise again, the oilfield service stocks could rebound sharply." Here, he takes a look at large cap plays on a rebound within the oilfield services sector.

"We all know that oil prices have fallen dramatically from their highs in the summer of 2008. But different types of oil-related stocks have reacted quite differently to the price change in the underlying commodity.

"For example, while oil itself has dropped nearly 70% from its 12-month high, the stock of the largest integrated oil company, Exxon-Mobil (NYSE: XOM), is down only 26%, less than the stock market as a whole.

"Our 'Forecasts Focus List' contains only two energy stocks, both of which are in the oil services sector: Oceaneering International (NYSE: OII) and Transocean (NYSE: RIG)," says blue chip advisor Richard Moroney.

The editor of Dow Theory Forecasts says, "While stocks in the equipment and services group tend to move with oil prices in the near term, their profits depend more on exploration spending than on commodity prices."

"Concerns about slowing demand for crude oil and re?ned products both in the U.S. and overseas have many investors worried. But investors in the equipment and services group should not panic.

"Most producers continue to spend aggressively. And U.S. crude-oil inventories remain well below the average for this time of year, with fewer than 20 days of supply in storage.

"Demand for offshore-drilling services remains strong, giving Transocean excellent growth potential. Consensus estimates project per-share profits will rise 69% in 2008 and 15% in 2009. Transocean, the world's largest offshore drilling contractor, operates in every major drilling region.

"A combination of tight global rig supplies and the ongoing discovery of new offshore reserves have driven rig lease rates higher and kept Transocean's fleet busy. The company's largest, most expensive rigs are 95% sold out for 2009, and the backlog is growing.

It goes without saying that every defensive stock category is being tested in this market.

Moreover, while no sector is 100% bullet-proof from a market that seems to look for an excuse to decline another 200 points, the oil and oil services sector has fared reasonably well, and in this category Oceaneering International (NYSE: OII) is worth a review.

Oceaneering is an advanced technology company servicing the oil and gas industry, among others. It focuses on providing underwater drilling support, construction, inspection and repair services to oil/gas companies.

As one might estimate, OII's fortunes are tied to the strength of oil/natural gas prices and with prices at near-record levels, OII's business is strong and likely to remain so: most analysts see a long, strong, global deepwater oil services cycle.

Human beings find it necessary to poke their noses into all manner of unfriendly environments, including ocean depths and outer space. Fortunately, there is an outfit in Houston that is adept at helping folks deal with the rigors of operating in such places.

Oceaneering International (NYSE: OII) provides engineered services and products to the offshore oil and gas industry, the defense community and aerospace concerns. Deepwater offerings include oilfield testing systems, underwater drilling support, and construction/repair services. The firm also makes remotely operated diving vessels and robotic systems for use in space.

Oceaneering pleased investors earlier in the month, when it reported Q2 EPS of 86 cents and revenues of $432 million. Analysts had been expecting 71 cents and $377 million. Management also guided Q3 EPS to 80-88 cents (81 cent consensus) and FY07 EPS to $2.95-$3.10 ($2.84 consensus). The news popped the shares out of a late-July/early August "cup" into the mid-August "handle" of a Cup & Handle formation. Now, the price is showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle."

Brokers recommend the shares with four "strong buys," three "buys" and one "hold." Analysts see a 20 percent growth rate, through the next year. The OII Price to Sales ratio (2.45), Sales Growth rate (38.86%) and EPS Growth rate (53.57%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95 percent of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $27.80 and $70.13. A stop-loss of $56.25 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.