The oilfield of the future is taking shape two miles underwater. As explorers search for energy in ever-greater depths offshore, the technical challenges of ferrying oil and natural gas more than 10,000 feet through the ocean is spurring a drive to relocate production operations to the sea floor. Spending on subsea valves, pipelines and cables that will help build these underwater oilfields will grow to a record $13.9 billion this year, a 66 percent jump over the $8.4 billion spent last year, according to Quest Offshore Resources, an industry research consultant.

Equipment makers specializing in gear designed to handle the intense cold and high pressures of the submarine depths, including FMC Technologies Inc. and Cameron International Corp., are best positioned to gain from the surge in investment. As oil companies improve their ability to operate undersea with new technology, they'll be able to open up new areas to exploration at lower costs, said Astrid Sorensen, vice president of U.S. offshore field development at Statoil ASA.

“The point now is to stretch the limits so you can put together a toolbox the way you need it,” Sorensen said.

Operating more efficiently in ultra-deep water, with less maintenance and down-time from weather disruptions, can be worth billions to a company, said Martin Craighead, chief executive officer at Baker Hughes Inc. A 1 percent improvement in the oil recovery factor translates into $3.2 billion in the value of some projects, he said. It also carries high risk, as BP Plc's oil spill at the deep-water Macondo well in the Gulf of Mexico demonstrated to the world in 2010.

Eoin Treacy's view While the US government has been slow to allow drilling in the Gulf of Mexico to recommence, the rest of the world is not so reluctant. Shale oil and gas continues to garner a great deal of investor attention, not least because the prospect of more countries deploying the requisite technology to unlock their own reserves remains undiminished. Only today, Shell announced it was investing $1billion in Chinese shale oil and gas development.

Despite this positive development for unconventional oil & gas, it is worth considering that a great deal of the world's expected additional supply is also expected to emanate from offshore locations. Companies that drive efficiencies in this sector can be expected to prosper. (Also see Comment of the Day on January 18th).

In the machinery and equipment sector Cameron International broke out of a 2-year range in February and has been consolidating above $60, in a relatively gradual process of mean reversion. Dresser Rand has a similar pattern while Dri-Quip is leading to the upside. FMC Technologies is testing the upper side of its 2-year range.

In the offshore drilling sector Ensco International has returned to test the region of the 200-day MA and the region of the upper side of the underlying range. Noble Corp, Rowan Cos. Transocean, Precision Drilling, Diamond Offshore Drilling and Nabors Industries have all pulled back to test the region of their MAs, where they will need to find support if recovery potential is to continue to be given the benefit of the doubt.

In the services sector Oceaneering International has been consolidating mostly above $60 since early February, allowing a steady reversion towards the mean. A sustained move below $55 would be required to question medium-term upside potential. Helix Energy Solutions Group and Atwood Oceanics also broke out in January and have been in a process of mean reversion for the last six weeks. John Wood is testing the upper side of its range.