3 Stocks for the Offshore Boom

The world is gearing up to spend more and more money pillaging deepwater oil and gas reserves. Norway's parliament has opened up a new part of the Arctic Circle to oil and gas drilling, the European Union recently passed legislation to tighten up offshore safety measures, and the U.S. House of Representatives just passed a bill to increase offshore oil and gas drilling here in the States. The exploration and production industry is already pouring billions of dollars into offshore areas, and the results are coming in the form of discovery after discovery of natural gas deposits and ambitious deepwater drilling endeavors.

Transocean is as good a bellwether as any, given it's the world's largest offshore driller. The company's most recent fleet status report shows that a number of rigs that were idle are now booked for work. Seadrill is no slouch either, with its fleet of 61 drillships and rigs. It just inked a massive $2.7 billion contract with Brazil's state-owned oil company, Petrobras .

A semi-submersible offshore rig. Photo: © Seadrill

As the offshore movement intensifies, Transocean and Seadrill should benefit, but there will be many winners, including the three companies I'm talking about today.

1. KNOT Offshore Partners
Ever wonder how the oil gets from the offshore rig to the onshore refinery? Sometimes there's a pipeline, and sometimes there are shuttle tankers, like the ones owned and operated by KNOT Offshore.

The master limited partnership only went public April 10, but don't let that fool you. Parent company Knutsen NYK has origins that stretch back 120 years, and it's the second-largest shuttle tanker company in the world. KNOT Offshore only has four vessels in its fleet right now, but it has at least five tankers identified as potential drop-downs from the parent company.

2. Oiltanking Partners
The Houston ship channel is the Mecca of marine transportation services for the oil industry, and Oiltanking Partners has one of the largest third-party terminals there. It's got six deepwater docks and a storage capacity of 12.1 million barrels.

The partnership handles a variety of products, including crude oil, fuel oil, refined products, liquefied petroleum gas (propane), and chemical feedstocks. All those different products mean that Oiltanking also has a host of different customers, which results in diversified income, something every investor loves to see.

3. National Oilwell Varco
This company has really left its mark on the offshore world, quite literally, with equipment on 90% of the industry's rigs. It doubled its quarterly dividend earlier this year, to $0.26 per share and an annualized payout of $1.04 per share. After a rough 2012, earnings are up again in 2013 as the entire industry has begun to rebound. Like Seadrill, the company has a lucrative relationship with Petrobras that should bode well in the near future.

Bottom line
The offshore industry has had a tough couple of years, but it is finally showing signs of life. If you want to take a deeper dive into one of these companies, check out the Fool's special free report: "
The Only Energy Stock You'll Ever Need." It should help you on your way to developing a fundamental understanding of the industry, and how a great company can really dominate.

The article 3 Stocks for the Offshore Boom originally appeared on Fool.com.

Fool contributor Aimee Duffy has no position in any stocks mentioned. If you have the energy, follow her on Twitter: @TMFDuffy.The Motley Fool recommends National Oilwell Varco, Petroleo Brasileiro S.A. (ADR), and Seadrill. The Motley Fool owns shares of National Oilwell Varco, Seadrill, and Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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