Cameron International Corp’s (NYSE: CAM) diverse business footprint and exposure to key secular growth trends in offshore and deepwater drilling make the stock an excellent pick for investors seeking long-term growth. Six of Cameron International’s 11 business lines offer exposure to deepwater the space, and the company holds the No. 1 or No. 2 market share in the majority of its product categories. The firm also generates about two-thirds of its revenue outside North America.

Cameron International operates three business segments: drilling and production systems (58.4 percent of 2011 revenue), valves and measurement (23.9 percent), and compression systems (17.7 percent).

Investors tend to focus on the drilling and production systems segment, which includes drilling systems, offshore systems and surface systems. Although the company’s surface (onshore) business should enjoy from robust demand in US shale plays, the offshore segment is the star of the show because of the potential for huge project awards.

Management has indicated that it expects major project awards over the next six to 18 months offshore Brazil, West Africa, Australia and Asia-Pacific. This could be a boon for sales of the company’s subsea equipment, which include trees, wellheads and controls among other items. CEO Jack Moore highlighted these opportunities in a conference call to discuss fourth-quarter earnings:

While we predicted overall tree awards in 2011 would be a low-water mark for the industry, we are very optimistic about the number of project awards over the coming years. We see significant opportunities involving in most every deepwater basin in the world. West Africa and Brazil will offer the largest scope of project awards for the industry over the next 12 to 18 months. Nigeria’s Egina, Erha North projects, along with Eni’s Block 15 and Maersk, and Block 18 in Angola will be significant in terms of their scope and size and breadth. Petrobras will ramp up spinning for pre salt trees in 2012 and expect to follow it up with additional orders for framed agreement trees and with significant quantities.

The Macondo oil spill in the Gulf of Mexico ironically gifted Cameron International with a new growth opportunity, though the failure of blowout preventer (BOP) that it manufactured was a big part of the disaster.

A BOP is a large, heavy device that’s installed directly on the seafloor above a deepwater well during the drilling process and removed after the well is completed. The BOP is an emergency mechanism that, once activated, seals off a well and prevents hydrocarbons from escaping by ramming a rod with a rubber seal into the well. These devices include several backup mechanisms.

Cameron International’s BOPs boast an installed base of roughly 50 percent on offshore rigs; new rules requiring original equipment manufacturers to service this equipment on a regular basis should bolster the company’s aftermarket revenue. Nevertheless, some analysts have noted that competitor National Oilwell Varco’s (NYSE: NOV) BOPs appear to be winning share in the new sales market.

An uptick in orders for floating production, storage and offloading (FPSO) vessel such as those used offshore Brazil would be a boon for the company, particularly the firm’s valves and measurement business. Much of these orders would come from projects offshore Brazil and West Africa. 

With $1.8 billion in cash on its balance sheet and an undrawn credit facility, Cameron International can afford to invest in future growth. The firm already boasts the only facility in the African nation of Angola that can design, assemble and test subsea equipment, and plans to invest considerable amounts to boost its presence in Brazil. Despite the recent rally in the stock market, shares of Cameron International Corp continue to trade at an attractive valuation and rate a buy up to 62.

National-Oilwell Varco (NYSE: NOV), which currently appears in The Energy Watch List, offers exposure to key onshore and offshore growth trends associated with the end of easy oil. A leading producer of components for rig equipment–management estimates that the firm’s products are on 90 percent of the world’s drilling rigs–National-Oilwell Varco has made over 200 acquisitions over the last 12 years, amassing an operation that spans 800 locations in 60 countries.

In 2011 the company generated about 43.4 percent of its revenue in the US and Canada, while its international operations accounted the remainder of its sales. With a whopping market share of 60 percent, National-Oilwell Varco has earned the nickname “No Other Vendor (NOV).”

The firm benefits from robust demand for fracturing and pressure pumping components, particularly its stimulation charge and top-drives. With operators shifting their focus from dry-gas shale plays to liquids-rich fields, demand for high-horsepower pressure pumping systems will only increase over the next few years. Meanwhile, the extreme wear and tear that these rigs endure should also ensure plenty of recurring revenue related to maintenance and replacement parts.

National-Oilwell Varco’s global operations and sales-force network position the firm to reap the rewards when the shale oil and gas revolution goes international, though infrastructure constraints make this a long-term opportunity.

But the evolution of offshore drilling offers the most potential upside. Whereas the company books about $15 to $20 million in revenue on each US land rig, a high-specification jack-up rig amounts to about $50 million in sales and a sophisticated drillship involves $200 to $300 million in revenue. A harsh-environment rig–a unit capable of drilling in arctic conditions–generates almost $1 billion in revenue for the firm.

National-OilWell Varco specializes in comprehensive top-side drilling systems that have become the standard on many rigs. The scope of the firm’s operations enables it to offer customers single control system that oversees all of the different drilling equipment on an offshore rig–a huge advantage over its competitors.

With the price of newly built models offering solid returns at current day rates, many contract drillers have indicated that they will take advantage of outstanding options to order additional units.

In mid-August 2011, Petrobras awarded National-Oilwell Varco a contract worth USD1.5 billion to produce top-side systems for the NOC’s first tranche of seven drillships. This win not only provides a welcome boost to the equipment provider’s backlog after a bit of a slowdown in the third quarter but also puts the company in pole position to win future business from Petrobras.

Investors should expect temporary weakness in new orders from time to time. However, by the end of 2014, when shipyards deliver all the new rigs currently on older, the market will still have only 220 jack-ups younger than 30 years old. The current cycle of rig upgrades will take some time to play out.

In addition to the secular growth trends in onshore and offshore drilling, National-Oilwell Varco has a long history of growing through acquisitions. For example, in 2010 the company purchased Norwegian FPSO designer Advanced Production and Loading for USD500 million, a deal that should give the company a foothold in what promises to be a lucrative business line. FPSOs receive and store hydrocarbons from nearby platforms for delivery to an oil tanker, eliminating the need for local pipelines. This technology is essential to exploiting frontier oil plays.

The firm’s biggest deal in 2011–the $772 million all-cash acquisition of Ameron International–will be accretive to earnings in 2012. The purchase will make National-Oilwell Varco the premier provider of fiberglass-composite pipes. This material is lighter-weight and boasts a longer life span than conventional steel.

With a solid backlog, exposure to key long-term growth trends and a cash balance of $3.4 billion, National-Oilwell Varco rates a buy under 84 in the Energy Watch List. Prospective investors may want to wait for the stock market to pull back for a better buying opportunity.