$OII - Dive in Deep for ROI

Which brings me to what I’ve been focusing on more recently: Oceaneering ($OII).  **The Background** As of my writing this post, $OII is a $2.6b company (I promise this is the first of only 2 times I’ll us AI to help write something in this post): *“Oceaneering International is a global technology company that specializes in* ***subsea robotics*** *and engineered services, operating the world's largest fleet of work-class remotely operated vehicles (****ROVs****) for the offshore energy industry.* *While its core business supports deepwater oil and gas extraction, the company also applies its advanced engineering to* ***aerospace, defense, and autonomous mobile robotics****, even providing specialized hardware for NASA and the U.S. Navy.”* The company has been around for a long time (founded 1969) and the 5 year chart doesn’t look that exceptional. They have a hand in a number of markets, some of which are more interesting and compelling than others: [https://preview.redd.it/z1c2zcnp2keg1.png?width=1020&format=png&auto=webp&s=9faf76b3d2b4aba92ac07545191ca383082a3c59](https://preview.redd.it/z1c2zcnp2keg1.png?width=1020&format=png&auto=webp&s=9faf76b3d2b4aba92ac07545191ca383082a3c59) In my opinion, the reason this name doesn’t get much attention or deeper dives is because their legacy business is boring: it’s oil & gas focused. The largest chunk of their revenue comes from their legacy energy business segment: [https://preview.redd.it/zgwin1sq2keg1.png?width=294&format=png&auto=webp&s=69e6729a677bb27b1ac973601d01f54cd9021480](https://preview.redd.it/zgwin1sq2keg1.png?width=294&format=png&auto=webp&s=69e6729a677bb27b1ac973601d01f54cd9021480) And that’s not a bad thing. $OII is a profitable business that has been FCF+ for 14 out of the past 15 quarters. Their energy business is hardened and has been able to fund their other segments and areas of growth. Boring, predictable but profitable (even the past few years).  [https://preview.redd.it/2bhbsibs2keg1.png?width=961&format=png&auto=webp&s=3bee786eed5b379cb48117149c25a0afa04766dc](https://preview.redd.it/2bhbsibs2keg1.png?width=961&format=png&auto=webp&s=3bee786eed5b379cb48117149c25a0afa04766dc) Where I’m most interested, and where I think the market is asleep at the wheel on $OII is when it comes to their ADTech segment (Aerospace and Defense).  [https://preview.redd.it/kzpqj8at2keg1.png?width=939&format=png&auto=webp&s=33efc18146d512d76ab6d657f92636c7134d00b4](https://preview.redd.it/kzpqj8at2keg1.png?width=939&format=png&auto=webp&s=33efc18146d512d76ab6d657f92636c7134d00b4) While their Adtech business is relatively small vs.their energy segment, it’s growing. And the reason why it’s growing, and the rate of said growth, is why I’m very bullish on this company. So let’s dive a bit deeper into what their adtech business actually does: [https://preview.redd.it/9ugh8lju2keg1.png?width=1011&format=png&auto=webp&s=bb7d09628e6738dbba29ec53683bf8e0635401aa](https://preview.redd.it/9ugh8lju2keg1.png?width=1011&format=png&auto=webp&s=bb7d09628e6738dbba29ec53683bf8e0635401aa) Oceaneering has an established relationship and track record with multiple arms of the US federal government. They’ve been a prime contractor for NASA for a number of years, designing habitation units and suits for their astronauts in space (for earth orbit, the ISS, even for future returns to the moon and potentially a maiden voyage to Mars) [https://preview.redd.it/lpdcii7w2keg1.png?width=1281&format=png&auto=webp&s=a47befadd52cc964abf25237a8927c27d2a69a9f](https://preview.redd.it/lpdcii7w2keg1.png?width=1281&format=png&auto=webp&s=a47befadd52cc964abf25237a8927c27d2a69a9f) **The Stage** But it’s the current efforts with the DoD that I’m most interested in right now. And that’s because it’s not because of what’s happening in the skies or on land; it’s what is happening below the surface of the ocean that’s driving a LOT of global conflict headlines. Whether it’s the arctic circle as a strategic area of importance, or safeguarding our technological infrastructure via massive networks of subsea cables, it’s quickly becoming apparent to us regular plebs that governments around the world are focusing a LOT of time, effort and resources into subsea supremacy and defense.   [https://preview.redd.it/ibuxsu4x2keg1.png?width=804&format=png&auto=webp&s=f5107c1e25c9cc7534710644aadcd1cc0c39cf1f](https://preview.redd.it/ibuxsu4x2keg1.png?width=804&format=png&auto=webp&s=f5107c1e25c9cc7534710644aadcd1cc0c39cf1f) The topic of Greenland becoming more and more (insane but also) center stage simply emphasizes the fact that conflict zones and vectors are evolving along with the technological need to be ready across those ever changing dynamics. The fact that new routes through the arctic are opening up (via melting ice sheets) also creates a new level of importance to protecting not just our physical land borders but those “fault lines” in the sea.  [https://preview.redd.it/1y6yweuy2keg1.png?width=1029&format=png&auto=webp&s=d688973c05594cf8d2ec03b5b73a0a3b05747733](https://preview.redd.it/1y6yweuy2keg1.png?width=1029&format=png&auto=webp&s=d688973c05594cf8d2ec03b5b73a0a3b05747733) One of the main defense topics that has shown up a lot during the past few years and will no doubt continue to show up is that of subsea cables. While satellites are great for transmitting data across vast distances, they have their own shortcomings; they’ll never be able to replace the need for hard-wired connectivity.  As a result, a single bad actor can (relatively) easily sever an import subsea cable. While there are many redundancies built into the network, each failure incurs a price tag and if said single bad actor wanted to coordinate their attack across multiple cables (and failsafes), it could represent an imminent national security risk to the western world. [https://preview.redd.it/xiwkzi063keg1.png?width=878&format=png&auto=webp&s=1a5bcd81bfd4e6821a58b21f682e3e3a344d1095](https://preview.redd.it/xiwkzi063keg1.png?width=878&format=png&auto=webp&s=1a5bcd81bfd4e6821a58b21f682e3e3a344d1095) [https://preview.redd.it/4ytdj6g63keg1.png?width=736&format=png&auto=webp&s=5b84eeea33423e11f403e6282bb9153ffd9d54c7](https://preview.redd.it/4ytdj6g63keg1.png?width=736&format=png&auto=webp&s=5b84eeea33423e11f403e6282bb9153ffd9d54c7) **The Opportunity** So where does $OII fit into all of these headlines, conflicts and storylines? Because of their innovations while meeting the needs of the oil and gas sector over the past 50 years, Oceaneering has developed a very robust and capable fleet of semi autonomous and fully autonomous underwater vehicles (“AUVs”) that have not only been developed under the harshest conditions, but proven to withstand everything that the government, private companies and mother nature could throw at them. Oceaneering, at its core, is the convergence of multiple key trading themes today: AI, robotics, defense and space (to name a few). Oh yea, and they’re a \*profitable\* company. Definitely somewhat rare for a lot of names mentioned on WSB. In fact, they repurchased shares in Q3 and they may repurchase more in the current quarter (will need to wait for the next filing to see if that happened). [https://preview.redd.it/pe9ris193keg1.png?width=961&format=png&auto=webp&s=bfdb750a91e3daf3fc901f306aaaf391ee0412aa](https://preview.redd.it/pe9ris193keg1.png?width=961&format=png&auto=webp&s=bfdb750a91e3daf3fc901f306aaaf391ee0412aa) Another thing that has (seemingly) gone under the radar: a \*large\* government contract. This was announced back in March of last year. Yes, ancient history by market standards. However, at the time of the announcement, the CEO mentioned it was their largest ever contract award. [https://preview.redd.it/wrtlo23a3keg1.png?width=1203&format=png&auto=webp&s=b6ec8385c9edf86dea31d26015e5d4685c4ed3ba](https://preview.redd.it/wrtlo23a3keg1.png?width=1203&format=png&auto=webp&s=b6ec8385c9edf86dea31d26015e5d4685c4ed3ba) Curiously enough, neither the government nor $OII was able to elaborate on the nature of the project, the award or the size of the award. Interesting. Almost as if the project may have something to do that’s central to matters of national security? Just a theory.  Without knowing the size of the award, my next thought was, “What was the biggest award they had received before the March announcement?” [https://preview.redd.it/05xtqbhb3keg1.png?width=1207&format=png&auto=webp&s=3f7777577abddb51bd84cee0e3d621b9dc5440ab](https://preview.redd.it/05xtqbhb3keg1.png?width=1207&format=png&auto=webp&s=3f7777577abddb51bd84cee0e3d621b9dc5440ab) So unless I’m an idiot (very real possibility), this means that the March 2025 award is north of $136m for $OII. The size and scope of the project was reinforced on $OII’s most recent earnings call, when an analyst asked about the status of the project. The response was that as of the earnings call timing (10/22/25): [https://preview.redd.it/sy0owpfc3keg1.png?width=810&format=png&auto=webp&s=bf9c5155305d42b5d492daf83fb97f40eb50efeb](https://preview.redd.it/sy0owpfc3keg1.png?width=810&format=png&auto=webp&s=bf9c5155305d42b5d492daf83fb97f40eb50efeb) Yes I know government projects are slow, but the fact that $OII won the bid in March 2025 and they’re still onboarding/will continue to be ramping up production through 2027 just speaks to the size/scope of the project and most likely, the mission-critical nature $OII is going to have within our subsea national security infrastructure. What about competition? Great question, there are a number of other suppliers that offer similar types of equipment and services to $OII. The only one that I thought would be a true competitor would be Anduril, as they are challenging the status-quo of government defense contractors. However, the Anduril AUV offerings do not directly compete with Oceaneering AUVs. The reason being Anduril takes the approach of defined parameters for a mission whereas Oceaneering AUVs can be set and forget in the harshest of conditions. Put some “Freedom” AUVs (as they name them) somewhere you expect the Russians or Chinese to be up to no good, and wait. Here’s a quick comparison (the 2nd use of AI in this post) of Anduril vs. $OII in for this type of application: [https://preview.redd.it/euafored3keg1.png?width=705&format=png&auto=webp&s=18d07793e4511dfc07744901490ee1a9a4f53ab1](https://preview.redd.it/euafored3keg1.png?width=705&format=png&auto=webp&s=18d07793e4511dfc07744901490ee1a9a4f53ab1) **Summary** The ocean represents a deep and wide new battleground for the 21st century. While fights have been waged above and below the surface for hundreds of years, the headlines of the past 10 years or so highlight the evolving nature of the battlefield and the need for governments to spare no expense  in maintaining their oceanic supremacy.  $OII, at just $2.6b mc, is poised to be one of the larger beneficiaries of this new area of spend, reinforced by their most recent award, their largest ever, for a “maritime mobility system” for the US Department of Defense. The last thing I want to share is what the CEO said on their Q2 earnings call. Oil & Gas has a great outlook for them, but where they're "really excited" is where the "Big Beautiful Bill" comes into play for them (i.e. everything else in their business): >But now we see things like Artemis, going to the moon, those things actually being refunded. Just the phone started ringing immediately with people who wanted to kick off projects again. So we think space definitely is a good one....they will probably put as much money into submarine maintenance and repair and newbuild as the industry can take. I’m long a starter 2k share position at the moment and trying to add July calls if MMs oblige and provide some liquidity (most likely not).