Back in December, National Oilwell Varco (NOV), the largest U.S maker of oilfield equipment, inked a deal to acquire Grant Prideco (GRP) for what was then $7.4 billion in cash and stock, making it the second largest deal in the oil service sector in 2007, second only to the Transocean (RIG) and Global Santa Fe merger.

National Oilwell agreed to pay $23.20 in cash and 0.4498 of a share for each share of Grant Prideco -- equal to $58 a share, or a 22% premium to Grant Prideco's share price back when National Oilwell made its offer four months ago. However, due to the terms of the agreement, this takeover price has vastly changed, thus creating an interesting opportunity.

Since shares of National Oilwell are down nearly 20%, the premium that National Oilwell will be paying Grant Prideco shareholders has been tempered. In fact, after you make the adjustments for the drop in National Oilwell shares, National Oilwell will be buying Grant Prideco for roughly $51.50, which is about 13% less than the December offer of $58 a share.

Despite the natural synergistic ties both companies have, National Oilwell is clearly buying Grant Prideco at a cheap price. Actually, I am quite surprised that shareholders are going to agree to the terms of the deal.

For starters, Grant Prideco has great piping technology that can transmit high-speed data from the wellhead to the surface. This system will feed more information to drillers and could potentially help direct the drill head, thus reducing drilling frequency and cost.

Anything that relates to deepwater drilling or servicing of those deepwater drills is worth looking at. Take for example GulfMark Offshore ( GLF), which last week beat analysts' fourth-quarter earnings estimates by 58 cents a share and shares of which reflect a forward price-to-earnings (P/E) ratio of 9, or Pride International ( PDE), which also handily beat Wall Street estimates when it posted fourth-quarter results last week and shares of which reflect a forward P/E of nearly 9 as well.

Grant Prideco should also be a huge beneficiary of the $125 billion that Exxon ( XOM) plans on spending in new projects over the next five years. Exxon has a forward P/E of 10 and a P/E-to-growth (PEG) ratio of 1.6.

With oil solidly above $100 a barrel, be sure to check out T. Boone Pickens' BP Capital portfolio, which includes such names as Occidental ( OXY) and Chevron ( CVX), on Stockpickr.com.

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