* Says bullish on deepwater and ultra deepwater drilling
* Initiates Baker Hughes, Halliburton with "buy"
* Coverage includes 14 buy recommendations, 13 holds (Adds details on exploration activities in Latin America)
March 8 (Reuters) - Dahlman Rose initiated coverage of the oil service and equipment and land drilling sector, and expanded its coverage of the offshore contract drilling sector citing a global growth in the industry's exploration and production spending.
"International exploration and production spending growth is forecast to be led by Brazil, Iraq, Mexico and deepwater, and as we get into the later part of the decade, the international shales," the brokerage said in a note to clients.
Dahlman Rose said it sees the strongest growth in Latin America driven by the massive spending plans of Petrobras.
Last month, Brazil's Petrobras reported its most profitable quarter ever, making the country's vast offshore reserves increasingly attractive to investors seeking access to some of the world's largest crude discoveries in decades.
The buzz over growth in Brazil's oil and gas projects is evident with Ensco Plc's acquisition of Pride International for $7.3 billion to extend its reach to the lucrative deepwater fields off Brazil and West Africa.
Apart from the Middle East and Africa, the brokerage sees a strong increase in spending in Colombia and from India, Malaysia and Thailand in the Asia Pacific area.
While lower spending in parts of the Middle East and North Africa is to be expected due to unrest in the region, the brokerage said the expenditure dip will be offset by the effect of higher oil prices internationally.
Dahlman Rose said it was bullish on deepwater and ultra deepwater drilling as it sees a "substantial" opportunity for equipment suppliers arising from the global expansion of offshore and onshore rig fleets.
Oil prices have steadily risen to a near 2-1/2 year high on worries over supply disruption and global unrest.
The brokerage initiated coverage of energy majors such as Baker Hughes , Halliburton , Transocean and Schlumberger with a buy rating.
Of the 27 stocks that Dahlman Rose initiated coverage on, 14 had buy recommendations and 13 had a hold rating. (Reporting by Swetha Gopinath in Bangalore; Editing by Roshni Menon)