"I'm particularly pleased the two of them are on board, considering Curtis will probably be out for a fairly lengthy period," O'Neill told the Express and Star.
"He needs to see the specialist again, but I think surgery is looking more and more likely.
"Luke Moore was out for four or five months with the same problem, so you are looking at an extended period out."
Davies had hoped the injury would not return but the latest setback could be enough to convince Villa that he needs surgery.
O'Neill added: "You have to look at the long-term picture. It's important for the player's future. If surgery is the decision, then the sooner it's done the better.
"It would probably be next week."