Davies, currently recovering from shoulder surgery, has a clause in his current deal which entitles him to discuss a new contract when he plays 60 games for Villa.
He had reached 58 before having an operation after his shoulder popped out three times in a month - once during the Peace Cup and in both legs of the Europa League play-off with Rapid Vienna.
O'Neill is upset Davies' advisors have gone public in suggesting the player should be given a new contract now rather than when he is back to fitness early in 2010.
O'Neill said: "I always thought that it was private information with a contract but if the agent of a player chooses to divulge them then that's entirely up to them.
"He's due a re-negotiation of a contract if he plays 60 games.
"I don't really want to bring this into the public domain, but I think that we've pretty well looked after players here at this football club - both injured players and players who have done very well for the football club.
"We had some conversations with the agent and really, at the end of it all, the agent knows where we stand and what we were looking at.
"He has chosen now to come out and tell these things and that's entirely up to him.
"The fact is I do not deny that the stipulation in his contract is an 'X' number of games which is 60.
"I didn't know that at the time until the agent reminded me."
O'Neill added: "That is not the reason that I did not play him in the game against Fulham.
"I was very pleased that he had played some matches, when really he probably wasn't completely fit - in the sense that it was psychological if not physical that the shoulder might come out at any given stage again.
"So from that viewpoint we're grateful. But all of those things are all taken into consideration when eventually we sit down and decide to do it (the contract), naturally.
"There are certain guidelines but this idea that 'he is considering his future', I'm not so sure that that's the brightest thing that an agent - and a player who's controlling his agent - should be saying."