Recap of Jim Cramer’s comments on Wall Street Confidential, Tuesday February 6. Click on a stock ticker for more analysis:
Schlumberger (NYSE:SLB), GlobalSantaFe (NYSE:GSF) and Transocean (NYSE:RIG), Exxon (NYSE:XOM), Halliburton (NYSE:HAL), Southern Copper (PCU), KBR
Universal Compression (NYSEARCA:UCO), Oil Service Holdrs (NYSEARCA:OIH)
Energy prices are going to keep going higher, and Cramer suggests taking a look at SLB, GSF and RIG which "have a great book of business" although they haven't had top notch performance. He adds that only deep water reserves are doing well, and oil is higher because it is hard to reach these sources. Cramer says that Exxon is cashing in on oil found when prices were lower, but not for much longer. Cramer's long-term view of natural gas and oil is that it is "inaccessible" and is becoming too expensive to find. "You can't expect oil to go back to $30, $40; and on the demand side you can't expect China and India to use less," Cramer said. "You have this great combination that's going to keep the equilibrium higher than it used to be." When Aaron Task mentioned that Exxon has forecasts for drilling in the $30 to $40 range, Cramer points out that this was the result of XOM's contract with Venezuelan President Hugo Chavez, and he added that if the company felt oil was coming down, it would not have negotiated "unfavorable contracts with dictators." Cramer discussed the fact that natural gas has never been "well stored" in the U.S. and is low when its warm and expensive when its cold. He adds that the reason Canada doesn't drill more is because of the "moronic approach" of the government which aims to protect a select companies. Cramer believes that natural gas is not finished and notes the good numbers from UCO and HAL. However, HAL's numbers will not help it, because many analysts are bullish on OIH and bearish on companies like HAL which are not takeover targets. While HAL has been shorted heavily, Cramer predicts that if the oil company makes an acquisition or improves its distribution through its spin-off,KBR "the shorts will then have huge, huge problems." Cramer suggests buying PCU, because hybrid batteries in cars use a "gigantic amount" of copper, and the metal will be in short supply for the long run. He adds that he likes PCU's yield.
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