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Jim Cramer is the host of CNBC's "Mad Money" and the chairman of TheStreet.com. In 1987, Cramer started his own hedge fund and returned an average of 24% per year between 1987 and 2001. Cramer also authored six money management books.

Although Cramer said he would like to see the price of oil fall, he doesn‘t believe it‘s going to happen drastically enough to hurt the earnings of oil stocks with strong fundamentals. Whether its production, transport, distribution or cleanup and maintenance, these are Cramer’s … favorite ways to play oil:

BP (NYSE:BP): Cramer gave BP a buy recommendation because the company has been able to raise its dividend over time. Under $40, Cramer said he’d be willing to buy half the position at once (while waiting for it to go down a few points before buying the rest). The stock only trades at 5.6 times earnings, but yields 4.2%.

Chevron (NYSE:CVX): Cramer’s preferred CVX for its higher production growth. Although he personally hopes for the price of oil will fall, Cramer doesn’t believe it will happen drastically enough to hurt earnings. Cramer’s charitable trust owns Chevron. Chevron trades at 7.9 times earnings.

Halliburton (NYSE:HAL): Cramer thinks the stock’s recent hammering took place because the price of oil has fallen, and that it is a mistake. Cramer recommends buying this second largest oil service and equipment company. Its engineering capabilities actually make it a tech play (in the oil industry) that has helped create a 75% increase in production. T. Boone Pickens of BP Capital reduced his position in the stock by 3%, but it still represents 4% of his portfolio. Halliburton trades at 12.5 times earnings.

Enbridge (NYSE:ENB): Cramer likes Enbridge and thinks it is a great stock, but it has gotten too high compared with the others. Other pipeline operators Cramer likes include Kinder Morgan (NYSE:KMP), Energy Products Partners (NYSE:EPD) and MarkWest Energy (NYSE:MWE). Enbridge has a $24 billion market cap, yields 3.2% and trades at 20 times earnings.

El Paso Pipeline Partners (NYSE:EPB): Cramer recommends owning this “terrific stock” that yields over 5%. The pipeline company has a $7.5 billion market cap and trades at 18 times earnings. Cramer likes these pipeline companies because of their reduced exposure to oil prices.

ConocoPhillips (NYSE:COP): Cramer continued to recommend the oil company because of its 4% yield, a pullback to the mid-60’s and a potential split up in the near future. ConocoPhillips has an $86 billion market cap and trades at 7.9 times earnings. Warren Buffett boosted his stake in COP to $2.8 billion during the second quarter (see Warren Buffett's top stock picks).

Continental Resources (NYSE:CLR): CLR is an oil and gas exploration company that has the largest land position (about 901,000 acres) in North Dakota’s Bakken shale. They have been able to consistently retrieve 400K barrels of oil per day. CEO Harold Hamm said there are an estimated 24 billion barrels of oil in the shale. The stock has a $9.39 billion market cap and is trading at over 100 times earnings.

Clean Harbor (NYSE:CLH): Clean Harbor is the 8th best performing stock of the past decade and has been up 53% since Cramer recommended the company in June of 2010. This is an environmental cleanup and waste disposal company that oil companies hire on an ongoing basis, not just when there’s an accident. CEO Alan McKinn made recent acquisitions that place the company deeper into the oil play. The company has a $2.68 billion market cap and trades at 24 times earnings.

Devon Energy (NYSE:DVN): Cramer highlighted this energy company as a bargain stock. The company reported a strong quarter and Cramer feels it is time for the stock to play catch-up with other high-flying domestic producers. Devon Energy has shifted from a diversified global explorer to a North American onshore development company.

The company raised 10 billion dollars in asset sales, in which it bought back stock, improved the balance sheet and expanded its resource base. Devon Energy is spending 95% of capital budget on oil and other liquid-rich plays. Cramer considered this to be good news, given the low price of natural gas and relative high price of oil.

Carrizo Oil & Gas (NASDAQ:CRZO): Cramer thinks Carrizo is a potential takeover target with solid fundamentals and better to own than similar Marathon Oil (NYSE:MRO), which didn’t report a great quarter. Carrizo Oil & Gas has an $860 million market cap.



Disclosure: I am long COP.

Source: Jim Cramer's 10 Favorite Oil Stocks