Strange that oil stocks haven’t mirrored that commodity’s meteoric rise in price. Their natural-gas counterparts certainly have.
XTO Energy , Anadarko Petroleum , Apache , Southwestern – the whole nat-gas cohort is up about 34% since oil hit the $100 mark. That growth rate is very close to oil’s own percentage climb – about 36% – during the same time. Meanwhile, Exxon Mobile’s up only 1.9%. Marathon , 1%. Of all the integrated oils Cramer mentioned Wednesday night, ConocoPhillips was the best performer with only a 19% jump in price.
The natural-gas firms were buying up land and drilling to bring more product to market while the big oils either didn’t or couldn’t. Maybe the oil companies thought it was 1980 all over again, that gas would drop back down to $50 a barrel. Or maybe they just didn’t have the rigs they needed. Either way they’re just not in a position to take advantage of this bull market in energy prices.
Historically there’s been a six to one ratio between oil and natural gas. So with oil at $136, nat gas should move from $13 to $23, Cramer said. And the companies that deal in gas should continue up as well. Not just because of a rise in prices, but also because of the asset growth that comes along with more land and drilling.
Just in case you doubt Cramer’s prediction, take a look at Chesapeake Energy CEO Aubrey McClendon. He’s bought about $34 million of his own company’s shares since May 30. It’s a sign he thinks this market’s going higher.
So don’t assume that oil’s topping out just because the oil stocks have leveled off, Cramer said. There’s still plenty of growth left on the natural-gas side.
Jim's charitable trust owns ConocoPhillips, Southwestern and XTO Energy.
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