Mad Money

Enbridge confirms confidence about oil

Enbridge CEO: Cheap oil good for economy

Given the nasty decline in oil lately, reaching a five-year low on Monday, Jim Cramer feels it is his duty to remind investors not to throw the baby out with the bathwater.

In his opinion, there are still many of the pipeline stocks that are worth owning. Enbridge is one of them. It operates the world's longest crude oil and natural gas liquids pipeline, running through Canada and the U.S.

Enbridge was slammed on Monday, down 4 percent on the price of oil.

"But I think this move was a mistake, and the market's mistake is your opportunity," the "Mad Money" host said.

Why? Well, Enbridge basically acts as a toll-road operator to transport oil and gas. That means that they charge a fee based on volume, not based on the price of oil. That's why the company has been able to reaffirm its full-year guidance and has a strong forecast for 2015.

Al Monaco, CEO of Enbridge Energy.
Adam Jeffery | CNBC

Meanwhile, the company has also announced a large restructuring effort, wherein it plans to release many of its pipeline assets to its master limited partnership subsidiaries for a lower cost of capital. That will allow the firm to spend billions to expand its pipeline network.

To find out more about what could be flowing in the pipeline for Enbridge, Cramer sat down with Enbridge CEO Albert Monaco.

"It's tough out there right now, let's face it, for producers. I think cash flows are coming off, and they don't want to raise equity at these prices. So, it's tough out there, and we are very concerned for our customers," Monaco said. He explained that, looking at the long term, a low interest rate environment coupled with low oil prices could be a huge shot in the arm for the entire economy, in terms of boosting GDP growth.

Cramer said Enbridge must not be worried about the price of oil on its business, considering that it just raised its dividend substantially.

"If you look at the dividend increase of 33 percent and then a 14 to 16 percent thereafter; it's really driven by the fact that we have a high degree of certainty," Monaco confirmed.

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For the investors who are worried that Enbridge won't be paid as companies in the oil patch run out of money, Monaco said, "Most of our contracts are with large players with big balance sheets, and they're in this for the long haul. So, we have contractual terms that give us a pretty good degree of reliability on our cash flows."

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