"In one fell swoop ConocoPhillips confirmed a lot of what's become the conventional wisdom in the oil patch: the price of crude's not going to roar higher any time soon, even as it rallied nicely again today, climbing back over $50," the "Mad Money" host said.
The purchase, which left ConocoPhillips with $10.6 billion in cash and $2.7 billion in stock, sent its shares soaring. Cramer said the company sold the sands because at today's prices, extracting oil from tar sands is simply not worth the cost.
"It's much better to take money from Cenovus, pay down debt, buy back stock and potentially increase the dividend than to keep pouring money into the dirtiest and most nasty form of oil around, the tar sands," Cramer said.
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That was the crux of both Cramer's argument and ConocoPhillips' deal with Cenovus. According to Cramer's go-to oil expert Rusty Braziel, oil would have to cost around $90 or $100 a barrel to justify owning tar sands.
While the details remain cloudy, Cramer said Royal Dutch Shell's decision to sell its tar sands to Canadian Natural Resources in early March reflected the same idea — that it would be smarter for the company to pay off its debt than bank on a massive near-term bounce in oil prices.
Cramer added that the five-year futures curve for oil that shows crude prices hovering close to $50 a barrel for "well into the next decade," making these companies' moves understandable.
But what does it mean for oil producers overall? "I think it means that the more oil you have in low-cost areas like the Permian Basin, the higher your stock price will go, and vice versa, if producers choose not to dump their unprofitable properties," Cramer said.
The oil glut is here to stay, and if you're a daring investor, Cramer said Cenovus' new tar sands essentially make its stock a call option on oil prices.
"Personally, though, I'd much rather own an almost-Canadian-tar-sands-free Conoco than a debt-laden play on that now-out-of-style project," Cramer said.
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