There Will Be Profits

If we’ve got even a prayer of having cheaper oil, it’s going to be answered by the energy companies that are actively drilling in new places. These “wildcat plays,” as Cramer calls them, are the best chance we’ve got to relieve the immediate stress from oil prices. And they’re also some of the most wildly underestimated stocks on the Street.

On Tuesday’s Mad Money, Cramer recommended Rex Energy as his latest wildcat stock. Rex is drilling for oil in Illinois, Appalachia and the Permian basin. It’s also doing a ton of new exploration in the Marcellus shale, a hotspot for natural gas and a place that’s already been hugely rewarding for other nat gas plays – think Atlas and Chesapeake – that are drilling there vigorously.

But the real kicker with Rex is that it’s as much a new tech company as it is an oil and gas play. The company is using an advanced technology that allows it to pump chemicals in the ground to help bring out oil easier. It’s in the testing phase now, but results could show as soon as the third quarter. This project could yield 84 million barrels in one oil field alone, which would make Rex worth around $40 a share.

The estimates on this one are too conservative, Cramer said. The Street is assuming Rex’s new technology will only have a 33% success rate. And analysts are too cautious about the potential for gains from Marcellus, which makes no sense to Cramer based on how great a yielder the area has been for other drillers so far.

Rex is a wildcatter with new technology to get at hard-to-reach oil and production costs so low that the company is clearing $100 on the oil it produces right now. Don’t listen to the estimates – Cramer thinks this one is a buy.

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?