Who would have guessed that 2010 would be the year of the Great American Natural Gas Rush? But companies both foreign and domestic are racing to plant a flag in our shales. Hence the recent flurry of M&A activity, such as Exxon buying XTO , Total SA picking up Chesapeake Energy’s Marcellus assets and CONSOL Energy going after the Marcellus holdings of Dominion Resources .
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And there are even more takeovers to come, Cramer said Friday.
Sure, nat gas prices have fallen and the resultant stocks have taken a hit. But investors need to know that there are two ways to value a company: its share price, or what the market is willing to pay for the stock; and what a potential acquirer is willing to pay for the company. It’s this second valuation method that matters the most right now, Cramer said. Because given all of these deals, he bets natural-gas assets will fetch a high price on the open market.