Cramer's Opinion on Energy Prices & Stocks

Stock Tickers: GSF, RIG, SLB, HAL, UCO, OIH, XOM

On this morning’s Wall Street Confidential on TheStreet.com, Cramer is commenting on energy as a permanently higher pricing environment and he referred back to that Schlumberger (SLB-NYSE) conference call plus GlobalSantaFe (GSF-NYSE) and Transocean (RIG-NYSE).  He noted the stocks haven’t done all that well, but their books of business are doing very well.

Cramer said ‘deepwater’ is doing very well because it is very expensive and the only way to replenish each company’s reserves now.  On a longer-term view he thinks getting to the new sources of energy is inaccessible or difficult and all the low-hanging oil and gas has been found, but that doesn’t mean it’s running out; on the demand you can’t expect China and India to use less energy ahead.

ExxonMobil (XOM-NYSE) says they want to pass on that they believe in $30’s to $40’s Oil, but since they signed an unfavorable contract with Chavez in Venezuela their actions show they are willing to believe in higher prices.  In natural gas there is no extra storage space and the excess supply and the companies have lost their prospects for being shielded.  He doesn’t think gas is done but notes the drop in Universal Compression Holdings (UCO-NYSE) and Halliburton (HAL-NYSE) dropping on great numbers.  Some are shorting the HOLDRs (OIH) and buying the ones that can’t really be acquired.

This goes on further and is only a partial coverage of his segment, but it sounds like Cramer isn’t backing away from higher energy prices (than historically) and isn’t backing away from being bullish on select energy services and drilling names.

Jon C. Ogg
February 6, 2007