4 potential oil deals slipping under the radar

These takeover plays make too much sense to ignore.

By Jim Cramer Feb 13, 2013 9:33AM

thestreet logoOil derricks Comstock CorbisHow can there NOT be more deals in the oil patch?

 

The other day EOG Resources (EOG) hit a 52-week high. And while everyone seems to be focused on the potential acquisition of this company because its visionary CEO Mark Papa is retiring, I can't see it getting a $50 billion bid, which is pretty much what it would take to buy the behemoth.

 

Of course there is endless speculation that something can happen to Chesapeake (CHK) now that its visionary chief Aubrey McClendon is gone. I believe the company was not set up to be sold, given its huge number of joint ventures and would be very hard to negotiate a price that would make it worthwhile to cash out on so many of its entanglements. Just too complicated for most companies to ponder.

 

I see four others that are far more easily consumed because of their far-flung holdings that haven't been explored nearly enough, and yet, because of the soaring price of oil in the ground, just make too much sense to ignore. Plus, with the revolution in using natural gas as a surface fuel for trucks just a few years away, these are naturals to go.

 

The first is Hess (HESS), which remains ridiculously low vs. its vast holdings. Sure, Hess has run, but unlike EOG it is nowhere near its high. I can see this $22 billion company getting north of a $30 billion bid and the acquirer making a fortune developing its oil lands in the Bakken.

 

Speaking of the Bakken, how long can Whiting Petroleum (WLL), a $5 billion play, remain independent. Last year, there were hot and heavy rumors that Statoil would buy them, but Statoil went to an extreme to deny that possibility.

 

That doesn't mean this one couldn't be bought for its extensive oil holdings.


Two others that could make sense that have done nothing but right things, yet been given zero credit for their efforts, are Linn Energy (LINE) and Carrizo (CRZO). They might be hard pressed to stay independent.

Linn's been a leader in developing properties cash off by others, including BP and then quickly bringing great returns to shareholders. I love that Linn offered Linn Co, with its bountiful 7% plus yield for non-taxable accounts. The company's growing its holdings like weeds, yet it stays at a ridiculously low $7 billion valuation.

 

The final takeover play is totally bite-sized, but should be anything but and that's Carrizo, a $900 million company that is growing reserves in all the best places in Texas. Why this one stays so far off its high is a mystery to me. It could be picked up for a song.

 

cramer

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.

 

 

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20Comments
Feb 13, 2013 10:45AM
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Again, Cramer misses the forest for the trees - his inability to look past the micro and into the macro is evidence of his life-long career as a technician. 

These buyouts and acquisitions aren't happening because of the current political and economic climate, and this lack of M&A activity isn't just limited to the energy sector.  We have a POTUS that wants to hike the minimum wage by almost 25%, who says he's willing to address climate change on his own via executive order if the Congress doesn't cooperate, and who wants to raise taxes even more on everyone who actually produces something - not exactly energy-friendly policies.  This doesn't count all the additional regulations involving the EPA, HHS, etc...

And we have a Congress that refuses to put together a long-term solution for anything, instead addressing every major fiscal problem by kicking it down the road a couple of months.  The last "fiscal cliff" hasn't even left our rearview mirror and there's another looming deadline on March 1st, barely more than 2 weeks from now. 

And finally, lest we forget, the economy actually contracted in Q4.  We could be in the midst of a double dip and not even realize it yet.  Companies, unlike the gov, actually prepare themselves for a rainy day, which is why there's still tons of cash sitting on the sidelines - too many people are seeing too many storms on the horizon, and they aren't in a spending mood, and who can blame them?
Feb 13, 2013 2:05PM
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HE SAYS DIVIDENDS OFFER PROTECTION AGAINST STOCK PRICE DECLINE

 

ASK CLF SHAREHOLDERS IF THAT'S TRUE

Feb 13, 2013 11:38AM
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So is Crammer recommending we buy stocks at 52 week highs? 
Feb 13, 2013 2:57PM
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Yes...I'm aware of  Canadian pipelines maybe going East and West ??

I think the Eastern line is a done deal..Oil Companies on board..

The Western pipe going near Vancouver...Not so sure...(for China oil buy).

That concerns me deeply,because I think you guys supply about one third 1/3 of our imported oil...?

 

The Keystone needs to be built, and I think it will ?...At least we woul have the jobs here...

If a pipeline goes West over the Rockies..There will probably be a lot of Chinese involvement, with a mixture of Canadian, American and possibly Chinese labor to accomplish the task.

 

It will be impossible to keep all the oil for our Two Countries because of demand and money..

And many of them are International or Foreign National players.

Feb 13, 2013 10:42AM
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i DON'T THINK the book should be closed on Aubrey(the snake)McClendon...And really don't think it will....The Shareholders(along with we) lost quite a bit of money...

And now assets have offered or sold off...Without recouping share value back to the $30-35 range.

 

Don't care if he founded CHK or not....He helped put it to us and others, and if there is Class Action against the bastard...We will be on board..

Have pared off about 25-30% of positions in recent upsides, think there are better places to be??

And now you are going to have me looking at Hess amongst others..

Or increasing Statoil positions......Also looking back again at SU and the Tar Sands because of the eventual Keystone PL that will be built....IMO

Feb 13, 2013 3:15PM
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Tog

The Canadian dollar is about par, bounces up and down a few cents here and there but basically at par.

The east coast pipeline has support from the provinces so that is a plus.

The west is stuck in a feud between Alberta and BC and the many first nations tribes for who gets what share of the money it would generate and over environmental concerns.  I think all 3 pipelines will go through meaning that Canadian oil will no longer be sold at -20% market value which could really boost our oil companies. 

I don't see Chinese labour building the western pipeline, but Chinese money for sure.

Funny if you have almost any Canadian mutual fund you have an oil company in your portfolio.

Feb 13, 2013 9:41PM
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Nice little rally 30 minutes from the close and the damage was partially minimized....Manipulators still got their way for the most part....Not bad after last night's debacle by Obummer....And tough to blame it on Europe today....Be very cautious tomorrow though...Scumbags didn't get all they wanted today.
Feb 13, 2013 11:36AM
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Tog

Look carefully at the oil sands (no longer political to call them tar sands despite the fact that they are essentially tar) as Canadian oil companies are paid the least for their oil on the planet.  Right now our oil is land locked as our only market is the USA.  That may change as it looks like whether Keystone happens or it doesn't there are plans for 2 new pipelines, one going to the BC coast to open up the Pacific markets (China really), the other going to the east coast which would supply all east Canada with Alberta oil.  Amazing that isn't the case as over 30% of our oil in eastern Canada is imported.  Some facts you should look into before getting into that market.  Also the TSX is not up nearly as much as the American markets this year, perhaps more room for upside?  To heavily weighted in energy, mining and financials which shows how our economy has really abandoned other sectors up here.

Feb 13, 2013 11:30AM
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brutus - companies like the one i'm in will continue closing up smaller sister companies that are non performers.  therefore consolidating more and cutting more cost and labor obligations. 
Feb 13, 2013 11:31AM
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Geezus Christ...Brutus, I DIDN'T SEE anything in the Article by Cramer....

 

That said ANYTHING about Energy Policies, the Administration or Obama or TAXES...???

 

Were you reading a different article SOMEWHERE ELSE perhaps....Or are y.......??

 

BTW....Jim C..... Hess(HES) is at the top of their price, and pays a crappy dividend.?? Recom'd ??

Feb 13, 2013 2:30PM
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AUBREY MCLENDON IS ONE OF CRAMERS PUMP AND DUMP THUGS
Feb 13, 2013 2:53PM
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APPLE... cuts the price of it's MacBook Pro. So? In a world where $5 is cautiously extended before actually being spent, $1,500 remains a ridiculous price for a toy. R.I.P. Apple, seems Steve will take you with him afterall.
Feb 13, 2013 2:46PM
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We were in Suncor Energy for a few years, until it kind of stagnated....Chris.

Just looking back at any advantages of owning it again ??

We have other oil patch plays along with pipelines, and I plan on eliminating Chesapeake(CHK) sooner or later...Have accumulated some Statoil(STO), but don't want everything in a Norwegian Company that only pays a dividend ONCE a year..

Other or many oil Companies are at the top of their Games..And if oil goes back into the 60s and 70s per barrel, the  Companies are going to drop also..Fear factor...Just like Gold.

 

I've always referred to the TSX- Toronto Stock Exchange, for those not aware...?

As Canada's commodities exchange...And maybe Gold/Silver miners are what's holding it back right now..??...But I thought the Looney and Maple were holding up pretty good against the US Dollar lately..??  Haven't checked recently. 

Feb 13, 2013 5:58PM
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Well V_L...I had a real good explanation of our investing and agendas as far as Wall St. is concerned.

Hardly all in....But cannot find a better way to enlarge/maintain capital....??

(it didn't post)

 

2008-2009 was somewhat depressing on the go down..

 

But sticking to a plan, it was all very worthwhile; And I wouldn't change a thing..

And I don't panic easily anymore....It's only money.

And we are just comfortable, that's all we need.

And I'm not going to re-write what I did a few minutes ago... 

Feb 13, 2013 4:53PM
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Along with Oil companies in Canadian Mutuals...You usually have a couple or more Canadian miners in the Funds also...

I like Canadian miners....One of our best ever Gold producers...They seem to do it well and don't believe in getting into Complicated Political issues, because more or less neutralality.

We  have owned several over the years including Platinum and Palladium..

But have settled mostly on Eldorado Gold, headquartered out of Vancouver...

It has been a great company off and on for years..

But prices are oppressed and the stock price mirrors the value of Yellow...Closely.

Our day is coming back, and we only hold about a third(1/3) of positions we normally carry.

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