The next energy rally: Natural gas or oil?
When the smartest guy in the sector contradicts the crowd, you at least stop and listen.
But the smartest guy I know in the patch, EOG Resources (EOG) CEO Mark Papa, the man who de-emphasized natural gas drilling when everyone else was going gaga for it, is saying the opposite.
He told me Wednesday on "Mad Money" that natural gas, at a two-month high, has got ahead of itself and that crude is still in short supply globally and that $105 a barrel is the natural price for the stuff.
Papa is a big believer that North America can be energy independent in a decade through a combination of aggressive drilling aided by new technologies, plus exploitation of natural gas. But he just doesn't see the will in the country to exploit natural gas for what it can be used for, which is why he is willing to let his own drilling budget go entirely away from natural gas.
He's putting all of his chips on oil and natural gas liquids and thinks natural gas should be sold. Only a very cold winter can alleviate the glut, and Papa isn't the kind of guy who bets on the weather.
The good news is that he thinks the Eagle Ford shale is the biggest find since Prudhoe and the more he drills the bigger it is, telling me that the 800-pound gorilla is developing into the 1,000-pound gorilla.
He is so sure of its potential that his company built its own rail line out of Texas to go to Louisiana so it won't get stuck getting a lower price in Cushing. He's getting the equivalent of Brent prices for American oil.
Now, I am not as bearish on natural gas as Papa, or my charitable trust wouldn't be buying Devon (DVN) here (another oil and gas company that, while shifting toward oil with alacrity, still has much more exposure to natural gas as a percentage of revenue than EOG).
But I do think his skepticism must be aired, because everywhere I go I hear there's a bottom at last in natural gas and this two-month high may be the beginning of something big.
I hope it is. But hope should never be part of the investing equation.
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 is long DVN.
more research on some of his nastiest scams:
gold at 1900 now 1600.............he said that eveyone should own gold
nyx at 90 now at 30 ....................he said this was his STOCK OF THE YEAR for 2010
aa at 18 now at 9...................he said this was his pick for BEST DOW STOCK OF 2011
shld at 150 now at 50...............he said never bet against ceo and buddy eddie lampert
i could list more but these are some of his most successful rip offs
research this unfunny comic..........don't take my word
he repeats his garbage scam i repeat his hack advice ............i will continue to point out
this scam artisist's crappy pump and dump game until he quits ripping people off
today's fact: just a few weeks ago this hack said $5 gasoline was inevitable.........the national average struggled to maintain $4............just another bad call or another pump and dump?
research one of his worst scams:chesapeake energy and it's crooked ex hedge fund
buddy mcclendon...........don't take my word ...............look it up
bgdgog is correct..........cnbc is only useful for it's real time ticker...........
as long as they have these re habs on they will have ZERO credibility
the lead hack is cramer........................here is an exercise to prove my point...........
watch SOTS on CNBC from 9-9:30 am eastern...........listen to the hack talk over his colleagues
as he spews his garbage .(if you can stomach it for 30 minutes)..............then come on this site and tell us one useful trade or investment you got from this segment............we will then monitor
your(his) pick...............cmon...if he is so good this should be simple
because the us is christian and they are jews so it malkes sense that they would want
troops there to kill muslims.............this jew,muslim christian killing didn't start yesterday
you know.............and news flash: it will never end
cramer has been pushing nat gas for years........it has been a loser just like him
don't take my word ...............research this criminal
Thanks for keeping Lee and Favor on the right track...I get the impression sometimes they don't know when to go to bed at night!
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