Nat Gas Stocks Outshine Integrateds

So many people have been puzzled why the major integrateds have not moved with the last $30 rally in oil's spot price. The answer?

They can't take advantage of it.

They either didn't believe, and therefore didn't drill, or they have been so in the crosshairs of sovereign lunacy that they haven't been able to. They didn't have the rigs or they judged that the rigs were so expensive that, like 1980, they would look like dopes when oil came back to $40-$50, where many thought it would. (Go back and check even last year's research for price targets, most of which were from the oil companies' themselves.)

Or maybe it didn't matter anyway. So many of the contracts these companies have signed with governments around the world are either being abrogated or just outright confiscated that you have to ask yourself "Who can invest under those scenarios?" Exxon (XOM - commentary - Cramer's Take) in Venezuela. Shell (RDS.A - commentary - Cramer's Take) and now BP (BP - commentary - Cramer's Take) in Russia. You can't continually invest billions and then write it off because the contracts you wrote don't mean anything.

I think it is more important to focus on which stocks have gone up and that's an easy one: the natural gas stocks. These companies, which include XTO (XTO - commentary - Cramer's Take), Ultra (UPL - commentary - Cramer's Take), Anadarko (APC - commentary - Cramer's Take), Devon (DVN - commentary - Cramer's Take), Apache (APA - commentary - Cramer's Take), Southwest (SWN - commentary - Cramer's Take), El Paso (EP - commentary - Cramer's Take) and many of the wildcatters I have been programming on "Mad Money", are all about acquiring acres and drilling. These companies do so voraciously, they are constantly on the move and they have the excess rig capacity to do something about it.

(Remember the domestic glut, which is part of Nabors' old problems, allows for drilling to be much less expensive, not to mention shallow. The thing that's costing is that the farmers have figured out the game but it is still a small price to pay.)

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At the time of publication, Cramer was long EP, XTO and SWN.

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