Cheap Oil Means Exotic Drilling Is a Loser

Editor's note: Jim Cramer will present his 2009 stock outlook for the first time at TheStreet.com Investment Conference on Saturday, Oct. 25. Limited seating. Act now.

Here's where the rubber hits the road on the big oil projects. Right about $60 and change is where many of the more exotic projects get scrapped and where the big-time day rates don't work.

It is incredible that oil has fallen to the point where any big contracts made in the last few years for day rates are now making it possible that companies are just at "push" level on their production. That's nasty for Transocean (RIG - commentary - Cramer's Take), as if the suffering owners themselves can't tell.

And the outfits like Suncor (SU - commentary - Cramer's Take) truly get scalded on any of the heavier oil projects. I presume we will soon hear about cancellations of those giant shale projects in Canada like the one Shell (RDS.A - commentary - Cramer's Take) is doing. Needless to say, solar's a total loser below $60, and I doubt natural gas can hold $6 for too long. I have no idea how coal stays up here and would be fleeing those stocks right now, especially after that "last good" Peabody (BTU - commentary - Cramer's Take) quarter.

Put simply, this decline is now dreadful for any company that relies on 2009 capex budgets, because despite what you will hear -- that we have to keep drilling to replenish -- I suspect that the bears in the room will have their way, just like they did in the mid-'80s, and everyone who went out on a limb to drill 10,000 feet or more will get their heads cut off.

At the time of publication, Cramer had no positions in the stocks mentioned.

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