Growing Like Crazy
In the "Executive Decision" segment, Cramer spoke with Gary Evans, chairman and CEO of Magnum Hunter Resources (MHR), a small oil and gas driller with acreage in the Bakken, Eagleford and Marcellus shale regions of the countries. Magnum is growing like crazy, said Cramer, with production up 455% last quarter and proven reserves up 44% over the past six months alone.
Evans said that the Bakken shale region will be the focus for Magnum in 2012, but he also noted that the company's Eagleford assets, which totals 25,000 net acres, are also a great resource that should be valued as high as $35,000 an acre.
When asked about the current value of his company, Evans said that Magnum now produces 14,000 barrels of oil a day and some recent industry takeovers were for companies that had 16,000 barrels a day. Those takeovers, he said, were valued at $4.2 billion, meanwhile the current market cap of Magnum is just $850 million.Turning to the company's plans to offer a master limited partnership for its pipeline assets, Evans said that Magnum's midstream assets now have "their own life" and could be valued at 12 to 13 times the $75 million per day that they produce. He said the proposed transaction would not take any money away from the company's upstream drilling plans. Looking at the company's future, Evans noted that for about 20 years of his career, the major oil companies were leaving the U.S. and selling their assets to the little guys like Magnum. Now however, the big boys are back and are competing with the independents, especially in the oil shale regions. "We've positioned the company for a takeout," said Evans, but noted that the company still has a lot of growing left to do to maximize its value. Cramer said that Magnum, while still small and speculative, is really terrific. He urged viewers to use limit orders when buying in.
Lightning RoundCramer was bullish on Taiwan Semiconductor (TSM), Praxair (PX), Airgas (ARG), McDonald's (MCD) and Southern Copper (SCCO). Cramer was bearish on Sprint Nextel (S).
Closing CommentsIn his "No Huddle Offense" segment, Cramer said that the move in Apple (AAPL) is all about earnings. He said after the company's huge upside surprise, shares should have immediately gapped higher to $550 a share, but instead, they're skipping ahead day by day to the level where they deserve to be. Why $550 a share? Cramer said forget about the company's $100 billion in cash or rumors of a new iPad or perhaps a dividend. Apple deserves to trade at $550 a share based on its earnings alone, as it is expected to earn $5.50 a share in earnings, yet still trades at less than 10 times those earnings. --Written by Scott Rutt in Washington, D.C. To contact the writer of this article, click here: Scott Rutt. Follow TheStreet on Twitter and become a fan on Facebook. To submit a news tip, send an email to: firstname.lastname@example.org.
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