- CNBC’s Jim Cramer said he sees a bull market in oil driven in large part by two recent major mergers.
- Chevron said Monday it would buy Hess in a $53 billion deal, while Exxon Mobil agreed in early October to buy rival Pioneer Natural Resources for $59.5 billion.
CNBC’s Jim Cramer said Monday he sees a bull market in oil and gas. He said oil stocks are gaining value thanks to the merger of two major oil companies and the rising price of crude oil.
“I would argue that there is always a bull market somewhere, and right now it is in the oil and gas cohort,” Cramer said.
Chevron announced Monday it would buy Hess in a deal valued at $53 billion. The merger comes just weeks after Exxon Mobil agreed to buy rival Pioneer Natural Resources in a $59.5 billion deal in early October.
These recent mergers reminded Cramer of oil takeovers in the early 1980s, when he said large companies realized “it was cheaper to drill for oil on Wall Street than in the ground.” Cramer says Chevron can use its large budget to strike deals that boost earnings almost immediately.
He highlighted Coterra, which he believes is worth much more than it is currently trading for, as well as Conoco.
“However, Wall Street has been slow to recognize this new trend. “It seems stuck in a world where oil has an expiration date due to ESG concerns and electric vehicle sales,” Cramer said. “However, the oil companies no longer believe in the short termination theory. Still, one more reason to stay invested in these stocks.”
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Coterra.