Cramer said on MAD MONEY that oil service names are acting horribly and acting like oil is heading much much lower.
He interviewed Global SantaFe (GSF), and the CEO said this is unusual, particularly since they are sitting on $11 Billion in backlog and that is close to their market cap. This level of backlog is higher than any others, but no one is exiting contracts or indicating they intend to exit contracts. This is still a very profitable level for oil companies and nowhere close to the threshold where they can’t make lots of money. They try to reinvest in the business with all the cash they have accumulated and that they bring in, but what they can’t then they will return to shareholders via buybacks and dividends and if that doesn’t do it they will look for other wars.
Cramer said he also likes Transocean (RIG) (he owns it) as worth more than it is selling for, but he says you have to be Very selective in the sector.
Jon C. Ogg
January 17, 2007