Cramer's New Oil Call (APA, XOM)

On tonight’s MAD MONEY on CNBC, Jim Cramer said he has no cure for the financials, mortgage insurers, and banks right now.  But Cramer’s call in oils for exploration and production is Apache Corp. (NYSE:APA) as the anti-Enron.  This was one of his $80 to $120 plays, but it is down $4 today to under $100 because of Exxon’s dense earnings and production being down 2%.  Apache is actively growing, while Exxon is not growing operations.  Cramer said he’s now off the ExxonMobil (NYSE:XOM) bandwagon.  Now you have to know which oils are growing and which ones aren’t. Apache had a blowout quarter and best conference call of oils.  Apache will buy properties that it thinks it can do better then the larger players, and it is on Goldman Sachs’ Conviction Buy List.  The Australian opportunity is more than double last year’s total production.  It has earnings visibility and it is one of of the cheapest of the E&P plays out there at 11.9 times earnings.  If it had a comparable multiple to peers it would be at $130 or $147 rather than $99.

Shares closed down over 4% at $99.18 today, but traded back up 1.6% to $100.80 after the Cramer pump in after-hours.  Its 52-week trading range is $63.01 to $104.90.

Exxon was light, as we worried it would be.
Goldman Sachs lowered oil estimates, or at least said take some profits, although there is no change to its Super-Spike band of up to $135/barrel and $4.50/gallon under extreme circumstances.

Jon C. Ogg
November 1, 2007