April 5, 2016 – The Street
Cramer: Don't Speculate on Broken-Down Oil Names
By: Jim Cramer
Where are the deals in the oil patch? We keep waiting and waiting. Stocks drift down that have all of these assets. They sell for a fraction of what they once did. Where are the opportunistic companies, the ones with the cash and the fabulous balance sheets? What the heck are they waiting for?
The answer: They aren't waiting. They simply don't care. Why? Steve Chazen, Occidental Petroleum's (OXY) outgoing CEO, said it best when we asked him about why there have been no deals of any consequence since the downturn.
First, the asset quality of most of the companies with stocks on their butts is poor. "They have break evens, maybe at $80 oil," he said. "Nobody needs to pay $80 breakeven oil properties."
How true. Rusty Braziel, my most trusted authority on oil and author of The Domino Effect, said of the shale revolution in this country that only a dozen counties actually produce oil at any real profit at these prices. Needless to say the distressed companies do not have assets in those counties.
Read the full article here: http://realmoney.thestreet.com/articles/04/05/2016/cramer-dont-speculate-broken-down-oil-names-0
