(May 21, 2014 – CNBC) Cramer's energy picks: EOG & APC (By: Jim Cramer)
See video at link below.
http://video.cnbc.com/gallery/?video=3000277432
[The following transcript has not been checked for accuracy.]
Why do I keep harping on the idea of a renaissance? It's not to sell books, but there is nothing wrong with self-promotion. This is television, but the move in this group is one of the most amazing reratings -- getting better -- that i have seen in 36 years on wall street. It's based not merely on the strength of oil sticky level above $100. Even at the west texas price. It's on production growth. For the longest time these stocks, EOG, Pioneer, Continental Resources, many others I talk about each day, for the longest time were boom-bust affairs. They were pegged to the comets to rise and fall with every tick in the price of crude. That's no longer the case. These companies have now taken control of their own destiny. Sure, the rising price of oil is an important tail wind. Do you know what's more important? The miraculous production growth provided by six key american shale plays. Eagle Ford in Texas. Utica in Ohio. Marcellus in Pennsylvania. They are proving far more bountiful than we imagined two years ago. Some of that comes from improved drilling. Conventionally drilled well costs $2.5 million a pop. The new fractured wells are about $7.5 million each. The amount of oil produced by horizontal drilling is far in excess of what many thought possible and the completion in the productivity of a well over time is slower than expected. So a $7.5 million investment in a horizontal well is yielding on average an astonishing $8.4 million cash flow payback in the first year according to RBN Energy, recognized expert in the field.
