There is a bull market in oil and gas thanks to recent mergers

CNBC’s Jim Cramer said he sees a bull market in oil, largely due to two recent major mergers.
Chevron announced on Monday that it would buy Hess in a deal worth $53 billion, while ExxonMobil agreed to buy rival Pioneer Natural Resources for $59.5 billion earlier in October.

CNBC’s Jim Cramer said Monday that he sees a bull market in oil and gas. He said that the value of oil stocks is increasing thanks to the merger of two major oil companies in addition to the rise in crude oil prices.

“I think there’s always a bull market somewhere, and right now it’s in the oil and gas group,” Cramer said.

Chevron announced on Monday that it would buy Hess in a deal worth $53 billion. The merger comes just weeks after Exxon Mobil agreed to buy rival Pioneer Natural Resources in a $59.5 billion deal earlier in October.

These recent mergers reminded Cramer of the oil takeovers of the early 1980s, when he said that major companies realized that “it was cheaper to drill for oil on Wall Street than to drill for oil in the ground.” For Cramer, Chevron can use its large balance sheet to make deals that increase its profits almost immediately.

He highlighted Coterra, which he said is worth much more than it is currently trading for, as well as Conoco.

“Wall Street is slow to recognize this new trend and appears stuck in a world where oil has an expiration date due to environmental, social and governance concerns and electric vehicle sales,” Cramer said. “However, oil companies no longer believe in the short exit theory. However, there is another reason to continue investing in these stocks.”