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“Is what’s good for natural gas bad for Lufkin?” Jim Cramer asked Monday on CNBC’s “ Mad Money .” He noted that Lufkin shares got hammered today in light of a dramatic slowdown in U.S. drilling for natural gas.
And while the name Lufkin may not be well-known, most are familiar with the “donkeys,” or the oilfield pumping units that Lufkin manufactures — Cramer described them as “the things that go up and down to bring out the oil or the natural gas once the drilling is done.”
Shares of Lufkin were down more than 21 percent by the close of trading on Monday. Meanwhile, Southwestern Energy, Cabot Oil & Gas and Range Resources all roared ahead.
Surprisingly, these opposite swings are “two sides of the same story,” Cramer said.
Lufkin is a piece of the nat gas chain, and business has been horrible ever since rigs and services have rapidly shifted over to U.S. oil plays instead of U.S. nat gas plays, he said. “Because we are saturated with natural gas and have no place whatsoever to put it.”
Unless the drilling stops, the pure plays will continue to be obliterated, he added. That’s why he finds it so surprising that the major nat gas plays are “roaring,” along with pipelines closely tied to natural gas use.
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