We’re buying 350 shares of Coterra Energy (CTRA) at roughly $24.77 each. Following Wednesday’s trade, Jim Cramer’s Charitable Trust will own 2,300 shares of CTRA, increasing its weighting to 1.96% from 1.66%. Energy stocks were getting hit Wednesday as U.S. oil prices fell below $70 per barrel for the first time since early July. But if you look further back, the pain in oil hasn’t been this severe in years. With the latest decline, the commodity was on pace for its seventh straight weekly loss, something it hasn’t done since November 2018. Additionally, energy has been the only S & P 500 sector negative quarter to date in what has otherwise been a terrific stretch for stocks. Yes, it’s been that bad for the oil bulls. @CL.1 YTD mountain WTI crude YTD Is the decline in West Texas Intermediate crude, America’s benchmark, a sign of something more ominous? We don’t think so just yet. Oversupply has been one of the main driving forces behind this latest collapse. And, as we’ve seen before when oil breaks down below $70, the weakness usually motivates OPEC and its international allies to become more aggressive with its output cuts. So, with Wall Street turning its back on the energy trade, we’re using this weakness as an opportunity to pick up shares in one of the best-run operators with a great balance sheet and a strong track record of cash return to shareholders. That company is Coterra — the lone energy stock in our portfolio following exits earlier in the year of Devon Energy (DVN) and Halliburton (HAL). Most recently, we moved on from Pioneer Natural Resources (PXD) after it agreed to be bought by Exxon Mobil (XOM). CTRA YTD mountain Coterra Energy YTD We say Coterra Energy is one of the best operators in the group because over multiple quarters this year, its results have shown a commitment to increasing capital efficiency, which measures a company’s ability to increase production while maintaining (or even lowering in an upside scenario) capital expenditures. It means getting more out of the ground with no change in costs. Coterra’s capital efficiency was on display in the third quarter after total production came in higher than expected at a lower cost. Looking out to next year, the potential for even greater efficiency gains is possible based on management’s belief that they will see about 5% cost deflation. That should give the company’s returns a boost even as the underlying oil and natural gas commodities remain volatile. By the way, Coterra is a roughly half-oil and half-nat gas producer with the ability to flex some of its rigs toward whichever commodity is more favorable. (Jim Cramer’s Charitable Trust is long CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
An oil pumpjack pulls oil from the Permian Basin oil field in Odessa, Texas, on March 14, 2022.
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