Freeport-McMoRan used to be a copper and gold miner, and back when oil prices were much higher in 2012, it purchased Plains Exploration and McMoRan Oil and Gas for $19 billion. However, when oil collapsed in 2014, Freeport was exposed to three of the worst commodities out there, and its stock was crushed.
Meanwhile, Anadarko is a well-run exploration and production company with a stock up more than 18 percent this year.
Cramer loved this deal for three reasons. First, the purchase doubles Anadarkoâ€™s ownership in the Lucius development, to 49 percent from roughly 23.8 percent. The newly acquired assets could boost Anadarkoâ€™s production by 80,000 barrels of oil per day in the area. Cramer estimated that Anadarko could turn a profit even if the price of crude drops to the low $30s.
Anadarkoâ€™s management also believes that the acquisition could generate $3 billion in additional free cash flow, which is huge, considering it only paid $2 billion for the assets.
Anadarko financed the transaction by issuing a secondary offering, and sold more than 35 million shares of stock at $54.50. What was even more astounding to Cramer is that Anadarko traded at $57.79 before the transaction, and it closed at $57.53 on Monday. Itâ€™s like investors are getting the Freeport assets for next to nothing.
“Anadarko shelled out $2 billion for a very attractive asset that is going to become a huge cash generator after they spend little money developing it,” Cramer said.
Ultimately, Cramer considers the transaction a big positive for Anadarko, and he thinks the stock deserves to go higher in the long term, even if oil stalls out at its current levels.
“Anadarkoâ€™s purchase of Freeport McMoRanâ€™s deep water Gulf of Mexico assets last week is one of the best I have ever seen,” Cramer said.