Is Warren Buffett wrong about oil stocks?

In order for Buffett to buy a stock, the company has to pass this set of criteria: high margins with a low amount of debt (it doesn't take a genius to run them); strong franchises and freedom to price, with predictable earnings. This set of criteria sounds great when investing in a consumer goods business, but when investing in the resource sector, it's almost impossible to achieve. Look at this chart below.

The energy industry has higher capital spending requirements than other industries. To be successful in the resource industry, you have to readjust your investing strategy so you're able to succeed in a high capital spending environment. This also means you have to be comfortable with companies possessing higher amounts of debt and lower margins than what you are normally accustomed to.

Another Buffet criterion that won't be fulfilled when investing in the resource sector is buying franchises that have the freedom to price. When it comes to oil and gas, this commodity is traded on exchanges all over the world. Exchanges, which speculate on world production and consumption, are the only things that influence the price of oil and gas.

Lastly, when trying to fulfill his criterion of "not needing to be a genius to run it", this is impossible when trying to grow, or maintain oil production. Running an oil and gas company, requires numerous amounts of geoscientists, chemical engineers, mechanical engineers, and petroleum engineers to maintain or grow the business.

Buffet's successes in the resource sector demonstrate that you should buy when prices are low, the sector is out of favor, company cash flows are still stable, and companies are selling for less than its book value.