Many investors are looking at oil and gas companies like Diamondback Energy (NASDAQ: FANG) to buy because their stock is down. Diamondback Energy, Inc., an independent oil and natural gas business that focuses on the exploration, acquisition, development, and exploitation of unconventional and onshore energy reserves in West Texas.
Gas and oil exploration, or generally known as hydrocarbon explorations, is the term used by geologists to look for natural and oil gas. The exploration permits mining and oil firms like Diamondback Energy to harvest natural hydrocarbons and natural gas from different parts of the planet. Drilling is costly, and as such, hydrocarbon explorations are done to identify possible areas that have these deposits while restricting cost and decreasing its impact on the atmosphere.
Diamondback Business – How Does Hydrocarbon Exploration Work
Before a drill place is identified, geologists must evaluate the place and make sure that five factors are present for investments – reservoir, source rock, trap and seal, migration, or cap rock. As explorations are costly and expensive, these factors must be present before any drilling is performed. Once the elements are considered, geologists employ many techniques to make sure the success of the drilling. The first methodology involves a seismic survey or geophysical survey. This process contains the measurement of electrical current, density variation, heat flow, magnetic irregularities, and gravitational and geochemical reactions.
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A seismic survey is one of the most popular techniques that geologists use in determining if hydrocarbons exist mainly in deep water surveillance. The technique makes use of sound to plan the level of rock formations in the deep water. Many firms make use of vibrator trucks or little explosive charges on land and record the sound using a geophone.
Aside from seismic surveys, geologists may also make use of offshore surveys, which contains the use of compressed air to make big bubbles that burst upon reaching the surface place. The sound waves from the burst will then travel below and reach the rocks where hydrophones then record the sounds. As each rock generates different sound waves, geologists are also capable of identifying the rock type that exists in the deep.
Some explorations may also make use of gravimeters and magnetometers to calculate the planet gravity pull at the surface. In contrast, geochemical prospecting involves the measuring of natural gases using high-tech tools.
Remote sensing is also one of the methods that geologists used to plan the structure of the exploration site. An aerial photograph is performed to map the surface area of the proposed site, revealing vital details such as minerals, vegetation, soil type, and other specs.
In certain instances where data is restricted, some gas and oil firms also do a wildcat well, mainly in areas that are not explored before. The wells offer mining firms information on the site and whether natural or oil gas are accessible.
Is Diamondback Energy A Buy?
Investors have asked AlphaBetaStock.com if FANG is a buy. The short answer to whether to buy FANG stock is no. The reason is simple; the oil price war is still going on, and, even with an agreement with US companies, it is unlikely to return $100 a share anytime soon. In addition, Haselkorn & Thibaut, an investor law firm, is investing stockbrokers that sold FANG stock to investors.
Crude Oil Prices Driving FANG
Today, during the Asian session, oil prices show mixed trading, consolidating near local lows at 21.90, reached on April 2 and renewed yesterday. The crude oil market ignores Sunday’s OPEC+ agreement, aimed at reducing the production by 10 million barrels per day. During Monday’s trading session, the price grew slightly and approached the local highs of April 3, located near the level of $29 per barrel.
It should be noted that OPEC+ participants came to an agreement with considerable pressure from the United States, which will probably help stabilize the market situation. However, investors are afraid that the effect of the new deal will be manifested for a long time since energy producers have accumulated significant reserves of raw materials, and the restriction on production will begin to apply only on May 1. However, rumors appear that OPEC+ is considering the possibility of reducing production by an additional 10 million barrels per day.
Crude Oil Technicals – Support and Resistance
On the daily chart, Bollinger Bands moves flat for oil. The price range consolidated within a reasonably vast range, entirely consistent with the observed dynamics. MACD falls, formed a new sell signal (the histogram is below the signal line). Stochastic falls but is close to its lows, which signals that the instrument is oversold in the ultra-short-term.
Resistance levels: 25.00, 27.22, 30.00, 32.00.
Support levels: 21.90, 20.00, 19.00.