Natural Gas has been always playing an important role in the world energy sector and in the US, and today we will be focusing on a particular US stocks.
The oil and gas resources in the Permian Basin were first discovered in the early 1920s. While some sources cite a small, non-commercial well in February 1920, the first commercially successful discovery well was completed in 1921 in the Westbrook Oil Field in Mitchell County, Texas.
Other equal important basins are the Appalachian Basin and Marcellus Shale.
The large-scale use of shale for oil and natural gas production is a relatively recent development, often referred to as the “shale revolution.” While the technologies to extract these resources have existed for decades, their combination and refinement began to be used on a large scale starting in the late 1990s and accelerated dramatically in the 2000s.
This “revolution” was made possible by the combination of two key technologies:
- Horizontal drilling: The ability to drill a well vertically and then turn the drill bit to follow a horizontal path through a thin layer of rock.
- Hydraulic fracturing (or “fracking”): The process of injecting a high-pressure mixture of water, sand, and chemicals into a well to create small fractures in the rock, allowing oil and gas to flow out.
By the mid-2000s, the application of these techniques, particularly in formations like the Barnett Shale in Texas, proved to be highly successful and economically viable. This success led to a rapid expansion of shale production across the United States, including in the Permian Basin, transforming the country into a leading global producer of oil and natural gas.
So since around 2007 the new technology applied mostly on the Permean Basin brought the US to become the number 1 energy exporter, both oil and natural gas. In addition, similar technological advance has been made in the mix of use of petroleum products which many of them come from a alteration of natural gas directly.
One of the stock that is involved in natural gas is Range Resources Corporation (NYSE: RRC), a U.S. independent natural gas, natural gas liquids (NGL), and oil company. Its core business is the exploration, development, and acquisition of natural gas and oil properties. The company’s operations are primarily focused on the Appalachian Basin, with a significant presence in the Marcellus Shale in Pennsylvania.
Range Resources is involved in the entire process from finding the resources to selling the end products. It sells:
- Natural gas to utilities, marketing and midstream companies, and industrial users.
- Natural gas liquids (NGLs) to petrochemical end users, marketers/traders, and natural gas processors.
- Oil and condensate to crude oil processors, transporters, and refining and marketing companies.
The company operates under a single, unified segment, which is the exploration and production of natural gas, NGLs, and oil in the United States. Therefore, it does not have a formal breakdown into separate, distinct business units. Instead, its operations are often discussed in terms of its geographic focus, such as its operations within the Marcellus, Utica, and Upper Devonian formations.
Let’s now look at the monthly chart of the this stock, since I found something intriguiing.
It appears that the stock is mimicking a previous upward movement from 2003 to 2008, that is five years. Very very similar but we do not know which outcome will play out from now on. The Plan A is to see a similar pattern as before and the stock could be at one of the best entry (but no inversion candle is there yet on a monthly chart) for a 12 months risk/reward ratio. In fact if the next high should arrive within the same timespan than before, five years, the stock is now within twelve month of concluding its five years period.
As said there are not yet any inversion candle on the monthly chart which could still happen in August, as there are still few trading days left. I would considering an entry in this stock only after an inversion candle will materialize. Right now taking a position will mean anticipation and remember: being early is equal to be wrong
If current situation can be sustained and we will see an inversion candle, then a position can be taken but also bear in mind where are the supports, and here we have clear supports.
Major supports are at 30 usd (low of April candle) and then 27 usd (low of August ’24 candle). Those supports are important stop losses. Plan B is a continuation of the bearish movement which could lead to double bottom or at least back at 18 usd.
This level, 18 usd has paramount importance since it’s the level that do the heavy work of keeping the stock on a bullish trend. Below this level the stock will enter a sort of oblivion.
