Fracking: How it Works, The Dangers, And The Stocks To Watch

It is common for politicians on the campaign trail to tout the exploitation of new sources of energy to spark innovation and improve the American economy. To that end, one of the most fraught over topics of discussion in the environmental community of late has been the use of hydraulic fracturing, commonly known as fracking.  While this could serve as a way to extract oil and natural gas on native soil, this practice is not accompanied by risk for the companies that engage in it and the surrounding communities.

A Quick Recap: How Fracking Works

Fracking is a practice by which a drill is inserted deep into the ground where upon hitting a certain depth that contains natural gas or oil,  the drill is turned horizontally.  Then a powerful concoction of sand and water coupled with various chemicals is shot into the rock basin, thereby freeing up the oil and gas to flow into the drill’s hole and be extracted at the earth’s surface. The  whole drilling process in a given area takes 3-5 months.

Debate

The hotly debated problems arise from the chemicals that are shot into the rock and the possibility that these chemicals will leak into the water resovoirs underground, thereby tarnishing the drinkability of the water in the area where the fracking is performed.

Due to the obvious dangers of fracking, efforts have been made by both lobbying groups and the federal government to pressure energy companies to disclose their fracking activities.  However, a new report shows that the voluntary nature of FracFocus.com, the main reporting vehicle for fracking wells, is falling far short of what is necessary to protect the public. In fact, because companies like Exxon Mobile (XOM) and ConocoPhillips (COP) can choose the date at which they want to report their well activity, a large number of drilling sites have gone unreported, making oversight more difficult.

Business Section: Investment Ideas

How will these energy producers heavily investing in hydraulic fracking be effected by public sentiment if it turns against the practice? On the one hand, the benefits of more domestic energy production could benefit consumers far and wide, while the obvious dangers could result in a serious accident.

We have assembled a list of companies who engage in fracking to help you start your research.

Interactive Chart: Use the Compar-O-Matic to compare market caps for the stocks mentioned below:

1. Exxon Mobil Corporation (XOM, Earnings, Analysts, Financials): Engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. Market cap at $406.85B, most recent closing price at $88.14.

2. ConocoPhillips (COP, Earnings, Analysts, Financials): Operates as an integrated energy company worldwide. Market cap at $69.61B, most recent closing price at $57.31.

3. Apache Corp. (APA, Earnings, Analysts, Financials): Engages in the acquisition, development, exploration, and production of natural gas and oil properties in the United States. Market cap at $12.68B, most recent closing price at $19.06.

4. Chesapeake Energy Corporation (CHK, Earnings, Analysts, Financials): Engages in the acquisition, development, exploration, and production of natural gas and oil properties in the United States. Market cap at $12.68B, most recent closing price at $19.06.

5. Concho Resources, Inc. (CXO, Earnings, Analysts, Financials): Engages in the acquisition, development, and exploration of producing oil and natural gas properties in the United States. Market cap at $9.78B, most recent closing price at $93.80.

6. SandRidge Energy, Inc. (SD, Earnings, Analysts, Financials): Operates as an independent natural gas and oil company in the United States. Market cap at $3.17B, most recent closing price at $6.45.

7. QEP Resources, Inc. (QEP, Earnings, Analysts, Financials): Operates as an independent natural gas and oil exploration and production company. Market cap at $4.79B, most recent closing price at $26.97.

Written by Dan Connelly

Use Kapitall’s Tools: Looking for ways to analyze this list?

Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall’s tab navigation to browse through the data…

Analyze These Ideas: Getting Started

• Read descriptions for all companies mentioned
• Access a performance overview for all stocks in the list
• Compare analyst ratings for the companies mentioned
• Compare analyst ratings to annual returns for stocks mentioned
• Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

• Exxon Mobil Corporation (XOM, Chart, Download SEC Filings)
• ConocoPhillips (COP, Chart, Download SEC Filings)
• Apache Corp. (APA, Chart, Download SEC Filings)
• Chesapeake Energy Corporation (CHK, Chart, Download SEC Filings)
• Concho Resources, Inc. (CXO, Chart, Download SEC Filings)
• SandRidge Energy, Inc. (SD, Chart, Download SEC Filings)
• QEP Resources, Inc. (QEP, Chart, Download SEC Filings)

New to Kapitall?

1. New to the site? Click here to register for a free account, and gain access to more tools and data
2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly
3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
ABOUT KAPITALL WIRE

Kapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.

Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.