Independent and major equity market and commodity return sources around the time of hydraulic fracking and horizontal drilling revolution: a differences-in-decompositions approach

Fracking and unconventional drilling have revolutionized international oil and natural gas production. Fracking increases the likelihood of well completion and decreases oil and gas equity and commodity market risk. Oil and gas Majors are producers with the greatest time and liquidity in the industry and are the largest integrated producers. Independents are smaller upstream, midstream, and downstream producers that have different capital and infrastructure and are less liquid than Majors. The fracking and unconventional recovery transition decreased returns to Independent equity market returns more than the Majors equity market decrease. Major oil returns increased with the transition by more than Independents. Independent equity returns across groups were higher after the transition than Majors both across and within groups. Fracking technology increased the likelihood of successful well completion, and with lower financial market risk, equity returns decreased in the post-fracking period.