Liam Denning, Columnist

The One Commodity Frackers Can't Do Without

Investor faith in the sector's ability to weather oil's slump has been shaken.

August 8, 2017 at 6:00 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

An oil well owned an operated by Apache Corporation in the Permian Basin are viewed on February 5, 2015 in Garden City, Texas.
Photographer: Spencer Platt

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The plucky shale sector has been hit with a reality check over the past week. Oil prices aren't much different from where they started August, but shares in exploration and production companies, especially the darlings of the Permian basin, have moved south for the summer:

The sector's seeming ability to shrug off low oil prices via impressive productivity gains, especially in the Permian shale basin, has become the received wisdom of bulls on these stocks over a couple of very rocky years in energy markets. So investors didn't take kindly to having their beliefs called into question when several firms tweaked their growth targets while announcing second-quarter results last week.