Why Shares of Emerald Oil Inc Dropped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of oil explorer Emerald Oil Inc (NYSEMKT: EOX  ) fell as much as 11% today after reporting earnings.

So what: Last night, the company announced fourth quarter earnings, and while production increased 29% sequentially and 101% year over year to 220,793 barrels of oil equivalent, the company still lost $10.9 million, or $0.17 per share. That's well below the two-cent loss that analysts expected and is why shares are down big today.  

Now what: At the end of the day, even increasing production has to turn a profit, and Emerald's $31.2 million loss last year left investors disappointed. But results are trending in the right direction, and if management can lower costs as planned the company can swing to a profit in 2014. Until I see that operational improvement I won't be jumping in as losses keep piling up.

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