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: Legacy Reserves (Nasdaq: LGCY) dropped 11% in intraday trading today after missing earnings expectations.

So what: Non-GAAP EPS of $0.41 grew 46% from the year-ago quarter but fell short of the consensus estimate of $0.43. Operating income more than tripled as higher volumes and prices more than offset an increase in expenses. GAAP earnings per share of -$1.39 reflected massive and increasing unrealized losses on commodity derivatives.  

Now what: Cold weather and power blackouts reduced production by roughly 5% below potential levels but caused an inventory buildup that could help the current quarter's sales volume. The business is showing nice fundamental improvement, but there's a risk that the losses on commodity derivatives will go from paper to real losses. Today's hit on oil prices also casts a negative pall on the revenue outlook. 

Interested in more info on Legacy Reserves? Add it to My Watchlist.

Fool contributor Cindy Johnson owns no shares of any company named above. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.