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: The stock plunge at InterOil (NYSE: IOC) that began yesterday has continued today, and now people are starting to pile on even more with the stock down 12%.

So what: Yesterday, the stock dropped because Papua New Guinea's government had said InterOil needs to build a much bigger liquid natural gas facility than the company was planning. Today, the worrying about the company's future continues. InterOil doesn’t have the balance sheet to build the estimated $6 billion project and the company's current partner, Mitsui, is only providing an advance until the project is completed.

Now what: A Seeking Alpha article published today puts the company's value somewhere in the teens if the LNG project isn't built. Analysts are only expecting $0.72 in earnings per share in 2011, and $0.59 in 2012, so even after the drop of the last two days the stock is trading at a hefty multiple. I would stay far away from this company until the issues in Papua New Guinea are resolved and we know what will be built and when.

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