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Why Shares of TransGlobe Energy Corporation (USA) Dropped Today

By Travis Hoium - Mar 5, 2014 at 4:25PM

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Is this meaningful or just another movement?

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 and gas company TransGlobe Energy Corporation (USA) ( TGA 0.38% ) fell as much as 10% in early trading today before recovering most of those losses.

So what: The company reported earnings this morning, and fourth-quarter revenue after royalties were down 12%, to $81.2 million, and net income dropped 80%, to $6.9 million, or $0.09 per share. Investors were expecting revenue of $94.9 million and earnings of $0.38 per share, so you can see why shares dropped early. 

Now what: Results were up slightly sequentially, and production is rising, but analysts had clearly set a high bar. Production is expected to grow between 9% and 15% next year, so there should be some solid growth. There's still high risk working in countries like Yemen and Egypt, and that could keep shares volatile as long as political turmoil exists.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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