Image Source: Memorial Resource Development investor presentation.

What: Shares of Memorial Resource Development (NASDAQ: MRD) are down more than 17% as of noon today. At first glance, the company's earnings looked pretty solid, but investors who were hoping to see continued growth in 2016 were likely disappointed with the company's 2016 guidance.

So What: There are probably a handful of companies that would have given their left arms for a fourth-quarter result similar to Memorial. Production increased by 64%, costs decreased, EBITDA increased compared to the same quarter last year, and the company remained cash-flow neutral throughout the year.

The big difference for investors, though, was that the company's net income slides considerably when you consider the gains from oil and gas hedges. Net income came in at $17 million per share compared to $170 million this time last year. It may be a big drop, but it's one of the few producers that can claim to be profitable today.

The reason why investors didn't receive this news well, though, is because the company's guidance calls for a scaling back of its spending and production growth. Memorial's management is expecting to lower its average active rigs to four on its acreage, down from nine in 2015. Also, the company is planning on not completing several of its wells in the year because of lower oil and gas prices. Considering that Memorial was one of the last bastions in the oil patch putting up large growth numbers, this one can sting a little.

Now What: All in all, Memorial Resource Development had a decent quarter, especially compared to some of its peers that are teetering on the verge of bankruptcy. Investors might knock it for its ownership of Memorial Production Partners (NASDAQ: MEMP) -- which posted some big losses after a large asset writedown; but it seems that today's big price drop is an overreaction.

The important thing to watch with Memorial in the future is whether oil and gas prices pick up before some of its hedges expire. Without the protection of hedges, Memorial's results won't look as strong.