TransGlobe Energy Shares Plunged: What You Need to Know

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 (NAS: TGA) fell 16% at the open this morning after the company reported earnings.

So what: A damaged pipeline in Yemen ended up shutting down about 2,300 barrels of oil per day (bopd) in the quarter and had a huge impact on earnings. Earnings per share in the second quarter were just $0.29 and fell well short of the $0.40 analysts expected.

Now what: Oil's drop today didn't help matters but management does expect full year production to be between 13,000 and 13,500 bopd. I would be more concerned about the falling price of oil than anything else, because estimates from analysts put TransGlobe's forward P/E at 6 times earnings right now. That could change after this report, but if oil recovers this stock could become a real bargain.

Interested in more info on TransGlobe Energy? Add it to your watchlist.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story