Clayton Williams Energy Shares Popped: 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 independent oil and gas explorer Clayton Williams Energy (NAS: CWEI) jumped 23% today after the company released earnings.

So what: Revenue rose 16% to $101.1 million, but the bottom line is what really impressed this quarter. Earnings per share exploded to $74.5 million, or $6.13 per share, from $0.96 a year ago.

Now what: Before we get too excited, there was a derivatives gain of $92.3 million in the quarter versus a loss of $4 million a year ago. That gain alone accounts for the outstanding earnings growth and then some. Production did increase more than expected, but I think this move is a bit overdone even after a great-looking quarter on the surface.

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At the time thisarticle was published Fool contributor Travis Hoium has no 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 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.

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