Why Cobalt International Energy's Shares Jumped


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 Cobalt International Energy (NYS: CIE) rose as much as 19% today after the company reported earnings and an update on its Angola project.

So what: Cobalt doesn't have any revenue yet, but the company's loss grew from $19 million a year ago to $141 million, or $0.35 per share this quarter. Adjusted for one-time items, the loss was $0.11, larger than the $0.09 loss analysts expected, but investors were encouraged by an update about Angola.

Management said that a new well in Block 21 showed that the reservoir was deeper than expected, which management called a "windfall."

Now what: This is huge news for the company because investors have been speculating on the size of the company's reservoir. Stifel Nicolau analyst Michael Scialla said there could be more than a billion barrels of oil in this one reservoir, which Cobalt has a 40% stake in. The company is still four years from potential production and with a market cap over $10 billion I think the bet is risky. Still, the news was good for today and investors will be waiting to hear more detail about the block in coming months.

Interested in more info on Cobalt International Energy? Add it to your watchlist byclicking here.

The article Why Cobalt International Energy's Shares Jumped originally appeared on Fool.com.

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.

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