Why Vaalco Energy's Shares Dropped

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 company Vaalco Energy dropped as much as 11% today after the company released earnings.

So what: First quarter revenue fell 3%, to $44.1 million, and the company reported net income of $7.2 million, or $0.12 per share. The problem is that analysts were expecting earnings of $0.25 per share, so Vaalco fell well short of expectations.Â

Now what: The earnings numbers aren't terribly strong, but the future is what investors should be worried about. Management is proceeding to get a partner in Angola approved, and the Block P award off the coast of Equatorial Guinea is expected to have exploratory wells drilled either this year or next. As these projects move forward, I think revenue and earnings will increase, which will drive the stock higher after today's discount.

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The article Why Vaalco Energy's Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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