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: WPX Energy Inc's stock sold off by as much as 10% on Thursday. The driving force behind the sell-off was the company's fourth-quarter results and weak outlook for 2015. It also didn't help matters that the price of oil was selling off today too.
So what: WPX Energy's fourth-quarter results weren't all that bad. The company actually made money in the quarter as its adjusted net income was $7 million, or $0.03 per share. That was actually $0.18 better than analyst expected as they figured the company would lose money again this quarter. The company also reported strong oil production growth -- up 71% from the year-ago quarter.
However, WPX Energy isn't expecting this robust growth to continue in 2015. The company slashed its capital budget in half, which will take oil production growth down from 56% last year to 15%-20% in 2015. What's a bit concerning is the fact that company's overall production is expected to fall by 4% next year as its legacy natural gas production is left to decline as WPX focuses on oil.
Now what: Like most other energy companies WPX Energy is enduring a rough oil market at the moment. The company shifted its focus from gas to oil over the past year, which in hindsight was poor timing. Now the company is cutting back investments, which will result in its total production slipping next year. Investors don't like it when a growth-focused company stops growing, even if it does make a lot of sense to cut back production when commodity prices are so depressed.
The article This Is What Sent WPX Energy Incs Stock Down Double Digits Today originally appeared on Fool.com.
Matt DiLallo 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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