Tullow is now one of Europe’s largest independent oil and gas companies and is a member of the FTSE 250. In 2004 the company bought Energy Africa for $570m (€480m).

The group produces 58,000 barrels of oil equivalent a day and is focused on British gas production and oil production in west Africa. It has development projects in Britain, Africa and south Asia. Tullow’s share price has rocketed in line with the price of oil.

The experts below have been selected for their skills in a number of investment areas. They, or the funds they manage, may hold shares in the companies or sectors discussed.

Kevin McConnell, head of equity research, Bloxham Stockbrokers OVER the past 12 months the price of crude oil has jumped 43% on the back of imbalances in the global demand-supply equation.

This imbalance has proved a boon to investors in oil companies, with Tullow rising by 82% in the period.

Its re-rating reflects increased investor appetite for the oil sector as the higher crude price boosts the bottom lines of companies.

As a medium-sized explorer, Tullow has a far smaller base than the majors. It is therefore much more leveraged to any boost in its production, a higher crude price or new oil discoveries.

A recent update from Tullow highlighted that it was expecting this year’s production growth to be up by 28% thanks to increased investment in drilling.

To put that in context, last week BP stated that its production grew by 4% in 2005.

That disparity in performance reflects Tullow’s execution of its simple strategy of using cash from its North Sea gas assets to invest in oil exploration in Africa and Asia.

The long-term outlook for the crude price remains exceptionally bullish. Geopolitical issues aside, structural imbalances in the oil demand-supply equation are the main reason the $70 (€59) barrel is not an outlandish prospect.

During the 1990s oil companies didn’t invest in their infrastructure or exploration, because they could not justify it when oil was $10 a barrel.

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