Followers of Tullow Oil have more reason than most blue-chip investors to keep an eye on events in Kenya.

One of the £4 billion company's two big exploration projects is in neighbouring Uganda — potentially a billion-barrel field in the Lake Albert rift basin — and Tullow conceded in yesterday's year-end trading update that supply disruptions caused by civil unrest in Kenya meant that drilling was running behind schedule.

However, with Uganda not expected to be a meaningful contributor to Tullow for a further five years — pending both confirmation of its potential and the construction of a 700-mile pipeline from Lake Albert to Mombasa, from where the bulk of its output will be exported — shareholders can probably put such concerns to the back of their minds for now.

Besides, Tullow confirmed that its wider exploration programme remained on track. The company's first well in Ghana's offshore Jubilee field is under way and Tullow expects the potential of the discovery to exceed 1.3billion barrels. Its 37 per cent stake in the project means that its share would be around 400million barrels, but, given that Tullow's entire worldwide reserves are 210million barrels, its importance should not be understated. Tullow was also more upbeat than before on another area in Uganda — the undrilled Butiaba field, where it plans to sink eight wells this year.

Yet the update also contained disappointments. Tullow is writing down the value of its Chinguetti field in Mauritania by £30million, not wholly unexpected given earlier impairment charges from Sterling Energy and Woodside, its partners in the project. Elsewhere, additional exploration expenses will mean that reported profits for 2007 will be slightly below the consensus range.

While Tullow's excitement lies in exploration, it is the forecast of flat production in 2008 that gives pause for thought. The company has squeezed all it can from Equatorial Guinea and the North Sea and faces the prospect of declining production in the medium term. That makes Tullow more likely to sell peripheral assets to fund its growth or seek acquisitions with producing assets, perhaps accompanied by an equity fundraising. However, with imminent updates on Ghana and Uganda set to buoy the shares, they are worth keeping.

RPS Group

Another trading update from RPS, another round of profit upgrades for Britain's biggest environmental consultancy.

Although the company's record might lead investors to expect nothing less - it has grown profits every year since 1991, and at an annual compound rate of 25 per cent over the past decade — RPS's recent share price performance, down by a third in less than three months, tells another story. That is partly a reflection of its success. RPS's outperformance — it had nearly quadrupled in value in three years - and premium rating left it susceptible to profit-taking. The shares have also begun to price in a downturn in construction activity, to which RPS is exposed through its planning division, which accounts for about half of forecast profits. However, most of its work is focused on government-backed urban regeneration projects. Revenues from UK housebuilders — for whom it obtains planning permission for land that lacks consent — account for only 1 per cent of the total, while those from commercial property are equally negligible.

Rather than feel any slowdown, RPS would appear to have seen prospects improve over the past few months. It has to date worked on 90percent of UK planning applications for offshore windfarms, and with the Government's announcement last month that it is targeting a tenfold increase in capacity, the pipeline is promising. The decision to commission a new generation of nuclear power stations by 2018 also plays to its strengths.

At 265p, or 16 times 2008 forecasts, RPS is still more expensive than the wider support services sector. But that seems only right given the prospect of 14 per cent earnings growth this year, and the likelihood of upgrades from bolt-on acquisitions. Buy on weakness.

Renishaw

There are not many mid-cap engineers that can reasonably claim that the next six months will be better than the last. Such is the position of Renishaw, the low-profile Gloucestershire company that is a world leader in co-ordinate measuring machines - gadgets that test the output and efficiency of manufacturing equipment.

Not that yesterday's first-half figures were weak. Sales were up 7per cent in constant currency terms, while an improvement in operating margins to 14.4 per cent — partly through a reduction in overheads — pushed operating profits up 25 per cent. The interim dividend was raised by an above-forecast 10 per cent.

However, three developments bode well for 2008. First, a six-month export ban on Mitutoyo, of Japan, one of Renishaw's biggest customers, expired this month, which should start to be felt in its order book. Second, with 93 per cent of Renishaw's output exported, its reported profits have been held back by a weak US dollar and should benefit from its recent strengthening.

Third, and most important, Renishaw has launched Revo, a handheld measuring device, after an 18-month delay, to be followed shortly by Gyro, a cheaper version. Revo, which cuts inspection times by one third, has been well received by the likes of GE, Rolls-Royce and Hyundai and should trigger an acceleration in revenue growth in the second half of this year. No engineer is immune from a manufacturing slowdown, but Renishaw, at 635p, or 15 times next year's earnings, is better placed than most. Hold.

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