Financial Analysis of Tullow Oil

Head Quartered in London, Tullow employees more than 250 people all over the world with the production capacity of approximately 80000 barrels per day. In 2007 the company was drilling more than 40 wells spread across the globe. The overall global strategy of Tullow has always remained in the domain of making long term investments in assets and markets where the company’s skills and expertise can make a difference. Tullow’s focus has always remained on the exploration and exploitation of its existing resource base with more operational innovation and active portfolio management. It is because of this strategy that the company is focusing on acquiring assets and making acquisitions in order to create synergy and achieve value for its stakeholders. The company is also continuously focusing on making capital expenditures and reinvesting the major portion of its profits into the business in order to fund the growth of the business through its own internal resources.
The recent corporate moves of the company include the $595 million acquisition of the Hardman Resources Limited which provided the company easy and substantial access into markets like Uganda and Mauritania besides offering high impact exploration licenses in South America. The beta is negative because of the fact that stock returns and market returns almost run parallel in opposite directions. The Tullow stock has continuously risen in price whereas FTSE over the period of 52 weeks has shown a negative return.
UK Gilts are considered as the most secure securities as they are backed up by the government of the UK. In every market, all government securities issued are considered as risk-free investments and returns offered by them are almost considered as the risk-free rate of investment. Therefore to make a direct comparison between risks free investment security and security open to most of the risks in the market in a direct way will be a little bit difficult to make.