by
Sheena Martin, Contributing Editor
Friday, November 20, 2009
Takeovers are big news in the market at the moment.
In fact, did you know that takeovers have the biggest one-day gain in stocks for any asset?
As my colleague – and takeover expert – Louis Basenese says, they're "some of the safest companies you can own. According to FactSet Merger Stat LLC, the average one-day return for shareholders of the target company is 48%."
Furthermore, Louis says, "Industries naturally go through cycles of consolidation – waves of mergers, acquisition and takeovers."
One industry riding this wave as it comes out of recession is oil. And I have a takeover target making strides in oil exploration that could put money in your pocket in a few months time.
The British Are Coming
Small U.K.-based exploration company Tullow Oil PLC (LSE: TLW) is a gem for a "Big Oil" firm breaking into reliable production in Africa.
In early November, Tullow signed a deal with oil major Royal Dutch Shell (NYSE: RDS.A) on a smaller, developed project. The agreement saw Shell purchase a 33% stake in Tullow's offshore oilfields in French Guiana, which have a combined rate exceeding 95,000 barrels per day.
As a result, Tullow shares climbed by 8% in November. But that's not the only deal…
Tullow's Major Oil Discoveries
In March 2009, a field more than twice the size of Lake Michigan was discovered off the coast of Ghana. Production estimates top one billion barrels of oil and Tullow has partnered up with Anadarko Oil Corp. (NYSE: APC) on the project. And the companies' third partner, privately owned Kosmos Energy, had its stake bought out for $4 billion by ExxonMobil Corp. (NYSE: XOM) last month.
Given that, there is considerable potential for ExxonMobil to go after Anadarko and Tullow as the project progresses.
What's more, Tullow has made significant oil discoveries in Uganda. And with easy to access oil reserves, Tullow has enjoyed almost 100% success in exploration on the Ugandan side of the Lake Albert Rift Basin.
That success rate, particularly in a region not popularly known for its oil riches, is few and far between.
