SHARES in exploration company Pan Andean chaired by Dr John Teeling, tumbled in London yesterday, sinking from 115p to 49p on disappointing news from its exploration activities in Bolivia.
The shares went into virtual free fall from early morning after one investor put a substantial block of shares on the market ahead of the company's formal announcement of poor drilling results to the Stock Exchange in London shortly after 11.30 am.
Given the huge movement in the share price and the heavy selling ahead of the drilling announcement, market sources expect that the London Stock Exchange will now be forced to launch an investigation into these early dealings.
A spokeswoman for the Stock Exchange refused to disclose whether an investigation was under way, saying it was unable to comment on share price movements in specific companies. But it is understood that the Exchange, as a general rule, investigates dealings where price movements of 10 per cent are involved, never mind the 75 per cent fall yesterday in the Pan Andean share price.
Pan Andean, which has a 20 per cent interest in the well revealed that its Chapare oil field in Bolivia had failed to yield commercial quantities of hydrocarbons.
In a statement, Pan Andean said that "despite the presence of hydrocarbons and excellent reservoir sands, the horizontal seal was faulty and the bulk of the hydrocarbons had migrated north eastwards, further into the block."
The company added, however, that the presence of hydrocarbons in the Chapare block was still "encouraging" with the well operator, BHP Petroleum, likely to undertake another drilling programme close to the Chapare oil field early next year.
"It's not the result people were expecting but it's not a bad result," a spokesman said. "While it's not an oil strike, it's not a dry well by any means. The oil has moved and we are quite happy it is there.
The outcome of the drilling in Bolivia is a severe blow for Pan An dean, however, whose share price has been driven ahead for some time by expectations of a major oil find.
The shares, which are traded on London's Alternative Investment Market, have traded from as low as 12p to highs of 140p over the past 12 months.
Brokers have estimated that more than 500,000 Pan Andean shares were sold in London yesterday with some further fall out from the latest news expected today. "The share price now purely depends on shareholders and what bottle they have got" said Mr Ralph Singleton, of British broker Rowan Dartington, which acts as market makers for the company.
Pan Andean joined with BHP Petroleum to explore the Chapare oil field last year. To date, BHP is estimated to have spent close to $27 million (£16.8 million) on seismic studies and the drilling operations.
Pan Andean has a 20 per cent carried interest in the project. If BHP now decides to drill again close to the Chapare field, Pan Andean will enter the project with just a 10 per cent free carrying interest, incur costs of up to $600,000 (£375,000).
Earlier this year Pan Andean raised £327,500 in a placing of new shares at 32.5p per share. While the company is thought to have a substantial number of Irish shareholders, the bulk of the shareholders are thought to be from the UK.
