BUTCH Cassidy and the Sundance Kid were the most celebrated fortune hunters to come unstuck in search of easy money in the mineral rich South American state of Bolivia. As any film buff knows, both came to an unpleasant but gloriously heroic end, surrounded by armed soldiers, dying freeze frame in a hail of bullets. This week bloodied shareholders in the Pan Andean exploration company must feel some affinity with these two entrepreneurial desperados, the value of their investment shot full of holes both by stock market gun slingers and the failure of the first exploration well on the company's Bolivian Chapare oil field to satisfy high expectations of a commercial flow.
Outgunned and encircled, the Pan Andean board ineffectually returned fire, offering shell shocked punters the intriguing story of "migrating hydrocarbons" to explain the sudden collapse in the share price, which spectacularly tumbled from 115p to 40p on Tuesday and continued downward during the week. Alarmed by the early sale of a large share block, the company belatedly issued a formal announcement confirming a negative outcome to drilling. Those nomadic hydrocarbons, driven to distraction by having massive drilling bits grinding away over their heads, seemingly folded their tents and sloped off in a north easterly direction to slurp around in peace and quiet. Pan Andean has a 20 per cent interest in the field which is operated by BHP Petroleum.
The announcement kicked away any remaining buttresses from the equity, releasing the foul odour of possible insider dealing. The London Stock exchange has begun a formal investigation into the pattern of share trading.
The outlook may be decidedly grim but Pan Andean, like Butch and Sundance, remains unfailingly optimistic, clearly believing in the aphorism of the oil well being half full and not half empty. "It's not a bad result. While it's not an oil strike, it's not a dry well. The oil has moved," according to a company philosopher cum trouble shooter. BHP is expected to conduct further drilling next year having already spent nearly £17 million on the prospect. Pan Andean has to chip in 0 per cent of the cost, a funding operation which shareholders might feel disinclined to support.
A Pan Andean spokesman blamed "some smart cookie who may have got an inside track and traded on the information". With such professional gun slingers around, even Butch and Sundance, let along the average share punter, can be excused in diving for cover.
