EXPLORATION company Pan Andean is in a better position now than at any time in its history, according to its chairman, Dr John Teeling. Speaking to shareholders at the company's annual general meeting in London yesterday, Dr Teeling said that having completed the drilling of its first exploration well in the Chapare block in Bolivia, it is in a stronger position to achieve its goal of becoming an oil and gas producer.
The well was found to have no commercial quantities of oil or gas when drilling was completed earlier this month. Pan Andean, which has a 20 per cent interest in the Chapare block operated by the Australian exploration group, BHP, said the drilling tests showed that the horizontal seal on the well had been breached, allowing the hydrocarbons to leak away over time.
Pan Andean share price plunged on the disappointing news, dropping from 115p to 40p and forced a Stock Exchange inquiry into share dealings. Yesterday the shares traded in London down 2p on the day to 40 1/2p.
Dr Teeling told shareholders that it is now searching for a new reservoir where there is a better chance of finding a good seal. "Currently experts at BHP are analysing and evaluating the vast quantities of data collected from the drilling. This process, which will take some time, will not only help to better identify drill targets but will also reduced the risk in further drilling." Following this evaluation, a drilling programme will be undertaken in 1997, Dr Teeling added.
However, he stressed oil exploration was a "risky business". Nevertheless, he insisted the potential rewards for a discovery in Chapare block justified the risk.
"I believe that rarely, if ever, will we, as shareholders, get as good a speculative investment opportunity as that existing at Chapare. If discoveries are made there they are likely to be large," according to Dr Teeling.
The risk in the next well and those to be drilled afterwards in that region, he said, will be lower. Pan Andean's current funds, he added, will go some way towards maintaining its 20 per cent interest in the next well but if additional funds are required, the company will look to arrange a private placing.
Speaking to The Irish Times after the meeting yesterday, Dr Teeling said it has provided details to the Stock Exchange on the timing of the release of the sensitive drilling results, but does not expect to have any further involvement in its inquiry.
The London Stock Exchange is carrying out a full-scale investigation into suspected insider dealing in Pan Andean shares ahead of the official announcement of the drilling results from Bolivia.
