Tuskar shares fell sharply yesterday after the exploration company said it would wind down its operations because it could not generate the revenue to pay its expenses.

The move follows its failure to resolve a dispute with its Obe oil field partner in Nigeria, Cavendish Petroleum, and court action in London by one of its creditors, Brovig Offshore.

Because of the dispute with Cavendish, production of oil at Obe had been suspended, Tuskar said yesterday. Cavendish is a Nigerian company.

Tuskar shares, which are listed in Dublin and London, dropped sharply yesterday. In early trading in London, the shares fell 75 per cent to 0.5p sterling following the announcement, with about 45 million shares changing hands. In Dublin the shares, which are traded in blocks of 10, fell from 34 cents to 3 cents.

Tuskar has about 16,000 shareholders, many of whom are small Irish or British retail investors. Tuskar said it had asked one of its creditors, Allied Energy, which owns just under 50 per cent of the group, to apply to the High Court for an order to wind-up the company.

Tuskar has alleged that Cavendish failed to present the Nigerian authorities with the documentation required so that the oil could be offloaded, transported and sold. It has alleged that Cavendish was aggressively seeking a larger share of the revenues from Obe or wanted to force Tuskar to buy the Cavendish rights in Obe for cash. With no oil production at Obe, Tuskar said it was unable to generate revenues or pay its expenses and obligations to a unit of Brovig Offshore, the Norweigan company that handles and stores the oil from Obe.

Brovig started court action in London to stop Tuskar using any funds held by the company, according to the statement.

Industry sources suggested Tuskar's move was highly unusual given that Obe was in production. One source suggested there may be an element of brinkmanship involved to "call Cavendish's bluff". Tuskar chief executive Mr Gene Manson said: "We will continue the process of going to the arbitration courts, the Nigerian government and our partner to try to resolve the matter." Tuskar's latest annual report showed the group had assets of $43.75 million at March 31st, 2000, which would more than cover its liabilities of $22.65 million.