Exchange inquiry into Pan Andean

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A Stock Exchange investigation was believed to have been launched into trading in the AIM-listed shares of Pan Andean Resources yesterday after they crashed by 74.5p to 40.5p following revelations that a key oil exploration well had come up dry.

The plummeting share price, which wiped at least pounds 30m off the value of the company, came amid allegations that an unnamed broker had been given advance warning of yesterday's announcement after contacting the operator of the well, BHP Petroleum, part of the Australian BHP mineral group, on Monday.

A Stock Exchange spokeswoman said officials had met with Rowan Dartington, Pan Andean's nominated adviser, but refused to confirm that a formal investigation was under way. However, other sources confirmed that the Exchange would be looking at the share price movement after claims that 1 million shares were traded between Monday evening and Tuesday morning. The sudden fall in the price yesterday morning forced the group to bring forward the BHP announcement.

David Bramhill, a director of the company, who said he had personally lost around pounds 1m from the share price slump, claimed yesterday he knew who sold the shares. "I know who the person is. I know who the company is. We just rang the company and they told us."

Shares in the Dublin-based group, which is said to have 1,500 shareholders, have been run up from a low of around 9p last year to a high last month of over 135p on hopes for its drilling programme in Bolivia. Early indications suggested between 250 million and 1 billion barrels of oil, the size of a small North Sea field, might be available.

Yesterday's results were from the Todos Santos X-1 exploration well, the first in a series of 10 which BHP Petroleum had planned to drill over 10 years on Pan Andean's Chapare block. Mr Bramhill said: "The information we have received really gives no cause for despair. Far from it, the drilling programme continues."

He said the drilling found that the cap rock Petaca sands "were mammoth: over 1,000 feet thick. Normally the oil industry is happy if it is 60 feet thick." The porosity of the reservoir was also "excellent". Although there were indications of the presence of hydrocarbons, the side wall of the formation had been fractured, allowing the oil to migrate north east, Mr Bramhill said.

BHP, which has already spent $40m in advance of drilling the well, will now evaluate the results of the well over the rainy season. Mr Bramhill said both BHP and Pan Andean, which has a 20 per cent interest in the prospect, would be sticking with the project.

Ralph Singleton of Rowan Dartington added that there was no question of Pan Andean needing to mount a rights issue to finance the rest of the drilling programme.