An oil-man accused of lying to investors to mount a £7.2 million sterling share issue openly reduced expectations of mineral resources waiting to be drilled before his company raised stock market finance, a jury heard yesterday.

Mr John O'Brien, former chief executive of London-based Alliance Resources, admitted "proven reserves" of natural gas underground in North America was a quarter of initial prospects. London's Southwark Crown Court was told that, even after he admitted the underground lake was less than earlier tests had indicated, it was agreed the reserves were still a "significant discovery".

Mr William Clegg, QC, defending Mr O'Brien, said his client had announced reserves were not the hoped for 29 billion cubic feet of gas tests had revealed but 7.27 billion. The barrister said Mr O'Brien had even ordered a new survey by independent experts before Alliance went to the market to raise the cash in the April 1995 share issue.

"This is not a man who, after the drilling, said to the investor `yippee' everything we thought was there is there. It's a huge success . . . not only that, but we have found bigger reserves than we thought were there."

Mr Clegg said Mr O'Brien ordered a new survey of reserves and published figures "less than a quarter of the figures announced before".

"It's a very funny way of going about deceiving everyone."

Mr O'Brien, of Midleton, Co Cork, denies five charges of forgery, two of false accounting, and two offences under the Financial Services Act. It is alleged he falsely claimed Alliance Resources held a lease to exploit 1,825 acres of the oilfield, when title had been terminated, and that a flagship well, Valentine 14, was producing significant quantities of gas, when in reality it had been abandoned and the drilling site needed to be capped.

The trial continues.