Pan Andean shares soar on oil firm deal

Shares in Pan Andean soared by 23.4 per cent to 19.75p sterling following an announcement that it had acquired Bolivian oil company, Petrolex. This follows a 12 per cent rise in the previous day on speculation of the Bolivian deal.

The acquisition will double Pan Andean's output of oil and gas with the addition of 4 million cubic-feet of gas a day and 240 barrels of oil. The consideration that could amount to $10 million (€11.6 million) involves the issue of 3 million Pan Andean shares, 1 million options on Pan Andean shares at 20p per share, and the assumption of up to $5 million (€5.8 million)in debt depending on the results of a deep gas well currently being drilled.

The owners of Petrolex are exiting the oil industry to concentrate on developing their "extensive land holdings around the city of Santa Cruz", said Dr John Teeling, Pan Andean's chairman. Petrolex has joint ventures in two Bolivian blocks; the El Dorado, which is said to be a highly prospective gas play located on the Bolivia-Brazil pipeline, and the Monteagudo block in the south of Bolivia that has a current daily output of 12 million cubic feet of gas and 720 barrels of oil.

Petrolex holds a 10 per cent interest in the El Dorado block with the remainder owned by BP/ Amoco and Bridas of Argentina. A deep well is underway to test a previously discovered reservoir. "Expectations are high," said Dr Teeling. Dr Teeling said the acquisition is a major step forward and more than compensates for recent drilling setbacks. "We now have a good cash flow in Bolivia and are in partnership with some of the worlds best oil companies. More importantly we are drilling again."