The Investment Column: Pan Andean back in the hunt

The good news for Pan Andean Resources' long-suffering shareholders is that confidentiality agreements have been signed with four international oil companies with a view to replacing the joint exploration agreement with BHP that collapsed three months ago. The bad news, with which investors in the AIM-listed resources company are more familiar, is that drilling of a second well in the Chapare exploration block in Bolivia is no nearer starting.

The first joint venture, hopes for which drove Pan Andean's share price into the stratosphere at the end of last year, did not survive the apparent leak from BHP in October that the first well was not commercially viable.

That bungled announcement sent Pan Andean shares into a free all from which they have never recovered. From a high of 135.5p they lost three quarters of their value in days and have languished ever since.

For a company that has never made a profit and never paid a dividend in almost 10 years of existence, the delay is disappointing. With BHP in effect forfeiting its stake in the venture, however, Pan Andean has been left with 100 per cent of the Chapare concession, an area the size of Wales, on which $30m worth of exploration work had been carried out and paid for by its former partner.

Chairman John Teeling says the chances of finding oil in commercial quantities are still good, and he hopes to clinch a new deal which will allow Pan Andean to keep perhaps 30 per cent of the equity. Meanwhile the new Bolivian Hydrocarbon Law which took effect last month opens up 11 state-owned oil and gas fields for tender on easy terms which even a tiddler can meet.

Up 2p to 35.5p, the shares focused yesterday on the potential, which could be mouthwatering but as likely will end in disappointment. As ever, an enormous punt.