BULA Resources is to carry out an investigation into how an incorrect bullish announcement on its Siberian oil well was made.

New information has revealed that the well flowed insignificant amounts of oil and it would not now be brought into production. Last October Bula announced that it had successfully tested oil at the Salmskoye oil field in western Siberia. Shareholders were told that development of well 705 in which the group has a 50 per cent stake tested at a rate of 150 cubic metres per day, or 942 barrels per day, on an 8mm choke, over a four day period.

The short Bula statement yesterday said the "directors have now received information that the results which they were furnished with and which were announced on October 13th were incorrect". It added "the previously announced review and technical assessment of all available information on the Salymskoye oilfield is continuing and is focusing on how the original incorrect announcement came to be made". A spokesman for Bula said he could not elaborate.

The October statement by the then executive chairman Mr Jim Stanley was very specific. It said the well was drilled vertically into the Bajenov reservoir and it "demonstrates the vast oil reserves contained in this oilfield and we hope to build up to first production before the year end. The pipeline link and pump station facilities have already been put in place which is a significant achievement for our company".

Sources close to Bula said the company is treating the matter very seriously, particularly as it was price sensitive information. However, the shares have not moved from the 2p to 3p price range over the past 12 months. The sources are not saying where the inaccurate information originated nor who supplied the data. These are now being investigated.

Bula alerted shareholders in March and April that the flows from the well were not as good as originally thought. It said the well head pressure was disappointing and warned of a probable significantly lower rate of production.

A short seven line statement from Bula last month announced that Mr Stanley, "who has been anxious to pursue his other mining interests for some time", had "tendered his resignation". Mr Stanley has not been available for comment.

The day after the announcement, Bula said it had postponed the start of production at its Siberian oil well for about six months. This was necessary, the company explained, because it needed further technical assessment. "The early onset of the spring thaw made it impossible for the contractor to undertake the announced initials 1997 work over programme", it said. "This programme will not now start until the winter of 1997".

Bula had been embroiled in a row with two of its Russian directors last year. This led to a legal wrangle but following a settlement they left the board.

Bula yesterday also confirmed that it has been approached by a number of "different parties regarding the company's future". However, it stressed that it is too early to say if this would "lead to any new investor acquiring a significant shareholding in the company".