Shares in Pan Andean Resources, the exploration firm controlled by Dr John Teeling, lost more ground yesterday after the company deferred drilling the Alana well at the Chapre field in Bolivia.

The stock closed at 13.5p sterling, down 1.75p or 11.84 per cent on London's AIM exchange, despite Pan Andean's disclosure that it had entered advanced negotiations to acquire a Bolivian oil and gas company.

An announcement was expected within days, it said in a statement.

Yesterday's fall brought the stock to less than half the value recorded after a collapse in mid-August when it said exploration at the Chipiriri well had failed to yield gas.

This prompted a 31 per cent fall in its value to 30 1/2p.

The share had peaked at 75p in June in the run-up to drilling in Bolivia.

Chipiriri was Pan Andean's "best target" and the results there were disappointing, Dr Teeling said.

"Geological results from Chipiriri suggest that there is a reduced chance of finding gas in Alana while the expected oil-bearing structure is smaller than we would like."

Dr Teeling said that Pan Andean remained committed to Bolivia.

The company it wanted to acquire had both oil and gas production and exploration capacity.

The company would talk to a number of potential partners, he said.

It had already spent seven years "and many millions of dollars" trying to make an initial discovery at Chapare, Dr Teeling said.