Shares in Petrel Resources weakened further yesterday as the market digested news of failed contract applications in Iraq.

It emerged on Thursday that Petrel had almost definitely lost out on two development contracts being awarded by the Iraqi oil ministry. The firm had been focusing on the contracts for the past year and had spent at least £1 million on efforts to secure them.

Reuters reported on Thursday that the two contracts had been awarded instead to a Canadian company named IOG and a Turkish firm called Everasia.

This led to some confusion in Canada, when an unconnected firm called Ironhorse Oil and Gas was rewarded with a sharp increase in its share price.

Ironhorse's shares were subsequently suspended until the firm told the Toronto stock exchange that it was not, in fact, pursuing any interests in Iraq.Petrel chairman, Dr John Teeling, said yesterday that the confusion had arisen because the letters in the successful Canadian firm's name had been confused with those of Ironhorse.

He said that while no official determination on the two contracts had been handed down in Iraq, Petrel had almost definitely been eliminated from the competition. Shares in Petrel closed 1.5p lower at 44.5p sterling in London.