The sale of almost 74 million shares in oil and gas exploration company Bula has been frozen by the High Court, pending an investigation into who is the beneficial owner of them.

Mr Michael Collins, SC, who appeared with Mr Michael Cush, for Bula Resources (Holdings) plc, told Mr Justice O'Higgins yesterday that, under Section 85 of the Companies Act 1990, if a company did not get a satisfactory answer as to the beneficial ownership of shares in that company, it was entitled to serve notice on those who appeared to have an interest in order to ascertain who was the beneficial owner.

Mr Collins said that, in August 1995, a British Virgin Islands company, Mir Oil Development Ltd, agreed to sell Bula 25 per cent of the issued share capital of another British Virgin Island company, Mir Space International Ltd, in exchange for 101,562,587 ordinary shares in Bula.

Mr Collins, instructed by Matheson Ormsby Prentice, solicitors, said the agreement gave Bula a four-year option to buy the remaining 75 per cent of Mir Space.

The sole asset of Mir Space was its rights to half of the Salymskoye oil field in western Siberia which was the subject of a joint activities agreement between Mir Space and a Russian company, Klhantymansiyskneftegasgeologia (KMG).

He said the arrangement with Mir Oil had been introduced in March 1995 to Bula by its then chairman and chief executive, Mr Jim Stanley, who had represented the Salymskoye oil field as being very valuable.

Prior to August 1995, Mir Oil had been the legal and beneficial holder of the entire issued share capital of Mir Space. The registered shareholder of Mir Oil was a Jersey-based company, Chamonix Corporate Secretaries Ltd.

As part of the due diligence by Bula prior to completion of the agreement, Chamonix informed it the beneficial owner of Mir Oil was Mr Charles Ellis, based in South Africa. Mr Stanley had also confirmed in writing that neither he nor any member of his family or agent had an interest in Mir Oil or Mir Space.

Mr Collins said that, when the deal had been signed, Bula committed many millions of pounds to the development of the Salymskoye oil field and on October 13th, 1996 announced encouraging test results of 942 barrels per day.

He said all correspondence emanating from Chamonix to Bula had been written by Ms Susan Neil, believed to be a director of Mir Space and Mir Oil.

On February 20th last, she wrote on behalf of Mir Oil to Bula stating that Mir Oil had recently sold a total of 27,833,333 shares in Bula and this had been announced publicly by Bula the following day.

He said the sale of such a significant block of shares in Bula by Mir Oil prompted expressions of concern and disappointment from other shareholders, the Irish Stock Exchange and analysts generally.

Later in February, technical personnel in Bula reported to the directors that the oil field might, in fact, only be capable of producing oil at a rate significantly lower than the 942 barrels announced in the previous October.

Bula had announced this information publicly on March 5th last and, on April 14th, Mr Stanley resigned as chief executive and chairman of the company.

Mr Collins said there had been some suggestion at the time that Mr Stanley had an interest in Mir Space and Mir Oil and that he himself may have been the beneficial owner of Chamonix Corporate Secretaries. It had been suggested that, instead of "stumbling" on to this share of an oil well, he may have been the owner in a corporate disguise, selling it on to his own company.

He said Bula director Mr Patrick Mahony met KMG's Mr Nikolai Bogatchev in Moscow on May 20th last and Mr Bogatchev informed him that, in discussions with Mr Stanley in early 1995 regarding future development of the Salymskoye oil field, his company had believed it was at all times dealing with Bula.

Mr Bogatchev had said that Mr Stanley was the only party with whom KMG had negotiated the deal to develop the oil field which culminated in its agreement with Mir Space. At a time close to the conclusion of their negotiations, Mr Stanley had introduced Mir Space as the entity with which he required KMG to conclude the agreement.

Mr Bogatchev had said KMG's understanding was that Mir Space was an offshore subsidiary controlled by Bula and that its involvement was necessary in order to minimise the potential future taxes that might arise from the deal.

Mr Mahony said that if the negotiations between Mr Stanley and KMG were accurately described to him by Mr Bogatchev, the role of Mir Oil and Mir Space in the transaction had to be investigated and, in particular, whether Mr Stanley or any party connected with him had any beneficial interest in either Mir Space or Mir Oil.

Mr Mahony said that on August 4th last a firm of English solicitors, Stanley Tee & Co, had written to Bula indicating it was instructed on behalf of a client who advised them he was the ultimate beneficial owner of the share capital of Mir Oil.

It had requested that any queries in relation to the company be addressed to it and confirmed that the beneficial owner was willing to disclose his identity subject to the completion of an attached confidentiality agreement. Bula had not been prepared to sign the confidentiality agreement.

On August 27th, Bula received a letter from Ms Neil indicating she had resigned as company secretary of Mir Oil and that she was not subject to the jurisdiction of the Irish courts. She declared she was not at liberty to disclose the names of beneficial owners of any company of which she was or had been a director.

Mr Mahony said the Irish Stock Exchange and the Department of Enterprise, Trade and Employment had written to Bula expressing concerns and requesting information, particularly about the initial announcement of test results made by Bula in October 1996, the sale of shares a month later by Mir Oil and the identity of the ultimate beneficial owner of the Mir Oil shares.