A company chief executive accused of cheating investors over the prospects of a US oilfield knew months before a £7.2 million sterling (€11.12 million) rights issue that the chances of striking gas were "vastly lower", a London court jury was told yesterday.

Mr John O'Brien, former chief executive of oil and gas company Alliance Resources, learned of "disappointing" results from a test well in October 1994 - yet shareholders were promised in April the next year the drilling site in Louisiana was productive. Mr O'Brien (45) is alleged to have defrauded his board of directors and the stockmarket over the potential of exploiting mineral resources on the Valentine Field, some 30 miles south of New Orleans. He is accused of lying to investors through an elaborate game of make-believe to raise cash successfully to back the venture.