The problems engulfing Regal Petroleum have deepened after it emerged that the oil exploration firm's ex-boss signed a deal to sell a key off-shore division.
Regal's problems started when it overestimated Greek oil production
Regal shares initially fell 17% after it said that Frank Timis had given Hong Kong firm Peak Resources the right to buy a Jersey-registered subsidiary.
The board of directors said it had no idea that Mr Timis had entered into a "call-option" agreement with Peak.
Regal's Jersey division owns the rights to oil production in the Ukraine.
After falling sharply in morning trade, Regal shares recovered to close down three and a half pence at 89p.
According to its statement, the agreement between Regal and Peak was signed by Mr Timis - the founder and former chairman of Regal - on 4 May 2005.
Under the terms of the contract, Peak has the right to buy Regal Jersey "on or before 31 August 2005". The price is $1.50 per barrel of oil, based on proven, provable and possible certified reserves.
Regal said it is currently "investigating the circumstances surrounding the agreement and is seeking legal and other advice".
"The remainder of the board was not previously aware of the existence of the agreement and had not authorised or approved the entering into of the agreement with Peak Resources," the company said in its statement.
On its website Regal said that it currently has four wells in production in the Ukraine and the "operation continues to be profitable and generate positive cash flow".
From pump to slump
A Romanian refugee, Mr Timis set up three firms in London: Regal Petroleum, European Goldfields and Sierra Leone Diamond Corporation.
Shares of Regal have been pummelled in recent weeks after the company shocked investors with news that some of its most promising ventures would not be as profitable as first thought.
Further shaking market confidence were reports that Mr Timis was caught up in criminal investigations in his native Romania.
Mr Timis strenuously denied the reports - which turned out to be incorrect - but resigned from Regal earlier this month.
That helped stem the slide in Regal's shares, but on Monday they dropped further to 78 pence in London.
The company, which has oil operations in Greece, Romania and Ukraine, was trading at a record high of 509p in March.