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In a large pot over medium-high heat, add the olive oil and bacon. When the bacon begins to lightly brown, remove it from the pot with a slotted spoon and set aside. Add the lamb and let the meat brown on all sides, about 3 minutes per side. Remove the meat with a slotted spoon and set aside. Chop the bacon into 1/4-inch pieces.
Add the mushrooms, carrots, garlic, onions and bacon to the pot and stir. Mix in the flour. Add the beef stock, sherry, bay leaves and lamb. Add salt and pepper and cover the pot but leave a vent for the steam to escape. Bring the mixture to a simmer and simmer until the meat is tender and falling apart, about 2 hours.
Slowly stir in the heavy cream, parsley, tarragon and peas. Serve the stew in shallow bowls over buttered egg noodles.
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