AGM Statement

Pan Andean Resources PLC
31 October 2003


 Highlights of Chairmans Statement to the Annual General Meeting of Pan Andean
                                 shareholders.

                         London October 31st - 12 noon


Pan Andean has cash profits and hard assets, most of which are in safe places,
an exploration track record, and an experienced team. We have seen dozens of
projects but we will only commit the company to high impact, high potential
projects.


 1. Our business is trading well. High gas and oil prices produce cash in both
    the Gulf and in Bolivia.



 2. We have a good position in Bolivia which we intend to maintain. We will
    develop the El Dorado gas field with our partner BP in 2005 and we will
    continue to extract cash from our oil and gas production in Monteagudo. The
    current political instability is not likely to affect us.



 3. We are an also exploration company. We have the skills, track record, cash
    and character to undertake high potential exploration. In the past year we
    have looked at, and rejected, numerous Latin American proposals.  Currently
    we have two under consideration:



•   A Caribbean oil project where we have an agreed deal. Terms are tough
    so we may not proceed - there simply may not be enough upside.

•   A good Venzuelan oil project with production and significant upside. It
    is big, but once again terms are tough.



 4. Operations in the Gulf of Mexico are going well.  High gas and oil prices
    produce cash and stimulate exploration.



 5. High Island 52 in the Gulf, in which we have a 45% interest, is a major asset
    and is a hub of activity:



•   The 1.92% royalty from the two Gryphon wells provides us with a monthly
    income of between $60,000 and $100,000. Gryphon should drill a third well 
    in the coming months.



•    Forrest Oil are using our platform to ship gas from an adjacent block.
     The rent is worth $20,000 a month to Pan Andean.



•    Successful workovers discovered 1 billion cubic feet of gas reserves
     which we are producing at a rate of 27 million cubic feet of gas a month, 
     worth $40,000 to Pan Andean, after royalties and before operating costs.



•    Identified shallow targets on the block await drilling proposals from
     Sterling Energy, our partner.


•   We have farmed out additional deep drilling rights on the block to
    Gryphon in return for a working interest of 22.5% or a royalty of 3.25%. 
    Gryphon is evaluating the results of a seismic programme.


 6. High Island 30, in which we have a 67% interest, continues to produce 400
    barrels of oil a day and 1 million cubic feet of gas a day. Production is on
    a slow decline curve. We are examining a proposal to conduct 3D seismic to
    identify deep drilling targets.


 7. We are finalizing a review of data, and a reinterpretation of seismic, on our
    Danbury Dome acreage where we recently acquired total ownership. The target
    is a reservoir at 14,500 feet which could contain up to 75 billion cubic
    feet of gas. A well will cost $3 million. If we farm out it will be on the
    basis of a 25% carry.  We have interest but not at acceptable terms.


 8. Apart from the Americas, we are looking at projects in Africa and the Middle
    East.


 9.  The 2004 programme for Pan Andean includes:


•        Maintaining production and cash flow from existing assets.

•        Drilling on High Island 52 and Danbury Dome.

•        Entering new exploration ventures, most likely outside of The Americas.




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