Drilling Report

Pan Andean Resources PLC
17 August 2000

Pan Andean Resources PLC ('Pan Andean') wishes to announce that the open hole
drill stem test performed on three zones of the Petaca sands in the Pan Andean
Chipiriri X-1 well in Bolivia was completed today and failed to prove
commercial quantities of oil.  The decision has been made to cease operations
and plug the well.

Pan Andean is now gearing up to drill the Alana X-1 well, some 30kms south of
Chipiriri and 7kms north east of the Pan Andean 1996 Todos Santos X-1 well. 
Pan Andean has been preparing the Alana well for some months.  A geological
team has evaluated available seismic data to optimise the wellsite location. 
An environmental impact study has been prepared by ENSR. All necessary permits
have been obtained.

The target in Alana is oil.  Based on a thorough review of data from Pan
Andean's own well and data from surrounding wells, it seems that oil has
migrated through the Chapare block rising towards the surface until blocked. 
Pan Andean now believes that the top seal is excellent, so will again be
looking for good lateral (sideways) seals to trap the oil.  A further
possibility existing in Alana is a fault independent closure, which means that
the top seal has bent an inverted U to trap hydrocarbons.  It is anticipated
that road construction will begin within 10 days and that drilling can begin
mid to late October.

The Alana X-1 well will be drilled to a depth of approximately 3,400 metres. 
The target is the highest point to the North East of the three structures,
which make up the Todos Santos reservoirs.  Pan Andean will operate using the
same team of specialists who participated in the Chipiriri well.  Serrpro will
construct the road through 7 kms of jungle, a task expected to take about 60
days.  We expect that Parker Drilling will again use Rig 117, which drilled
Chipiriri.  Alana is expected to take 30 days to drill.  Intergas will provide
all of the ancillary control logging and well services.  While Chipiriri was
not commercial, Pan Andean has demonstrated its ability to operate in one of
the most challenging drilling environments worldwide, completing a 3,800 metre
well on time and below budget.  The experience gained will be used in Alana.

Geologically, Chipiriri is something of an enigma.  While analysis and
interpretation is ongoing, initial indications are that hydrocarbons existed
in the structure but have migrated.  The gas shows extended over 200 metres
but were below expectations.  The promising oil indications in the Petaca
sands were encouraging.  The completion of Chipiriri at a cost of $5m covers
Pan Andean's legal work commitments on the Chapare block until July 2001.

The Bolivian oil and gas industry continues to grow rapidly.  Pan Andean
believes that it is, and will continue to be, the energy hub of South America
and wants to be a part of this industry.  While maintaining its commitment to
Chapare, Pan Andean continues to evaluate other exploration and production
opportunities in Bolivia.