Drilling Report

Pan Andean Resources PLC
25 October 2000


Pan Andean announce that X-1004 the final well in the current Monteagudo
drilling programme in Southern Bolivia has been completed.  Despite having oil
and gas shows at two levels the values were not commercial.  We will now
evaluate the prospectivity of the deeper Huamapampa targets at Monteagudo. 
Meanwhile the drilling of the El Dorado well is continuing.

In commenting John Teeling the Chairman stated 'Any find at Monteagudo was
always going to be a bonus.  We acquired Petrolex in Bolivia to gain access to
El Dorado.  We valued Monteagudo on the cash flow from the existing
production.  We were delighted to find that just after we acquired Petrolex
that the penultimate well X-1003 at Monteagudo tested positive for oil. 
Because Monteagudo is currently producing, all production facilities are on
site so this well is now coming on stream at 500 barrels of oil per day. 
Daily production from Monteagudo is now 1200 barrels of oil a day and 10
million cubic feet of gas a day.  The Pan Andean share of monthly revenues is
about $500,000.  It would have been icing on the cake if the final well had
also been a producer but it too would have been small though strongly cash
generative.  Monteagudo is not finished.  The current programme tested only to
300 metres.  The highly prospective Huamapampa strata lie at 5000 metres under
Monteagudo.  We will look at these next year.  We can now focus on El Dorado'.

The El Dorado well which is located close to the city of Santa Cruz and
adjacent to the Bolivia-Brazil pipeline is being drilled to a depth of 4,700
metres.  It is expected to reach the first target zone within days and a
second deeper zone within 10 days.  If indications are positive casing will
then be run prior to any further work.