Drilling Report

Pan Andean Resources PLC
02 July 2004

                    Drilling commences in the Gulf of Mexico


Pan Andean Resources plc, explorer for and producer of oil and gas in South
America and in the U.S announces that drilling has commenced on the 50% Pan
Andean owned 5,000 acre High Island A68 lease in the Gulf of Mexico, offshore
Texas. The well is located approximately 75 miles south east of Houston in less
than 100 feet of water. Drilling is expected to take up to 3 weeks.



Contacts:

David Horgan or Jim Finn, Pan Andean Resources -       Tel.[phone]
Emma Kane - Chief Executive, Redleaf Communications -  Tel.[phone]
Ian Rice - Rowan Dartington -                          Tel.[phone]




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