Drilling Report

Pan Andean Resources PLC
14 October 2004

                                Drilling Update



•   El Dorado X-1004 to be production tested
•   French major, Total, makes major discovery near field in which Pan
    Andean retains a 30% interest
•   Drilling at Black Stone Ivory Well, on schedule


El Dorado, Bolivia


The El Dorado X-1004 exploratory well, located in Santa Cruz, Bolivia, has
reached target depth of 4,290 meters.


Gas shows have been encountered in both the Guanaco and Tacobo sands. Following
completion of casing, full production testing will commence. This will last
approximately three weeks.


Monteagudo, Bolivia


Total have made a major gas discovery on Incahuasi, a neighbouring block to
Monteagudo in which Pan Andean has a 30% interest.  The discovery may contain up
to 12 trillion cubic feet of gas. The find was made in the lower Devonian
Huamampampa sands which are also present in the Monteagudo block.


Current oil and gas production in Monteagudo is from shallower horizons.  Pan
Andean, together with partners Repsol and Petrobras, will drill the Huamampampa
when market conditions are appropriate. The positive results at Incahuasi
encourages our optimism.


Danbury Dome, Texas


Drilling the 14,500 foot Black Stone Ivory well is on schedule and has passed
10,000 feet. Target zones are about 20 days away.


Contacts:


Pan Andean Resources
John Teeling / David Horgan              Tel: [phone]


Bell Pottinger Corporate & Financial
Nick Lambert                             Tel: [phone]


Rowan Dartington
Barrie Newton                            Tel.[phone]






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