Drilling Report

Pan Andean Resources PLC
02 August 2007

New Drilling in Gulf of Mexico





Pan Andean Resources PLC ('Pan Andean') the AIM listed oil and gas producer
(AIM: PRE) is pleased to announce that drilling of an exploration well on block
High Island 52 ('HI 52') in the Gulf of Mexico will commence within the next
seven days.  The well will be drilled by our farm in partner Phoenix
Exploration.  In 2006 a farm in deal was agreed with Phoenix Exploration,
whereby they have an option to drill the deep plays on most of block HI 52.  Pan
Andean holds a 2.15% royalty.  Under the terms of the deal, Pan Andean will also
benefit from the release of abandonment liabilities.



The well will take about a month to complete and will be drilled to a depth of
around 8000 feet.  The well is a side track well and will target a zone expected
to have gas reserves. If successful, the well will be tied back to existing
facilities and will be put into production. Additional exploration wells,
targeting deeper zones, may be considered by our farm in partner.



Pan Andean holds a 50% working interest in HI 52 and a 1.32% royalty on lease
number 508, located in the north east quarter of the block.  Lease number 508,
was farmed out in 2000 to Gryphon Exploration.  Gryphon drilled three successful
wells currently producing gas.  The royalty to Pan Andean from this production
is in excess of $150,000 a month.





Managing Director, David Horgan said:



Our US assets continue to provide important cash flow to Pan Andean while also
having upside potential.  We are delighted that Phoenix has seen the opportunity
of HI 52 and have been able to obtain a drilling rig.



We are also continuing to work with our partner Hunt Oil to bring HI 30 back
online.  A jack-up rig is repairing leaks in the pipeline to shore.  These leaks
were discovered while testing the pipeline prior to production.  This work is
expected to be completed within weeks and following successful testing
production is expected to commence.





Background



Pan Andean was founded in 1988.  The group has assets in Bolivia and Peru and
important working interests and minority holdings in the United States in the
Gulf of Mexico and Texas.  Pan Andean seeks to identify and access opportunities
in frontier and established basins in South America



The announcement has been approved by Mr Ivan Sandrea, Director Pan Andean.  Mr
Sandrea has more than 10 years of international E&P experience.





Contacts:


David Horgan, Managing Director                       + 353 87 292 3500
John Teeling, Chairman                                + 353 1 833 2833

College Hill
Paddy Blewer                                          + 44 (0)20 7457 2074
Nick Elwes

Blue Oar Securities
John Wakefield                                        + 44 (0) 1179 330020




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            The company news service from the London Stock Exchange