Drilling Report

Pan Andean Resources PLC
12 September 2007

Gas Discovery in Gulf of Mexico


Highlights

•160 ft net of natural gas column in High Island 52 well
•Production to commence shortly at 5 million cubic feet per day
•Pan Andean to receive 2.15% revenue royalty on this well
•Phoenix take over platform and related abandonment liabilities



Pan Andean Resources Plc (AIM:PRE) is very pleased to announce that the
exploration well drilled on High Island 52 is a commercial discovery.  The well
was drilled to the target depth of 8,700 feet and encountered over 160 ft net
pay of hydrocarbon column in three separate sections.

Production casing has been set and flowlines are being prepared for production
which is expected to commence at an initial level of 5 million cubic feet of gas
per day. Pan Andean retains a 2.15% royalty on all revenues from this well.

The well was drilled by Pan Andean's farm-in partner Phoenix Exploration.  Under
the terms of the agreement Phoenix have now earned into the block and will take
over the platform and related abandonment liabilities, estimated at US $6
million (Pan Andean: 50%).

Pan Andean  holds an existing 1.32% revenue royalty on 3 wells drilled by
Gryphon Exploration in the northeast quarter of the block High Island 52. To
date, Pan Andean has received over US$8 million from the Gryphon royalty





David Horgan, Managing Director of Pan Andean commented,



'This is a excellent discovery for both Pan Andean and Phoenix Exploration. High
Island 52 in the Gulf of Mexico has been very good to Pan Andean. The existing
Gryphon royalty produces over USD140,000 a month, royalties will flow from
Phoenix in weeks and we have exited or aboandoment liabilities. More
importantly this discovery means that additional wells will be drilled on the
block.'

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







Notes to editors

Pan Andean was founded in 1988 as an oil & gas exploration and production
('E&P') company with a focus in South America. The group has assets in Bolivia,
and Peru and important working interests and minority holdings in the United
States in the Gulf of Mexico (offshore) and Texas (onshore). Profitable, cash
generative and debt free, Pan Andean's strategy is to identify and access unique
opportunities in frontier and established basins with transforming commercial
potential.



Contacts:

Pan Andean Resources Plc
John Teeling (Chairman)                               [phone]
James Finn (Director)                                 [phone]

College Hill
Paddy Blewer                                          [phone]

Blue Oar Securities
John Wakefield                                        [phone]




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