Final Results

Pan Andean Resources PLC
28 September 2000


                 PRELIMINARY RESULTS AND CHAIRMAN'S STATEMENT                 
                       FOR THE YEAR ENDED 31 MARCH 2000                      

For a decade Pan Andean followed a very clear strategy - seek out and explore
high potential oil prospects in frontier areas.  This strategy is high risk,
which means high reward when it works but it often fails.  In recent months,
after years of preparation, we drilled a second deep well on our large Chapare
oil concession in central Bolivia.  It was unsuccessful, as was the 1996 well.
Our share price, which had tripled in the extended run up to drilling, crashed
by two thirds.  Yet, as I write this report Pan Andean is in the strongest
position ever, with high hopes for a well being drilled in Eastern Bolivia. 
The causes of this good fortune are a change in strategy, an excellent
corporate acquisition in Bolivia and high oil prices.

In early 2000 the board agreed to a change in strategy.  It was accepted that
institutional oil investors would be happier with greater technical
competence, stronger industry shareholders and some production.  The decision
was made to change the Pan Andean strategy from a pure exploration company to
an E&P company i.e. exploration and production.

In June 2000 Pan Andean acquired Endeavour Oil and Gas Ltd a private UK
company with production in the Gulf of Mexico and in Texas.  The shareholders
were all oil men with strong technical and industry reputations.  Recently, we
have acquired Petrolex, a private Bolivian company with production and
exploration activities in Bolivia.

The Chapare Operation

The operations report below gives more technical detail on the drilling
operation in the Chapare.  It was an absolutely monumental task.  In my report
last year I thought that a 30 km road could be built in 12 weeks. It took over
six months and, even then, bulldozers were required to drag vehicles the last
4-kms across a swamp in which logs provided the foundations for the roads.  As
you moved along this section the road rose up and down behind and in front of
you.

No one had previously attempted to build a road in this part of Bolivia.  Our
construction partner, Serppro, had surveyed the terrain but they grossly
underestimated the task.  Heavy rain, flash floods, heat and mosquitoes were
only part of the misery suffered by the road crew.  Bridges were built over
five piranha-infested rivers.  On my way to site I watched a piece of meat
being torn to shreds in seconds by thousands of these carnivores. If effort
and ingenuity were requirements for success then our well would have been a
gusher.

It became clear that the Chipiriri area is virtually unworkable in the rainy
season from November through May.  Despite that realisation, Serppro battled
on at major cost to themselves and major delays to Pan Andean.  We had to
forego a drilling rig from one company and replace it later at much greater
expense from another company.  We commenced drilling Chipiriri in June.  The
drilling and logging went very well, below cost and on schedule.  The results
were poor, a little gas and some oil indications.  The decision to test for
oil was marginal but given that we had decided against testing in similar
circumstances in the earlier 1996 well at Todos Santos and subsequently
wondered at our decision, we proceeded.  The result was water.

The post drilling assessment of the Chipiriri well is disheartening.  The
problems of migration and fractured seals found in Todos Santos were also
present in Chipiriri.  We had intended to proceed from Chipiriri to a third
well, Alana X-1, about 7 kms North East of the Todos Santos well.  Everything
was ready to go, the environmental impact study completed, permits issued,
road construction team ready and the drilling rig on standby.  We decided
against proceeding because an intensive review of the Chipiriri findings when
added to the analyses of the earlier well, indicated that the chance of a
successful find was one in twelve.

The position on the Chapare block now is that we are assessing the project
from first principles. The huge size of the block is both an opportunity and
problem.  The opportunity is for significant discoveries on the 2m acres.  The
problem is the cost of holding and working.  The annual rent is US$775,000.
The block needs more seismic, preferably 3D.  This is expensive and beyond the
capability of Pan Andean. Pan Andean obtained the Chapare in 1994 on a 40-year
concession with 7-year reviews.  The block is the largest in Bolivia located
in some of the most hostile exploration terrain on Earth.  Everything you do
is expensive, time consuming and sometimes dangerous.  In reality, to fully
explore a block like this requires the skills and deep pockets of a
multinational.  We are examining a series of options on the block.

Production in the US

In mid 2000 we purchased production assets in the Gulf of Mexico and in Texas.
Details are in the Operations Review.  We paid $13 million in cash and shares,
a full price.  Since then gas prices have risen sharply while the High Island
property has increased production up to 500 barrels of oil a day and 1.5
million cubic feet of gas.  We now generate a good monthly cash flow.  We are
looking at bolt on acquisitions in the Gulf but it is an expensive place in
which to operate while high oil and gas prices are now factored into sale
prices.

The Acquisition of Petrolex

After months of negotiations we agreed to purchase 100% of the shares of
Petrolex SA a private Bolivian E&P company with non-operating interests in two
blocks, Monteagudo (30%) and El Dorado (10%).  Monteagudo is a producer of
1300 barrels of oil and 12m cubic feet of gas a day.  Some of the worlds
largest oil companies are the partners in the blocks, Petrobras and Repsol in
Monteagudo and BP/Amoco and Bridas in El Dorado.  As I write two wells are
being drilled, one on each block.  High hopes are held for the El Dorado well
where gas is the target at 15000 feet.

Power Generation in Bolivia

Because the focus of activities was on drilling, our downstream activities
have gone unnoticed.  Since early 2000, in joint venture with Enel Power of
Italy, Pan Andean has been examining the feasibility of a 110-megawatt power
station close to the city of Santa Cruz.  The project is at an advanced stage.
In addition, two further power projects, one on the Bolivia/Brazil border, the
other on the Bolivia/Paraguay border, are being examined.  The availability of
gas in Bolivia and rapidly growing power demand in surrounding countries is an
attractive combination of factors.

Finance

During the period under review Pan Andean raised a total of ?4.9m from
institutional investors and shareholders at 22p a share.  The funds were used
to drill in Bolivia.  After the year end a further US$6 million was raised
from institutions at 50p a share to fund the acquisition of the US assets. 
The recently announced Petrolex acquisition and the drilling commitments are
being funded from cash balances and the cash flow from the US assets.

Oil and Gas Prices

How fortunes change!  Eighteen months ago all was doom and gloom in the oil
business.  Now euphoria is taking over.  Are we looking at a speculative
bubble or is there substance to the rise in both oil and gas prices?
Accelerating growth in the world economy has led to a fundamental increase in
demand.  The supply is not that flexible.  Capacity cannot be added that
quickly.  Facilities in Iran, Iraq and Nigeria need refurbishment.  The North
Sea and US are mature declining suppliers. Saudi Arabia cannot supply all of
the extra demand.  The conclusion is that high prices are here for a while. 
Supply can, and will, increase but not quickly.  On a positive note the high
oil prices are damping down overheating economies thus avoiding further
interest rate rises.

Management and Board

I mentioned earlier that we felt that we needed additional technical
expertise.  We now have strong skills in both Endeavour and in Petrolex.  At a
higher level we were delighted to welcome Mauricio Gonzalez back as a main
board director.  Jim Finn also joined us as Finance Director in early 2000. 
Jim brings wide experience of natural resource ventures to the table.  As we
acquire more operations his role will increase.  We expect to further
strengthen the board in the coming months.  We were sorry to lose our long
time colleague David Bramhill who resigned after eleven years of service in
order to manage his two mineral ventures.  We wish him every success.

I must pay tribute to the Herculean work done by our management in both Europe
and Bolivia.  Chipiriri could only be drilled by a company our size if
management was prepared to perform at extreme levels.  This they did.  Our
thanks are due to them all.

Future

The evolution of Pan Andean from a pure exploration company to an E&P company
is well underway.  Current production levels of about 1000 barrels of oil plus
5.5 million cubic feet of gas a day sound small until you multiply them by
current prices.  Over the coming weeks and months further evolution will occur
as we review the results of current drilling, seek out markets for gas, and
examine further acquisition opportunities.


CONSOLIDATED PROFIT AND LOSS ACCOUNT 
for the year ended 31 March 2000        
                                                         2000            1999
                                                            £               £
TURNOVER                                                    -               -
Cost of Sales                                               -               -
                                                      -------         -------
GROSS RESULT                                                -               -
Administrative expenses                              (209,864)       (113,031)
                                                      -------         -------
OPERATING LOSS                                       (209,864)       (113,031)
Interest receivable and similar income                 73,745          29,730
                                                      -------         -------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION          (136,119)        (83,301)
Tax on loss on ordinary activities                          -               -
                                                      -------         -------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION 
TRANSFERRED FROM RESERVES                            (136,119)        (83,301)
                                                      =======         =======
Loss per share                                         (0.25p)         (0.18p)
                                                      =======         =======
Loss per share - diluted                               (0.25p)         (0.18p)
                                                      =======         =======
       
BALANCE SHEETS 
as at 31 March 2000

                                    Group     Company       Group     Company
                                     2000        2000        1999        1999
                                        £           £           £           £

FIXED ASSETS                                                        
Intangible assets               2,529,037   2,514,178   1,133,144   1,133,144
Tangible assets                     3,099       3,099          25          25
Investments                         1,979       1,979       1,955       1,955
                                ---------   ---------   ---------   ---------
                                2,534,115   2,519,256   1,135,124   1,135,124
                                ---------   ---------   ---------   ---------
CURRENT ASSETS                                                        
Stocks                                  -           -         157         157
Debtors                           415,946     430,805       6,372       6,372
Cash at bank and in hand        3,139,178   3,139,178     386,831     386,831
                                ---------   ---------   ---------   ---------
                                3,555,124   3,569,983     393,360     393,360

CREDITORS: Amounts falling due 
within one year                   (58,858)    (58,858)    (33,246)    (33,246)
                                ---------   ---------   ---------   ---------
NET CURRENT ASSETS              3,496,266   3,511,125     360,114     360,114
                                ---------   ---------   ---------   ---------
TOTAL ASSETS LESS CURRENT 
LIABILITIES                     6,030,381   6,030,381   1,495,238   1,495,238
                                =========   =========   =========   =========

CAPITAL AND RESERVES                                                        
Called-up share capital           695,280     695,280     472,569     472,569
Share premium                   7,355,741   7,355,741   2,908,217   2,908,217
Profit and loss account
deficit                        (2,020,640) (2,020,640) (1,885,548) (1,885,548)
                                ---------   ---------   ---------   ---------
EQUITY SHAREHOLDERS' FUNDS      6,030,381   6,030,381   1,495,238   1,495,238
                                =========   =========   =========   =========

Copies of this announcement will be sent to shareholders and will be available
for inspection at the Company's registered office at 20-22 Bedford Row, London
WC1R 4JS.