Final Results

Pan Andean Resources PLC
23 September 2002


CHAIRMAN'S STATEMENT

If you were to pick an industry in which to invest in 2002 it has to be oil and
gas in the Americas.  As the war drums beat louder in the Middle East,
hydrocarbon prices rise.  Producers such as Pan Andean, with oil and gas
production in the Gulf of Mexico and in South America, reap significant cash
benefits.  That is the future. Meanwhile the period under review to end March
2002 was one of frustration rather than achievement.  We failed, despite
frequent and vigorous attempts to conclude a deal on our El Dorado gas asset in
Bolivia. This project had the potential to be a company maker but political
posturing between Bolivia and Brazil, weakening economies and strategic
considerations between two of the worlds oil majors stymied our every effort.
On the other hand, the decision to purchase producing assets in the Gulf of
Mexico and in Bolivia in 2000 now looks inspired. Though low gas prices in the
US in the last half of 2001 resulted in a drop in our revenue we remained cash
positive. I am happy and relieved to report that both income and cash flow are
strongly positive in the current year. Pan Andean is financially strong,
generating cash and has no debt. Financial strength combined with good share
liquidity on the London Stock Exchange and a base of 7000 shareholders makes Pan
Andean an attractive partner.  Your board has received a number of proposals.
All but one was rejected.  The one project not rejected has been the subject of
long drawn out negotiations which show no sign of reaching a conclusion.

The stock market environment facing small oil and gas producers like Pan Andean
is harsh.  Share buyers are on strike and it may be some time before they
return. The ongoing bear market results in continuous downward pressure on our
share price.  This is exacerbated by our good liquidity.  Unlike many of our
peers, shareholders can always trade in our shares.  If an investor needs cash,
Pan Andean may be the easiest share to sell. The bad market makes it virtually
impossible to raise new equity capital. A low share price means that significant
fund raising seriously dilutes existing shareholders.

Weak stock markets are symptoms of a wider economic malaise.  The world economy
is not in good shape.  There are ominous signs of a double dip recession and,
even more worrying, the spectre of deflation looms.  A stagnant world economy is
good for no industry, even oil and gas. The 2001 fall in US gas prices was
directly attributable to a substantial reduction in Californian power demand.
The predicted energy shortage in Brazil has failed to materialize so the demand
for Bolivian gas to supply the energy has fallen.  Our partner in El Dorado, Pan
American, is an Argentinian company suffering from the virtual implosion of the
local economy.  Hard times lead to political instability and civil strife.
Though Bolivia remains one of the most stable countries in a volatile continent
there has been some civil unrest.  This is a worrying sign and one that we will
closely monitor.

As I write this in Autumn 2002, war in the Middle East looks imminent.  A war is
probably good for Pan Andean - at least in the short run.  Already oil prices
are pushing $30 a barrel and rising.  US gas prices have risen by 50% during the
summer!  They are expected to go much higher this winter.  A war in the Middle
East will provide a quick fix for Western economies.   This too is good for oil
and gas demand.  But the longer-term effects are less certain.  It is to be
hoped that diplomacy will prevail.  Peace may be bad for oil prices but war is
bad for everyone.

The Review of Operations below provides details on our various activities but
let me give you a quick summary.

Gulf of Mexico: We have significant interests in three blocks in the shallow
waters of the Gulf of Mexico offshore Texas.  We hold 62.9% of High Island 30L,
a 500 barrel a day oil producer, 39.6% of High Island A68, producing over

1 million cubic feet of gas a day and 39.7% of High Island A52 producing over
1.5 million cubic feet of gas a day.  Each block has its own platform, two of
which are shown on the covers of this report.  There is significant exploration
potential on High Island A52.  A small part of the block was farmed out to a US
company who drilled a discovery well at 17000 feet.  They have brought the find
on stream and are now drilling additional wells.  Pan Andean has a 2.1% royalty
on production.  The royalty has been as much as $25000 a month. It is believed
that the block contains an additional 7 billion cubic feet of gas in undeveloped
reservoirs. Proposals to drill identified structures are being developed.  Pan
Andean will participate in drilling.

Offshore Louisiana, Pan Andean has a small interest in Eugene Island block 255.
We receive a small monthly income.  Recently there have been significant new
discoveries on surrounding blocks.

Onshore US: We hold a 1% royalty on the North Bob West field on the Texas/Mexico
border. This high potential gas field is being drilled by El Paso.  As a royalty
holder we obtain little information but anecdotal evidence suggests that the
drilling has been successful.  We have a good monthly income.   Danbury Dome in
Texas is a joint venture with El Paso.  The joint venture is currently mired in
confusion over costs and drilling.  Discussions are ongoing to resolve
outstanding issues.  There is a deep play, which needs to be drilled.

Monteagudo Block in Bolivia: Our 30 per cent interest in Monteagudo was acquired
so that we might participate in drilling high potential exploratory wells for
gas.  We placed little value on the shallow oil wells, which had been producing
for 30 years. We had initial success drilling for gas but the wells quickly
depleted.  The deeper gas plays were not drilled, as there was no ready market.
Meanwhile the oil continued to flow.  Currently Monteagudo produces over 600
barrels a day.  We are in constant discussions with our two partners Repsol, the
operator, and Petrobras as to how best to maximize the value of the field.
Certain improvements have been made and I am hopeful that this asset will soon
generate good monthly cash flows to Pan Andean.

El Dorado Gas field Bolivia.  The failure to secure a supply contract for this
large gas deposit is disappointing.  We were close.  Throughout 2001 our local
Bolivian management worked with the Bolivian authorities and with Brazilian
companies to fashion a deal, which would allow the development of El Dorado as a
100-mmcf a day gas supplier to Brazil.  We had a buyer for the gas, a contractor
to drill and build the required facilities and agreement with the local
authorities in Santa Cruz.  Our 90% partner, Pan American, and the Brazilian
buyer could not agree on a price.  As the discussions dragged on the Brazilian
economy went into recession and gas prices fell.  It proved impossible to
finalise a deal.  Now we are further than ever from commercializing El Dorado.

Corporate Activity

As hopes for a deal in Bolivia faded your board began to consider alternatives
in South America and elsewhere.  We examined projects in Bolivia, Colombia and
Argentina.  None of these were deemed worthy of investment.  We had discussions
with groups wishing to merge with Pan Andean.  Most of these brought no obvious
benefit.  One we liked but we have not been able to finalise an agreement due to
changing circumstances on the other side.  While maintaining a dialogue on this
proposal we have commenced discussions with a private group in the Americas,
which may lead to a joint venture to explore three areas with substantial
exploration upside for gas.  This project has the added benefit of a ready
market for gas.

The Future

We are in good shape and ready to move on.  We are generating cash, have no debt
and have a range of options.  Our roots are in exploration so we are attracted
to projects, which offer high potential but in return are high risk. An
alternative way forward is to pursue a corporate strategy of acquiring companies
with production.  This has the advantage that as we grow in production we
attract a wider range of investors.   Over the coming months we will review all
options.

John Teeling, Chairman



CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2002


                                                                                    2002                2001
                                                                                       £                   £

Turnover - continuing operations                                               3,846,754           4,893,481

Cost of sales                                                                (3,470,309)         (2,834,312)

Gross profit - continuing operations                                             376,445           2,059,169

Administrative expenses                                                        (646,565)           (724,415)

Exceptional item - discontinued operations                                             -         (5,045,440)

Operating (loss)/profit
- Continuing Operations                                                        (270,120)           1,334,754

- Discontinued Operations                                                              -         (5,045,440)

                                                                               (270,120)         (3,710,686)

Interest receivable and similar income                                             9,270             101,808

Interest payable                                                               (103,713)            (78,917)

Loss before taxation                                                           (364,563)         (3,687,795)

Tax on ordinary activities                                                             -           (224,590)

Loss on ordinary activities after taxation                                     (364,563)         (3,912,385)

Loss per share                                                                    (.37p)             (4.53p)

Loss per share - diluted                                                          (.37p)             (4.53p)




BALANCE SHEETS
at 31 March 2002


                                           Group             Company               Group             Company
                                            2002                2002                2001                2001
                                               £                   £                   £                   £

Fixed assets

Tangible assets                       12,970,195             121,046          13,138,280              10,320
Investments                                3,219           6,837,344               2,203           6,837,367
                                      12,973,414           6,958,390          13,140,483           6,847,687

Current assets

Debtors                                  988,095           5,122,542           1,788,364           5,083,528
Cash at bank                             975,831               9,431           1,513,328             223,039
                                       1,963,926           5,131,973           3,301,692           5,306,567

Creditors: (Amounts falling due
within one year)                     (1,662,961)           (169,399)         (2,541,013)           (356,379)
                                     

Net current assets                       300,965           4,962,574             760,679           4,950,188

Provision for liabilities and
charges                                (854,747)                   -         (1,059,364)                   -
                                       

Total assets less liabilities         12,419,632          11,920,964          12,841,798          11,797,875
                                      

Capital and reserves

Called-up share capital                  973,220             973,220             973,220             973,220
Share premium                         17,715,926          17,715,926          17,715,926          17,715,926
Profit and loss account -
deficit                              (6,269,514)         (6,768,182)         (5,847,348)         (6,891,271)
                                     

Equity shareholders' funds - 
all equity                            12,419,632          11,920,964          12,841,798          11,797,875
                                      


CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2002


                                                                                      2002              2001
                                                                                         £                 £

Net cash inflow from operating activities                                          696,391         3,183,504

Returns on investments and servicing of finance

Interest received                                                                    9,270           101,808
Interest paid                                                                    (103,713)          (78,917)

Net cash (outflow)/inflow from returns on investments and 
servicing of finance                                                              (94,443)            22,891
                                                                                  

Capital expenditure and financial investment


Disposals of tangible fixed assets                                                  14,427             5,944
Payments to acquire intangible fixed assets                                              -       (2,516,403)
Payments to acquire tangible fixed assets                                      (1,302,661)       (3,081,440)

Net cash outflow from capital expenditure and financial 
investment                                                                     (1,288,234)       (5,591,899)

Acquisitions and disposals
Purchase of subsidiary undertakings                                                      -       (5,179,677)

Net cash outflow before financing                                                (686,286)       (7,565,181)

Financing

Issue of ordinary share capital                                                          -         5,886,500
Costs associated with shares issued during the year                                      -         (280,875)

Net cash inflow from financing                                                           -         5,605,625

Decrease in cash                                                                 (686,286)       (1,959,556)


Notes

The financial information contained in this announcement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The figures for the year ended 31 March 2001 have been extracted from the
statutory accounts which have been filed with the Register of Companies and
which are available on request from the Company Secretary.  The auditor's report
on those accounts was unqualified and did not contain any statement under
section 237(2) or section 237(3) of the Companies Act 1985.  The statutory
accounts for the financial year ended 31 March 2002 have been approved by the
Directors.  The auditors' report on these accounts was unqualified and did not
contain any statement under section 237(2) or section 237(3) of the Companies
Act 1985.

A copy of the audited Annual Report for 2002 will be mailed to shareholders and
is also available for inspection at the Company's registered office at 20-22
Bedford Row, London WC1R 4JS.


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