Final Results

Pan Andean Resources PLC
29 September 2006

                            Pan Andean Resources plc

           Statement and Results for the year ending March 31st 2006

Highlights

•         Profits before tax: £923,000  - an increase of 37% on 2005 (£674,000).

•         Cash balances in excess of £4m: Pan Andean remains cash generative.

•         The restart of a 300 barrel a day oil production in the Gulf of
          Mexico, delayed by the hurricanes, is due shortly.

•         Discussions are advanced to farm out further exploration on block High
          Island 52 in the Gulf.

•         Exploration work has commenced on the prospective oil block 114 in
          Peru.

•         Early stage negotiations on entering Middle East hydrocarbons
          projects.



John Teeling, Chairman commented:

'This has been a year of slow but sure progress. While we are waiting for the
situation in the Gulf of Mexico to return to the status quo ante hurricanes
Katrina and Rita, our North American portfolio is providing a strong cash flow
which is enabling us to build an exploration programme in Latin American, the
Middle East and the US.

Pan Andean's future is looking bright: our recruitment of Ivan Sandrea to the
Board, along with the acquisition of an exploration block in Peru are both very
positive moves. We believe that there is considerable potential in Latin America
for a flexible independent player with the correct experience and contacts.  We
are therefore confident and look forward to updating the market on our progress
throughout the year.'



Contacts:

John Teeling                           [phone]
David Horgan

College Hill
Paddy Blewer                           [phone]
Nick Elwes

Corporate Synergy
Ian Rice                               [phone]
Craig Howie                            [phone]




       Statement Accompanying the Results for year ended March 31st 2006

In the year under review Pan Andean made a profit, before tax, of over £923,000,
up 37% on 2005. This profit derives mainly from our US operations which made $2m
profit. Bolivian operations broke even and the majority of exploration
expenditure was farmed out.

On the exploration front, we completed negotiations and commenced work on Lot
114 in Peru, a large highly prospective oil block. A thorough review of our US
assets identified exploration potential onshore and offshore. We expect a deal
on block High Island 52 in the Gulf of Mexico. We continued to examine new
strategic directions in South America, the Middle East and in parts of Africa.

In the coming months we should see the restart of oil production in the Gulf,
additional exploration on High Island 52 while our exploration in Peru has
already attracted interest. All of this at a time of near record oil and gas
prices.

Why then has our share price seriously under performed the market? Investors are
hard taskmasters.  We promised the restart of production of 300 barrels of oil
per day from High Island 30L. Due to circumstances outside of our control, we
have not yet restarted. It is due to commence within 60 days. We participated in
two small dry wells onshore Texas, while political uncertainty in Bolivia
threatens the value of our investment.

Since we acquired our US acreage in 2000, profits have increased each year. The
principal current source of profit is a royalty on offshore block High Island
52.  I am pleased to report that there is current exploration interest in this
block. We are hopeful that ongoing negotiations will lead to further
exploration. We will be a royalty participant.

High Island 30L, in which we are operator and hold a 62.91% interest, has been a
source of great frustration. Capable of producing 300 barrels of oil a day, the
field has been closed in since March 2004. At an oil price of $50 a barrel, the
close in represents a loss of over $5m a year in revenue. We shut down
production in 2004 to refurbish the platform and to allow gas lift from well 1
to well 2. There was also a need to find a new pipeline to shore. The platform
repairs have been complete since early 2005 and most of a new logistics system
installed. When hurricane Katrina devastated the Gulf, US authorities
commandeered all available supply and repair/lift boats to secure production and
to minimise environmental threats. Pan Andean and logistics partners, Sterling/
Goldking, were unable to obtain a suitable boat until early September 2006.
Final pipeline and pumping installation is now underway with a projected start
up date in Q4 2006.

It is important to clarify the situation in regards to High Island 30L. We are
not losing income, merely deferring it. In fact, it is possible that Pan Andean
will profit from the delay due to higher oil prices.

Danbury Dome remains our principal US onshore exploration asset. The geology is
right, the seismic is encouraging but the target is deep and expensive to drill.
In the past year we have reworked the data. We have some interest from a
potential farm in partner who is a specialist in onshore drilling.

What can I say about our Bolivian operations? We have been in Bolivia since the
late 1980s. We produce oil and gas at Monteagudo; we have a large gas discovery
at El Dorado near Santa Cruz, while there is a very substantial gas target below
our current production strata at Monteagudo. We have excellent partners, BP,
Petrobras and Repsol, and we have an experienced oil and gas team.

The decision by the authorities in La Paz, in 2005, to drastically increase tax
and royalties, followed by a decision to expropriate the assets, has created
major uncertainty. Expropriation has not yet happened. Recent statements by the
Authorities suggest a future partnership with the State.  Given the relatively
small size of our operations we are hopeful of obtaining 'marginal' status which
may allow us to continue to operate at lower tax levels.

International companies operating in Bolivia have been very successful in
finding gas. There are now reserves of 60 trillion cubic feet. Bolivia can be
the hub of a gas network supplying Southern Latin American countries. The
country will not be able to achieve this without the financial and technical
support of international oil companies. But, as we know politicians, do not
always make purely economic decisions.  Politicians rarely realise that
exploration dollars are orphans - they go where they are wanted, respected and
rewarded. Uncertainty is likely to continue in Bolivia for some time yet.

Waiting for Bolivia to become an attractive investment location is not an option
for Pan Andean so we took steps to use our knowledge and experience elsewhere in
South America. Peru was an obvious location. It has a long tradition in oil
production, has good geology and attractive fiscal terms. Lot 114 is in a known
oil and gas area. It has over 2,000 kms of seismic and 4 wells. Of particular
interest is the Rio Caco structure which has 350 kms of seismic lines. Work has
begun to reinterpret the seismic and the well logs. We are also undertaking an
environmental assessment. The first well is targeted for Q3 2007. We are in
early stage discussions with a potential partner in the project.

Future Strategy

As well as investing in Peru, we are examining other possible projects in South
America. I was delighted to welcome Ivan Sandrea to the Board.  As a Venezuelan
citizen, with nine years major oil company experience and now with OPEC, he
brings a wealth of industry and regional experience to the Board. While
opportunities in Venezuela will be a focus they will not be the only target.

As has been previously announced, we are also examining the possibility of
starting operations in the Middle East. The management team has valuable
experience in the region, currently working on separate projects in Iraq, Iran
and Jordan. During the past year we have maintained slow progress in the region.
Whilst we are closer to a firm proposal than we were twelve months ago it is
still early days.

We are very conscious of the need to monetise the value of our assets. The
resumption of oil production on High Island 30L, together with the current
royalty on High Island 52, both in the Gulf of Mexico, should provide healthy
additions to our cash holdings. Our profits, cash balances, low market
capitalisation and US assets make us an attractive partner for junior oil
exploration companies. During the year we have had initial contacts with a
number of companies of this type.  We welcome such approaches but believe that
shareholders will obtain greater benefits by building the existing business.

Hydrocarbons exploration is a risk business, as is investing in developing
countries yet the rewards can be substantial. I am confident that our contacts,
experience and persistence will pay off.

John J Teeling
Chairman
29th September 2006

                           www.panandeanresources.com


CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2006

                                                                         2006                      2005
                                                                            £                         £


TURNOVER                                                            2,023,369                 2,133,186

Cost of sales                                                       (443,849)                 (613,832)

GROSS PROFIT                                                        1,579,520                 1,519,354

Administrative expenses                                             (617,601)                 (837,975)

OPERATING PROFIT                                                      961,919                   681,379

Interest receivable and similar income                                 82,694                    64,618

Interest payable and similar charges                                (120,875)                  (72,328)

PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION                                                       923,738                   673,669

Tax on profit on ordinary activities                                (325,452)                 (202,101)

PROFIT ON ORDINARY
ACTIVITIES AFTER TAXATION
FOR THE FINANCIAL YEAR                                                598,286                   471,568

Earnings per share                                                      0.50p                     0.41p

Earning per share - diluted                                             0.49p                     0.39p


All income arises from continuing operations.



CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2006

                                                                         2006                      2005
                                                                            £                         £
FIXED ASSETS

Tangible assets                                                    14,681,010                12,393,150
Investments                                                             2,857                     2,789

                                                                   14,683,867                12,395,939

CURRENT ASSETS

Debtors                                                             1,630,303                 1,900,473
Cash at bank                                                        4,381,940                 3,790,367

                                                                    6,012,243                 5,690,840

CREDITORS: (Amounts falling due
within one year)                                                  (2,063,535)               (1,433,772)

NET CURRENT ASSETS                                                  3,948,708                 4,257,068

TOTAL ASSETS LESS
CURRENT LIABILITIES                                                18,632,575                16,653,007

PROVISION FOR LIABILITIES                                         (2,283,793)               (1,754,511)

NET ASSETS                                                         16,348,782                14,898,496


CAPITAL AND RESERVES

Called-up share capital                                             1,192,178                 1,192,178
Share premium account                                              20,229,168                20,229,168
Profit and loss account - (deficit)                               (5,072,564)               (6,522,850)

EQUITY SHAREHOLDERS' FUNDS -
ALL EQUITY                                                         16,348,782                14,898,496


CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2006

                                                                         2006                      2005
                                                                            £                         £

NET CASH INFLOW FROM
OPERATING ACTIVITIES                                                2,231,864                 1,220,246


RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE

Interest received                                                      82,694                    64,618
Interest paid                                                       (120,875)                  (72,328)

NET CASH OUTFLOW FROM
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE                                                 (38,181)                   (7,710)

TAXATION                                                                3,642                  (55,409)


CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT

Payments to acquire tangible fixed assets                         (1,605,752)               (1,549,718)

NET CASH OUTFLOW FROM
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT                                              (1,605,752)               (1,549,718)

NET CASH INFLOW/(OUTFLOW)
BEFORE FINANCING                                                      591,573                 (392,591)


FINANCING

Issue of ordinary share capital                                             -                 2,840,442
Costs associated with shares issued during
the year                                                                    -                 (108,242)

NET CASH INFLOW FROM
FINANCING                                                                   -                 2,732,200

INCREASE IN CASH                                                      591,573                 2,339,609



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 MARCH 2006

                                                                        2006                       2005
                                                                           £                          £


Profit for the financial year                                        598,286                    471,568

Currency translation adjustments                                     852,000                  (240,075)

Total recognised gains recognised since last
annual report and financial statements                             1,450,286                    231,493



RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

                                                                         2006                      2005
                                                                            £                         £

Profit in the financial year                                          598,286                   471,568

Currency translation adjustments                                      852,000                 (240,075)

New share capital subscribed                                                -                 2,732,200

Net change in equity shareholders' funds                            1,450,286                 2,963,693

Opening equity shareholders' funds                                 14,898,496                11,934,803

Closing equity shareholders' funds                                 16,348,782                14,898,496


Notes

The financial information set out above does not constitute the Company's
financial statements for the years ended 31 March 2006. The financial
information for 2005 is derived from the financial statements for 2005 which
have been delivered to the Registrar of Companies. The auditors have reported on
2005 statements; their report was unqualified and did not contain a statement
under section 237(2) or (3) of the Companies Act 1985. The financial statements
for 2006 have been audited and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. The auditors have reported on
the 2006 statements; their report was unqualified and did not contact a
statement under section 237 (2) or (3) of the Companies Act 1985.

A copy of the Company's annual report and accounts for 2006 will be mailed to
all shareholders shortly and will also be available for collection from the
Company's registered office, 20-22 Bedford Row, London WCIR 4JS


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