Interim Results

Pan Andean Resources PLC
19 December 2003
                                       

                                                              19th December 2003


                  Interim Statement to Pan Andean shareholders


Pan Andean is profitable, cash generating and debt-free.  The high oil and gas
prices are good for our operations in the Gulf of Mexico and in Bolivia.  We
have exploration upside on our existing assets that should lead to drilling
during 2004. We are in negotiations that may lead to the acquisition of a stake
in a large, producing oil field with considerable upside potential. The
sensitivity of the deal make it impossible to reveal more at this stage.  Having
operated in an unstable environment in Bolivia for fifteen years, we are
concerned at the current political instability. Further investment is not
possible in the current climate.

We continue to produce oil, gas and income from two areas; the Gulf of Mexico
and Bolivia. In the Gulf we obtain income from:

  • The 1.92% Gryphon royalty on High Island 52 currently producing £100,000 a
    month.
  • The use of the High Island 52 platform by Forrest Oil giving a monthly
    processing fee of US $7,500 to Pan Andean.
  • Production on High Island 30 averaging 290 barrels a day and 0.8 million
    cubic feet of gas a day. This is worth $100,000 a month to Pan Andean.
  • Income from our 7% interest in the Zachary well onshore Texas beside
    Danbury Dome which contributes $22,000 monthly.

In Bolivia, the Monteagudo field continues to produce nearly 500 barrels of oil
and condensate together with 1.5 million cubic feet of gas. We are working with
our partners Repsol and Petrobras to improve efficiencies. It should be possible
to increase production by 400 barrels daily through a limited number of
workovers and in-field drilling.  The field is profitable and should provide
cash to Pan Andean in the coming years.

We have a number of ongoing exploration activities:

  • On High Island 52 Gryphon are likely to drill a third well in 2004.
  • We are in farm out negotiations to bring in a partner to drill the 75
    billion cubic feet gas target on Danbury Dome onshore Texas. Drilling will
    cost US $3 m.
  • Our large El Dorado gas deposit in Bolivia, where we partner BP, is
    scheduled to be developed in 2005.  Conservatively, it could produce 40
    million cubic feet of gas and 1,700 barrels of sweet condensate oil for 20
    years.  We are programming an eight well development plan.  Because of the
    Bolivian gas overhang, we are working on a Gas-to-Liquids project.
  • We await gas market opportunities before drilling the deep 2.4 million
    cubic feet gas target and 55 million barrel of oil target at depth in the
    Monteagudo field.  It is not possible to flare gas, so liquids and gas must
    be marketed together.


We are an exploration company with the skills, record, cash and character to
undertake high potential exploration. Potential risk and economic uncertainly
makes it uneconomic to explore in Bolivia. In the past year we have looked at
and rejected numerous proposals. The current project, if we can finalise it,
will transform the company.


Contacts:
David Horgan, Managing Director                      Tel + 353 87 292 3500
John Teeling, Chairman                               Tel + 353 1 833 2833
Jim Finn, Director                                   Tel + 353 1 833 2833


Pan Andean Resources
Financial Information (unaudited)
                                                                               Six Months ended
                                                                          30 Sep 03       30 Sep 02
                                                                              £'000           £'000
Group Profit and Loss
Turnover                                                                      1,920           2,412
Operating Costs                                                             (1,586)         (2,166)

Operating Profit                                                                334             246
Interest Receivable                                                               1               1
Interest Payable                                                               (34)            (34)

Profit before Taxation                                                          301             213
Taxation                                                                          0               0

Profit for the period                                                           301             213

Profit per share                                                              0.31p           0.22p


 
                                                                              Six Months ended
                                                                          30 Sep 03       30 Sep 02
                                                                              £'000           £'000
Group Balance Sheet
Fixed Assets                                                                 11,190          11,706

Current Assets                                                                3,345           2,876
Current Liabilities                                                         (1,262)         (1,547)

Current Assets less Current Liabilities                                       2,083           1,329
Creditors (amounts falling due after one year)                              (1,189)           (828)

Total Assets less Liabilities                                                12,084          12,207

Share Capital and Reserves                                                   12,084          12,207




Notes

The figures for the six months to 30 September 2003 and 30 September 2002 are
unaudited.  The financial information set out above does not constitute full
statutory accounts within the meaning of section 240 of the Companies Act 1985.

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.


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