Interim Results

Pan Andean Resources PLC
13 December 2005


                          Pan Andean Resources Plc

           Interim Results for the six months to 30th September 2005


Chairman's Statement


For the six months ended September 30 2005 Pan Andean recorded a pre-tax profit
of £430,000.  The Company has maintained a strong cash flow due to high oil and
gas prices. The recommencement of production from High Island 30, which is
expected in early 2006, will boost our earnings in the coming year.


We produce oil and gas in the US and in Bolivia. Reserves are mainly in Bolivia.
We are pursuing new exploration projects in Peru and in Iran.


US Production


Offshore Gulf of Mexico


Pan Andean's production facilities in the Gulf did not sustain serious damage
from Hurricane Rita but production was lost for most of October/November because
of damage to the onshore facilities owned by the pipeline company.


•  The Gryphon wells on High Island 52 are now producing in
excess of 30 million cubic feet of gas daily.  Pan Andean has a royalty on
production worth in excess of net US$140,000 a month at current gas prices.  A
new well is intended to be drilled by Gryphon in the first half of 2006 which is
expected to double production.  This will be drilled at no cost to Pan Andean.



•  The gas production platform on High Island 52, in which Pan
Andean has a 50% interest, is expected to recommence production by the end of
2005.


•  Production at our oil producing platform at High Island 30
will re-start when the gas compression and transmission facilities to shore are
installed at Platform 24.  The work was delayed due to Hurricane Rita and the
subsequent shortage of equipment and service boats in the Gulf of Mexico.  Work
is now underway and should be completed within a month.



Onshore Texas:


Drilling is underway on the first of two new shallow wells on the Zachry
acreage, in Danbury Dome.  The Blackstone Day No 1 well is expected to take 7 -
10 days to reach the target depth of 10,600 feet where it will test the middle
Frio F-5 and F-6 sands.  The expected reserves are 8 billion cubic feet of gas.
Results should be available by mid December.



Following completion of the Blackstone well the rig will move location to drill
the Neff -Geissen No 1 well.  The target is 450,000 barrels of oil and 1.5
billion cubic feet of gas at a depth of 8,900 feet.  Zachry Exploration is the
operator and Pan Andean holds a 9.375% working interest in both these leases.



Production is continuing on the Vrazel No 2, Korenek No 1, Korenek No 2 and
North Bob West wells.  On the Vieman lease at Danbury Dome Pan Andean is working
to bring in new partners to drill a deep well in 2006.



Iran



Pan Andean has vigorously pursued Iranian exploration opportunities in recent
months.  The Iranian authorities are open to new ideas and approaches.  We hope
to win a study contract during 2006.


Persian Gold plc, a company under the same management as Pan Andean, is already
exploring for gold in the Takestan mountains west of Tehran.  Another company
under the same management, Petrel Resources plc, has just signed an oil field
development services contract on the Subba & Luhais oil fields in the
predominantly Shia south of Iraq.  This has given Pan Andean credibility and
access at a senior level.



Since the 1990s, foreign investment in Iran has been limited to large oil groups
with buy-back contracts.  Larger groups are best suited to very large gas
developments.  There are many shortcomings associated with the buy-back
approach: it does not align the investors' interest well with the country and it
encourages a cautious and short-termist approach.  US sanctions effectively
prohibit US companies.  Political developments mesmerise many others.  Where
they see difficulties we see opportunities.



The recent election has opened Iranian policy to review.  For existing players
there is uncertainty.  For Pan Andean there is now an opportunity to study
medium-sized oil structures, whose technical challenges may leave them below the
radar screens of oil majors.



Our advantage is that Pan Andean is independent from the major oil companies but
has access to world-class technologies attuned to Iranian circumstances.  We can
approach exploration and production challenges of demanding reservoirs.  There
are no constraints in bringing that know-how to Iran.



One possibility under discussion is for Pan Andean to study, and if appropriate
and acceptable, explore and develop existing fields and structures on the
Iranian/Iraqi border.



Peru



Peru is one of the world's longest established petroleum-producing provinces
worldwide.  The hydrocarbon potential of remote jungle areas was neglected
during the 1970s and 1980s because of concerns over economics and government
policy.



Now, with Peruvians opting decisively for business-led development and a high
oil price, the time is right to vigorously explore selected acreage.  Royalties
are reasonable at 5% to 20%, depending on production.  The standard corporate
tax rate is 30%.  Latin American procedures are ponderous, but the contracting
agency is transparent and efficient.  Importantly, given developments elsewhere,
there is a fiscal stability clause forbidding tax or royalty changes over the
contract life.



Pan Andean was one of the first European groups to identify Peru's potential.
We focused on the central jungle basin, with similar geology to attractive
producing zones in Columbia and Ecuador.



We are in the final stages of acquiring Lot 114 in the central jungle zone, on
which there were 1970s oil discoveries.  Data includes over 2,000km of 2d
seismic and 4 wells.



Development of the substantial river system has opened up this region.  There
are now low draught barges capable of transporting large drill rigs and other
equipment.  This has reduced mobilisation and logistical costs - opening up
discoveries to economic development.



The stratigraphy of this area is complex, with folding and thrusting.  This
calls out for application of new analytical and data processing techniques to
better understand the sub-surface and direct exploration wells.



We have conducted initial geological work and plan to formally launch a fuller
work programme immediately after contract signature - expected early in 2006.
We plan to re-process, where appropriate, existing seismic and well data.  Our
team will reinterpret existing data and develop a regional model to identify key
priorities for further delineation seismic acquisition.  When satisfied with the
size and potential of worked-up prospects, we plan to drill one or more wells.



Bolivian production



Bolivia has some of the finest undeveloped and un-drilled gas exploration
targets outside the Middle East.  This should be a time of growth and
opportunity: energy prices are high, new technologies to monetise large gas
reserves are advanced, the US market is gas-hungry.  Yet investment has slumped
in Bolivia and there is political and tax uncertainty.  Highly prospective
exploration acreage has been relinquished.  There are question-marks over the
commitment and political skill of the oil majors. The draft Hydrocarbon Law
purported to breach solemn international contracts, backed by international
treaties, which limited royalties to an effective 18%.  The legislation
purported to increase the tax rates but in a way that was effectively imposing
an increased royalty, rather than a real tax.  Moreover price controls limit
revenue to about half of the international price for liquids.  Producers are in
an invidious position where they are effectively taxed on the international
price, while only receiving revenues of half that level.  This is unfair,
unlawful and counter-productive.  Sooner or later such treatment will be
corrected.



Our strategy is to maintain our position and emerge from the current political
and economic turmoil affecting Bolivia.  The petroleum industry, including Pan
Andean's local subsidiary, have opted for international arbitration.  Given the
economic slump and investors' strike, it is only a matter of time before a
solution is worked out.



There are elections due on 18th December 2005.  We are hopeful that a new
government with a renewed mandate will cut the Gordian knot - unleashing a wave
of investment that will power export-led growth distributing benefits to
investors, both domestic and international, the authorities and the general
population.



Future



Pan Andean is well placed to take advantage of high US gas and oil prices.  The
re-start of oil production will boost income while our participation in onshore
and offshore Texan gas wells may prove lucrative.  The work being done in Peru
and Iran may prove very significant for the future.


John J Teeling

Chairman

13 December 2005


For further information:

John Teeling, Pan Andean Resources            - 00 353 1833 2833

Jim Finn, Pan Andean Resources                - 00 353 1833 2833

Barrie Newton, Rowan Dartington & Co. Limited - 0117 933 0011


                       FINANCIAL INFORMATION (UNAUDITED)


Group Profit and Loss
                                                                                 Six Months Ended
                                                                           30 Sep 05             30 Sep 04
                                                                               £'000                 £'000

Turnover                                                                       1,201                 1,181
Operating Costs                                                                (770)                 (805)

Operating Profit                                                                 431                   376
Interest Receivable                                                               39                    20
Interest Payable                                                                (40)                  (37)

Profit before Taxation                                                           430                   359
Taxation                                                                       (129)                 (108)

Profit for the period                                                            301                   251

Profit per share                                                               0.25p                 0.23p



Group Balance Sheet
                                                                           30 Sep 05               30 Sep 04
                                                                               £'000                   £'000

Fixed Assets                                                                  13,458                  11,994

Current Assets                                                                 5,981                   5,963
Current Liabilities                                                          (1,594)                 (1,569)

Current Assets less Current Liabilities                                        4,387                   4,394
Creditors (amounts falling due after one year)                               (1,773)                 (1,561)

Total Assets less Liabilities                                                 16,072                  14,827

Share Capital and Reserves                                                    16,072                  14,827


Group Cash Flow
                                                                         Six months ended

                                                                           30 Sep 05              30 Sep 04
                                                                               £'000                  £'000

Net Cash Inflow from Operating Activities                                      1,452                  1,280
Returns on Investments and Servicing of Finance                                  (1)                   (17)
Taxation                                                                       (129)                  (108)
Capital Expenditure                                                          (1,110)                (1,215)
Financing - Issue of Ordinary Share Capital                                        0                  2,732
Increase in Cash                                                                 212                  2,672




Notes:


1.  The figures for the six months to 30 September 2005 and 30
September 2004 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.



2.  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.


                      This information is provided by RNS
            The company news service from the London Stock Exchange