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Pan Ameri Energy LLC (57UC)

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Monday 02 July, 2007

Pan Ameri Energy LLC

Annual report & accounts

Pan American Energy LLC, Argentine Branch
                  

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

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FINANCIAL STATEMENTS AS OF DECEMBER 31, 2006
COMPARATIVE WITH THE PRIOR YEAR






CONTENTS                                                                                      Page
                                                                        ------------------------------------------------

Auditor's report                                                                               2
Corporate information                                                                          4
Balance sheet                                                                                  5
Statement of income                                                                            6
Statement of cash flows                                                                        7
Notes to the financial statements                                                              8
Exhibits A, B, C, D, E, F, G, H and I                                                         22
Reporting summary                                                                             35
Supplementary information required by the Buenos Aires Stock Exchange                         40
*T

AUDITOR'S REPORT

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To the Legal Representative of
Pan American Energy LLC (Argentine Branch)
Av. Leandro N. Alem 1180 - 11th Floor
Buenos Aires C.U.I.T.: 30-69554247-6
*T

We examined the accompanying balance sheet of Pan American Energy LLC (Argentine
Branch) as of December 31, 2006, and the related statements of income and cash
flows, notes 1 to 14 and exhibits A, B, C, D, E, F, G, H and I for the year then
ended, comparative with the prior year. The preparation of these financial
statements is the responsibility of the Legal Representative of the Branch. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards in force in the
Republic of Argentina. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and the
reasonableness of the significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In relation to the financial statements as of December 31, 2005, we issued an
unqualified opinion on February 24, 2006.

In our opinion, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of the Branch
as of December 31, 2006, the results of its operations and the changes in cash
flows for the year then ended, in conformity with the professional accounting
principles in force in the City of Buenos Aires (Republic of Argentina).

In compliance with rules and regulations in force, we report that:

a) the financial statements comply with the provisions of the Corporations Law
and the regulations on accounting documentation of the National Securities
Commission, they are transcribed in the Inventory Book and they derive from the
accounting records of the Branch maintained in Argentina which, in their formal
aspects, are kept pursuant to legislation in force. The information systems used
to process the data included in the financial statements are kept under the
security and integrity conditions based on which they were authorized;

b) we read the information included in the reporting summary (sections 'Balance
sheet items', 'Income statement items', 'Statistical data' and 'Ratios') and in
the supplementary information to the financial statements required by section 68
of the regulations of the Buenos Aires Stock Exchange corresponding to the
financial statements as of December 31, 2006, based on which, as far as it
relates to our area of responsibility, we have no observations;

c) as of December 31, 2006, the accrued liability for pension contributions
arising from the accounting records amounted to $ 3,848,275, no amounts being
due as of that date, and

d) as required by General Resolution No. 400 of the National Securities
Commission, we inform that:

    --  the ratio between the total audit services invoiced to the Branch and
        the total amount invoiced to the Branch, including audit services, is
        58%;

    --  the ratio between the total audit services invoiced to the Branch and
        the total audit services invoiced to the Branch and its subsidiaries and
        affiliated companies is 78%, and

    --  the ratio between the total audit services invoiced to the Branch and
        the total amount invoiced to the Branch and its subsidiaries and
        affiliated companies is 47%.

Buenos Aires, March 9, 2007

SIBILLE

Graciela C. Laso

Partner

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) FINANCIAL STATEMENTS as of December
31, 2006 for the fiscal year No. 10 beginning January 1, 2006 and ended December
31, 2006 comparatively presented with the prior year

Stated in pesos

Legal address of the Branch: Av. Leandro N. Alem 1180 - 11th floor - Buenos
Aires

Main activity of the Branch: Oil and gas exploration and production

Date of registration with the Public Registry of Commerce: October 17, 1997

Registration number with the Inspection Board of Legal Entities: 1868, Book 54,
Volume B of Foreign Companies

Capital registered with the Inspection Board of Legal Entities: $ 200,000,000
under number 1257, Book 57, Volume B of Foreign Companies, and $ 21,779,007
under number 2106, Book 58, Volume B of Foreign Companies (Note 8).

Date of registration of capital with the Inspection Board of Legal Entities:
$ 200,000,000 on July 11, 2003 and $ 21,779,007 on December 12, 2005

Subscribed capital (paid in full): $ 221,779,007

HEAD OFFICE

Name: Pan American Energy LLC

Legal address: The Corporation Trust Company, Trust Corporation Center, 1209
Orange Street, Wilmington, Delaware - 19801 - United States of America

Main activity: Oil and gas exploration and production

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

BALANCE SHEET as of December 31, 2006 comparative with the prior year (in pesos)

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                                                           12/31/2006          12/31/2005
                                                       ---------------     ---------------
ASSETS

CURRENT ASSETS
Cash on hand and in banks (Note 4 a)                       34,350,572           9,130,717
Investments (Exhibit C)                                   215,056,665         374,163,381
Accounts receivable (Note 4 b)                            737,519,309         536,783,441
Other receivables (Note 4 c)                              117,891,798         150,094,893
Inventories (Note 4 d)                                    130,809,611         123,056,552
                                                       ---------------     ---------------

Total current assets                                    1,235,627,955       1,193,228,984
                                                       ---------------     ---------------
*T

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NON CURRENT ASSETS
Other receivables (Note 4 e)                               28,915,445          71,903,761
Investments (Exhibit C)                                     8,719,558           5,691,193
Property, plant and equipment (Exhibit A)               5,870,488,156       4,797,794,173
Intangible assets (Exhibit B)                               1,918,767           3,716,720
                                                       ---------------     ---------------

Total non current assets                                5,910,041,926       4,879,105,847
                                                       ---------------     ---------------

Total assets                                            7,145,669,881       6,072,334,831
                                                       ===============     ===============
*T

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LIABILITIES
CURRENT LIABILITIES
Accounts payable (Note 4 f)                               661,464,349         464,381,789
Loans (Note 4 g)                                          877,022,350         546,436,420
Payroll and social security contributions                  32,833,398          23,093,534
Taxes payable (Note 4 h)                                  465,157,941         348,761,336
Provision for future compensation to personnel (Exhibit
 D)                                                         1,968,408           1,841,405
                                                       ---------------     ---------------

Total current liabilities                               2,038,446,446       1,384,514,484
                                                       ---------------     ---------------
*T

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NON CURRENT LIABILITIES
Accounts payable (Note 4 i)                                32,579,735          44,138,822
Loans (Note 4 j)                                        2,265,642,982       1,485,426,710
Other liabilities (Note 3.2.j)                             97,036,602          69,687,858
Deferred tax (Note 3.2.h and 11)                          441,951,134         438,487,889
Provision for future compensation to personnel (Exhibit
 D)                                                         9,797,018           4,704,049
Provision for environmental remediation (Exhibit D)       122,553,250         100,386,197
Accruals (Exhibit D)                                       19,903,786          22,152,066
                                                       ---------------     ---------------

Total non current liabilities                           2,989,464,507       2,164,983,591
                                                       ---------------     ---------------

Total liabilities                                       5,027,910,953       3,549,498,075

Account with Head Office (Note 7)                       1,656,519,921       2,061,597,749
Capital allocated to the Branch (Note 8)                  221,779,007         221,779,007
Capital adjustment                                        239,460,000         239,460,000
                                                       ---------------     ---------------

Total                                                   7,145,669,881       6,072,334,831
                                                       ===============     ===============
*T

The accompanying notes and exhibits are an integral part of these financial
statements.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

STATEMENT OF INCOME for the year ended December 31, 2006 comparative with the
prior year (in pesos)

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                                                                         2006                          2005
                                                             ----------------------------- -----------------------------

Sales                                                                       5,349,672,587                 3,762,800,793
Cost of sales (Exhibit E)                                                  (2,372,170,274)               (1,720,742,526)
                                                                           ---------------               ---------------

Gross profit                                                                2,977,502,313                 2,042,058,267

Administrative expenses (Exhibit G)                                         ( 212,692,114)                ( 149,117,278)
                                                                           ---------------               ---------------

Operating income                                                            2,764,810,199                 1,892,940,989

Financial results
 Provided by assets
  Interest                                                     56,391,423                    18,168,418
  Exchange gains/losses                                        10,169,992                    14,552,432
    Other financial results                                     2,293,677      68,855,092       971,071      33,691,921
                                                             -------------                 -------------

 Provided by liabilities
  Interest                                                   (179,682,702)                 (112,467,898)
  Exchange gains/losses                                      ( 21,319,803)                 ( 11,727,732)
    Bank commissions and other financial results             ( 10,786,138)  ( 211,788,643) ( 20,498,675)  ( 144,694,305)
                                                             -------------                 -------------

Other income and expenses - net (Note 3.2.j
and Exhibit D, line 8)                                                       ( 76,968,829)                ( 100,766,855)
                                                                           ---------------               ---------------

Income before income tax                                                    2,544,907,819                 1,681,171,750

Income tax expense - current (Note 3.2 h and 11)                            ( 896,407,452)                ( 609,797,133)

Income tax (expense) benefit - deferred
(Note 3.2.h and 11)                                                           ( 3,463,245)                   14,847,018
                                                                           ---------------               ---------------

Net income (Note 7)                                                         1,645,037,122                 1,086,221,635
                                                                           ===============               ===============
*T

The accompanying notes and exhibits are an integral part of these financial
statements.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

STATEMENT OF CASH FLOWS for the year ended December 31, 2006 comparative with
the prior year (in pesos)

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                                                                                           2006            2005
                                                                                      --------------- ---------------

Cash provided by operations:

  Net income                                                                           1,645,037,122   1,086,221,635

  Adjustment to reconcile net income with the cash provided by operations

  Depreciation of Property, Plant and Equipment                                          638,177,818     575,601,999
  Amortization of intangible assets                                                        2,215,059       2,298,959
  Income tax expense                                                                     896,407,452     609,797,133
  Net increase in allowance for bad debtors                                                3,228,052       8,132,301
  Decrease in Property, Plant and Equipment (net)                                          3,261,704      10,096,801
  Net (decrease) increase in accrual for lawsuits                                        ( 1,388,897)      5,053,792
  Increase in provision for future compensation to personnel                               7,395,291         862,730
  Net increase in provision for environmental remediation                                 22,167,053      48,473,049
  Net increase in the allowance for obsolescence of materials                                444,196         826,407
  Other non-cash items (1)                                                               159,537,645     106,758,595

  Changes in assets, liabilities and account with Head Office:

  Increase in accounts receivable                                                      ( 203,963,920)  ( 238,847,565)
  Increase in inventories                                                                ( 8,197,255)   ( 10,774,481)
  Decrease (increase) in other receivables                                                75,191,411    ( 75,938,326)
  Decrease in accounts payable, payroll and social security contributions,
taxes payable and other liabilities                                                    ( 557,398,766)  ( 420,084,198)
  Compensation (post retirement) to personnel                                            ( 2,175,319)    ( 1,751,883)
  Payments related to lawsuits                                                             ( 859,383)      ( 118,135)
  Contribution received from Head Office                                                           -      21,779,007
                                                                                      --------------- ---------------
  Net cash provided by operations                                                      2,679,079,263   1,728,387,820
                                                                                      =============== ===============

Cash used in investing activities:

  Increase in long-term investments                                                      ( 3,028,365)    ( 5,691,193)
  Additions of Property, Plant and Equipment                                          (1,714,133,505) (1,253,752,672)
  Additions of intangible assets                                                           ( 417,106)    ( 1,297,879)
                                                                                      --------------- ---------------
  Cash used in investing activities                                                   (1,717,578,976) (1,260,741,744)
                                                                                      --------------- ---------------

Cash used in financing activities::

  Increase in loans (net)                                                                954,727,802     406,460,535
  Remittances made to Head Office (net)                                               (2,050,114,950)  ( 648,654,555)
                                                                                      --------------- ---------------
  Cash used in financing activities                                                   (1,095,387,148)  ( 242,194,020)
                                                                                      --------------- ---------------

Net (decrease) increase in cash                                                        ( 133,886,861)    225,452,056

Cash at beginning of year (2)                                                            383,294,098     157,842,042
                                                                                      --------------- ---------------

Cash at year-end (2)                                                                     249,407,237     383,294,098
                                                                                      =============== ===============

(1) Exchange gains/losses and other financial results
relating to loans, account with Head Office and other                                    156,074,400     120,172,849
deferred tax expense (benefit)                                                             3,463,245    ( 13,414,254)(3)
                                                                                      --------------- ---------------

Total                                                                                    159,537,645     106,758,595
                                                                                      =============== ===============

(2) Cash and banks plus investments becoming due within three months.
(3) In the fiscal year 2005 it includes $ 1,432,764 corresponding to the deferred tax effect provided by the assets and
 liabilities contributed by Head Office (Note 8)
The accompanying notes and exhibits are an integral part of these financial statements.
*T

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

NOTES TO THE FINANCIAL STATEMENTS as of December 31, 2006 comparative with the
prior year (in pesos)

NOTE 1 - THE BRANCH Pan American Energy LLC (Argentine Branch) is engaged in the
exploration, development and production of hydrocarbons.

On October 30, 1997, a definitive agreement for the transfer of assets and
liabilities was entered into between Amoco Argentina Oil Company (Argentine
Branch) and Pan American Energy LLC (Argentine Branch) hereinafter 'the Branch',
whereby Amoco Argentina Oil Company (Argentine Branch) transferred its business
consisting of assets and liabilities to the Branch, effective on October 8,
1997.

On May 1, 1998 a definitive agreement for the transfer of assets and liabilities
was entered into between Pan American Continental S.R.L. and the Branch, whereby
Pan American Continental S.R.L. transferred to the Branch its business
consisting of the assets and liabilities except for the name Pan American
Continental.

NOTE 2 - OPERATIONS OF THE BRANCH

The following table summarizes the main operations, blocks and joint ventures in
which the Branch is or was involved during the year ended December 31, 2006.

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                                          Main blocks/                   Ownership             Branch's
              Activity                    operations                     interest           participation
--------------------------------------- --------------------------      ----------         ---------------

Oil and gas production and development  Cerro Dragón                      100,00%            Operator
                                        Piedra Clavada                    100,00%            Operator
                                        Koluel Kaike                      100.00%            Operator
                                        Lindero Atravesado                 62.50%            Operator
                                        Anticlinal Funes (2)               80.00%            Operator
                                        Acambuco                           52.00%            Operator
                                        Aguada Pichana                     18.18%           Non operator
                                        San Roque                          16.47%           Non operator
                                        Estancia La Escondida (1)          25.00%           Non operator

Oil and gas exploration and development Acambuco 'B'                      100.00%            Operator
                                        Río Barrancas (2)                 100.00%            Operator
                                        Bandurria                          18.18%           Non operator
                                        Costa Afuera Argentina 'CAA-40'    50.00%  (3)      Non operator
                                        Costa Afuera Argentina 'CAA-46'    50.00%  (3)      Non operator
*T

Explanations:

(1) The Joint Venture agreement (UTE) governing the relationships between the
holders of concession states that their participating interests in rights,
obligations and interests inherent in the property including production, will be
distributed based on the depth from which production is obtained: in the deep
area, the Branch has a 75% interest and the co-holder has the remaining 25%; in
the shallow area from which current total production is obtained, the Branch has
a 25% interest and the co-holder the remaining 75%; and in the area
'Descubrimiento El Zanjón', both parties hold a 50% interest. The average
interest described grants the Branch a 50% interest in the rights over the
property, regardless the percentage thereof in the concession.

(2) In February 2005, the Branch acquired an 80% interest in the area Anticlinal
Funes, located in the Province of Chubut and a 100% interest in the area Río
Barrancas, located in the Province of Neuquén, under the corporate
reorganization between Head Office and Head Office's subsidiary Pan American
Continental S.R.L (Note 8). In December 2005, the Branch relinquished the
concession for Lote Chapúa Este which covered part of the area CNQ-4, Río
Barrancas, as commercial production would not be achieved based on reserves
estimates.

(3) In December 2003, the Branch acquired a 35% interest in the exploration
blocks Costa Afuera Argentina (CAA) 40 and 46, located in Malvinas Basin. In
December 2004, one of the members withheld from the CAA 46 block and transferred
an interest of 15.72% to the Branch and, therefore, the interest in such block
was 50.72%. In December 2005, the Branch assigned an interest of 0.72% in the
CAA 46 block and acquired a 15.00% interest in the CAA 40 block and, therefore,
the Branch's interest in both exploration blocks is 50.00%.

NOTE 3 - ACCOUNTING PRINCIPLES

3.1 Reporting currency

In accordance with Decree 664/2003 and General Resolution No. 441/2003 of the
National Securities Commission ('Comisión Nacional de Valores' or CNV), the
Branch discontinued the application of currency restatement as from March 1,
2003.

From January 1, 2002 to February 28, 2003, the Branch applied the restatement
methodology set forth by Technical Resolution No. 6, amended by Technical
Resolutions Nos. 17 and 19 of the Argentine Federation of Professional Councils
of Economic Sciences (FACPCE) and by the Professional Council of Economic
Sciences of the City of Buenos Aires (CPCECABA), using indexes derived from the
Internal Wholesale Price Index.

3.2 Valuation and presentation principles

a) Presentation

The financial statements are presented in accordance with the presentation
principles established by the accounting standards generally accepted in the
City of Buenos Aires (Republic of Argentina).

Investments to become due or to be realized in the short term are considered a
cash equivalent in the statement of cash flows.

Certain reclassifications were made to the financial statements presented as
comparative information to conform them to the presentation used in this fiscal
year.

b) Participating interest in joint ventures The Branch is engaged in exploration
and production activities in certain areas through its participation in joint
ventures with other companies. The account balances reflecting the joint
ventures' assets, liabilities, income and expenses are proportionately
consolidated in these financial statements.

c) Foreign currency Assets and liabilities denominated in foreign currency as
listed in Exhibit F have been stated in Argentine Pesos at the exchange rate
prevailing at the end of each fiscal year. The resulting exchange gains/losses
are presented in the financial results line (provided by either assets or
liabilities, as applicable) of the Statement of Income.

d) Inventories

Crude oil is stated at reproduction cost.

Spare parts, materials and raw materials are stated at the latest acquisition
cost.

Goods in transit are stated at acquisition cost plus import expenses.

Advances to suppliers are valued at the amounts actually incurred.

The carrying value of inventories, taken as a whole and after considering the
allowance for obsolescence (see Note 3.2.g), does not exceed their recoverable
value.

e) Property, plant and equipment

Property, plant and equipment is stated at acquisition cost as indicated in Note
3.1 less the related accumulated depreciation. The acquisition cost includes all
the necessary costs incurred in order to put the assets in working condition.

Depreciation is calculated by applying the straight-line method over the
estimated useful lives of the assets and/or the duration of the contracts, as
applicable, except for production wells, equipment and services, which are
depreciated per the units of production method.

The pre-operating costs of the properties in the exploration stage, except for
geology and geophysics related expenses that are charged to the Statement of
Income as incurred, remain capitalized for a given period based on the
characteristics of each property, without exceeding five years considered as
from the completion of the exploration stage or, if applicable, as from
production interruption, unless:

1. it is expected that explored areas will proceed to the commercial production
stage, in which case the referred costs remain capitalized, or

2. during the referred five year period, management estimates that commercial
production will not be feasible, in which case, the referred costs are expensed.

For Property, plant and equipment existing as of January 6, 2002, the
acquisition or construction of which resulted in outstanding liabilities
denominated in foreign currency - exchange gains/losses resulting from restating
such liabilities totaling $1,832,303,600 through July 28, 2003 were capitalized
pursuant to specific accounting principles, based on the determination of the
direct or indirect ratio between the assets subject to capitalization and the
outstanding liabilities in foreign currency. The assets or group of assets
eligible for the capitalization of exchange gains/losses have remained
unchanged. Such capitalization of exchange gains/losses was performed in
proportion to the balance of the original value of the referred assets not
subject to depreciation. Additionally, exchange gains and losses were
capitalized up to the limit arising from the comparison between the replacement
or reproduction cost of the assets and their recoverable value.

For the purposes of presenting the financial statements in restated currency
(see Note 3.1), the capitalized exchange gains/losses amounting to $
1,832,303,600 are considered an anticipated currency restatement until such
differences are absorbed thereby. The excess of capitalized exchanges losses
over the restated amounts totals $ 85,358,131 as of December 31, 2006.

The net carrying value of property, plant and equipment, taken by group of
assets of similar characteristics, does not exceed their estimated value in use
based on the information available as of the date of issuance of the financial
statements.

f) Intangible assets These are pre-production geological expenditures and
acquisition cost of blocks valued at restated cost as indicated in Note 3.1.,
less the related accumulated amortization. Amortization is calculated per the
units of production method.

Deferred expenditures, mainly consisting of organization and system development
expenses, are amortized in accordance with the straight-line method over 5 and 3
years, respectively.

g) Allowances, Provisions and Accruals

Allowances deducted from assets:

- For bad debtors: they are determined following the detailed analysis of the
credit status of each customer.

- For obsolescence of materials: the Branch creates an allowance for those
assets evidencing significant slow movement based on a specific analysis.

Accruals:

- For lawsuits: they are determined considering the potential costs of those
lawsuits filed against the Branch based on the opinion of the legal counsels.

Provisions:

- For future compensation to personnel: they are estimated as a percentage of
compensation paid, calculated in terms of actuarial methods, and can be applied
to compensate employees of the Branch who have complied with certain seniority
requirements defined by the Branch. Payments are debited from the related
provision.

- For environmental remediation: calculated on the basis of well-abandonment
forecasts until the expiration of agreements, at present values.

h) Income tax /Minimum deemed income tax

The Branch applies the deferred tax method to account for income tax. Based on
the referred method, the current income tax is calculated by applying the rates
prevailing as of December 31, 2006 and 2005 on taxable income; and the future
tax effect of a) the temporary differences in the book and tax values of assets
and liabilities and b) the tax loss carryforwards, if any, are recognized as
deferred tax assets or liabilities.

The deferred tax assets are recognized only to the extent of their
recoverability.

No provision for the minimum deemed income tax was recognized for the fiscal
years ended December 31, 2006 and 2005, as the income tax provision is higher.

i) Use of estimates

The preparation of the financial statements in accordance with generally
accepted accounting principles requires that the Legal Representative of the
Branch and management make estimates about the value of certain assets and
liabilities, including contingent liabilities, as well as the amounts informed
of certain income and expenses generated during the fiscal year.

i) Use of estimates (Cont.)

The final amounts may differ from the estimates used in the preparation of the
financial statements.

j) Defined benefit pension plans

The Branch implemented a pension plan for the benefit of its personnel called
'Plan Puente' or 'Bridge Plan'. The amount accrued upon the implementation of
such plan amounts to $ 97,036,602, presented under Other non current
liabilities, out of which the amount of $ 27,394,646 accrued in the fiscal year
ended December 31, 2006 and is included in Other income and expenses of the
Statement of Income. Such amount is made up of $ 169,818,815 of nominal value
less $ 72,736,311 corresponding to the financial effect from the discount to
present value and payments in the amount of $ 45,902.

In the fiscal year ended December 31, 2005, the amount accrued in connection
with the referred 'Plan Puente' was $ 16,926,337, presented under Other income
and expenses of the Statement of Income. Such amount was made up of
$ 129,937,378 of nominal value less $ 60,249,520 from the discount to present
value.

As of December 31, 2006 and 2005, the relevant actuarial information related to
the pension plans for the benefit of personnel included herein and in Note 3.2.g
under Other liabilities, Provisions for future compensation to personnel and
Account with Head Office is as follows:

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                                                                 2006                     2005
                                                            ---------------          ---------------

Cost of benefits accrued at beginning of year                   96,784,802               75,164,144
Service cost (1)                                                 6,350,558                5,668,905
Interest (1)                                                    14,296,029                4,195,596
Benefits paid                                                  ( 2,071,223)             ( 1,764,333)
Actuarial losses (1)                                            14,799,860               13,520,490
                                                            ---------------          ---------------
Obligation at year-end                                         130,160,026               96,784,802
                                                            ===============          ===============
*T

(1): Included in the Statement of Income under Other income and expenses. Main
actuarial assumptions used

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Interest rate                                                            4%                       4%
Actual rate of long term compensation increase (net of
 inflation)                                                              1%                    0.50%
*T

k) Revenue recognition Revenue derived from the sale of assets is recognized
when the significant risks and rewards of ownership have been transferred to the
purchaser.

Revenue derived from the sale of oil is recognized by the Branch by applying the
production method. In those cases in which the Branch has an interest in joint
ventures with other producers, revenue is recorded based on the interest held in
each joint venture.

Revenue derived from the sale of gas is recognized by the Branch by applying the
sales method, whereby revenue is recorded regardless of whether gas is produced
by the company itself or through joint ventures with other producers.

l) Lease agreements

The Branch leases the space occupied by its offices, which agreements are of an
operating nature and, therefore, the expenses incurred are recognized in the
Statement of income to the extent they are accrued.

The amount of the leases, broken down by maturity dates, is reported below:

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                                                                                                  Nominal value
                                                                                          ------------------------------
Up to a year                                                                              US$ 2,597,264 and $ 234,318
Over one year and up to five years                                                        US$ 4,995,876
*T

During this fiscal year, the Branch recognized an expense of $ 8,388,906 related
to such lease agreements presented in the line Buildings Rentals and Maintenance
in Exhibit G.

m) Enactment of new technical resolutions and other regulations

In line with General Resolution No. 487/2006 of the CNV, the Branch now
considers the currency restatement of Property, plant and equipment as a
temporary difference for the purposes of the deferred tax calculation.
Consequently, an increase in the net deferred tax liabilities amounting to
$229,088,577 was recognized, as well as an adjustment to prior year results
(loss) presented as part of the Account with Head Office (Note 7).

As required by Resolution No. 487/2006 of the CNV in connection with the
recoverable values of assets, we report that at the date of issuance of these
financial statements, no indicators exist that the carrying value of the assets
exceeds the recoverable value.

NOTE 4 - BREAKDOWN OF CERTAIN BALANCE SHEET ACCOUNTS

-0-
*T
                                                                                           12/31/2006       12/31/2005
                                                                                       ------------------ --------------
ASSETS

CURRENT ASSETS

a) Cash on hand and in banks
  Cash on hand in local currency                                                                  141,977        146,969
  Cash on hand in foreign currency (Exhibit F)                                                    232,722        281,946
  Cash in banks in local currency                                                              24,481,235      4,086,100
  Cash in banks in foreign currency (Exhibit F)                                                 9,494,638      4,615,702
                                                                                       ------------------ --------------

  Total                                                                                        34,350,572      9,130,717
                                                                                       ================== ==============
*T

-0-
*T
b) Accounts receivable

  Accounts receivable in local currency                                                         73,659,586    62,040,957
  Allowance for bad debtors in local currency (Exhibit D)                                     ( 4,983,016)  ( 3,547,930)
  Accounts receivable in foreign currency (Exhibit F)                                          682,872,598   252,277,278
  Affiliated companies in foreign currency (Note 9 and Exhibit F)
                                                                                                         -   238,250,029
  Allowance for bad debtors in foreign currency (Exhibits D and F)
                                                                                             ( 14,029,859) ( 12,236,893)
                                                                                             ------------- -------------

  Total                                                                                        737,519,309   536,783,441
                                                                                             ============= =============
*T

-0-
*T
c) Other receivables

  Loans to personnel                                                                           8,490,283       4,625,479
  Tax credits                                                                                 24,907,001      32,515,843
  Expenses recoverable in local currency                                                       7,310,337       5,837,727
  Expenses recoverable in foreign currency (Exhibit F)                                         1,284,463       2,063,279
  Prepaid expenses in local currency                                                           7,648,706       2,996,588
  Tax credit certificate, Decree 564/05 in foreign currency (Exhibit F)                                -      36,985,316
  Miscellaneous in local currency                                                             39,819,127      28,333,063
  Miscellaneous in foreign currency (Exhibit F)                                               28,032,599      35,602,288
  Affiliated companies in foreign currency (Note 9 and Exhibit F)
                                                                                                 399,282       1,135,310
                                                                                      ------------------ ---------------

  Total                                                                                      117,891,798     150,094,893
                                                                                      ================== ===============
*T

-0-
*T
d) Inventories
  Crude oil in stock                                                                        69,704,063        62,065,127
  Spare parts, materials and raw materials                                                  47,997,293        44,967,474
                                                                                    ------------------ -----------------

  Subtotal                                                                                 117,701,356       107,032,601

  Allowance for obsolescence of materials (Exhibit D)                                     ( 2,864,130)      ( 2,419,934)
                                                                                    ------------------ -----------------

  Subtotal (Exhibit E)                                                                     114,837,226       104,612,667

  Goods in transit                                                                           7,924,880        13,076,372
  Advances to suppliers in local currency                                                    7,765,719         3,929,418
  Advances to suppliers in foreign currency (Exhibit F)                                        281,786         1,438,095
                                                                                    ------------------ -----------------

  Total                                                                                    130,809,611       123,056,552
                                                                                    ================== =================
*T

-0-
*T
NON CURRENT ASSETS

e) Other receivables
  Loans to personnel                                                                          3,837,996        1,974,314
  Prepaid expenses in local currency                                                          4,534,641                -
  Interest in Fideicomiso Gas ampliación Gasoducto Sur                                                -       
48,000,000
  Miscellaneous in local currency                                                             6,517,545        5,795,618
  Miscellaneous in foreign currency (Exhibit F)                                              14,025,263       16,133,829
                                                                                       ---------------- ----------------

  Total                                                                                      28,915,445       71,903,761
                                                                                       ================ ================
*T

-0-
*T
LIABILITIES

CURRENT LIABILITIES

f) Accounts payable

  Trade payables in local currency                                                          449,624,468      283,641,773
  Trade payables in foreign currency (Exhibit F)                                            167,263,681      160,999,848
  Expenses payable in local currency                                                         34,598,789       17,305,648
  Affiliated companies in foreign currency (Note 9 and Exhibit F)
                                                                                              9,977,411        2,434,520
                                                                                          ------------- ----------------

  Total                                                                                     661,464,349      464,381,789
                                                                                          ============= ================
*T

-0-
*T
g) Loans

  Bonds in foreign currency (Exhibit F)                                                      306,200,000               -
  Unsecured notes payable in local currency                                                  275,057,276     305,964,724
  Secured notes payable in foreign currency (Exhibit F)
                                                                                               4,172,593      13,202,113
  Unsecured notes payable in foreign currency (Exhibit F)
                                                                                             226,105,569     182,659,601
  Interest accrued on bonds and notes payable in foreign currency (Exhibit F)
                                                                                              65,486,912      44,609,982
                                                                                        ---------------- ---------------

  Total                                                                                      877,022,350     546,436,420
                                                                                        ================ ===============
*T

-0-
*T
h) Taxes payable

  Income tax net of prepayments                                                             391,273,549      288,037,030
  Other taxes payable                                                                        73,884,392       60,724,306
                                                                                      ----------------- ----------------

  Total                                                                                     465,157,941      348,761,336
                                                                                      ================= ================
*T

-0-
*T
NON CURRENT LIABILITIES

i) Accounts payable

  Miscellaneous liabilities in local currency                                                7,294,213        27,432,054
  Miscellaneous liabilities in foreign currency (Exhibit F)                                 25,285,522        16,706,768
                                                                                  -------------------- -----------------

  Total                                                                                     32,579,735        44,138,822
                                                                                  ==================== =================
*T

-0-
*T
j) Loans

  Affiliated companies in local currency (Note 9)                                              446,709,189             -
  Bonds in foreign currency (Exhibit F)                                                      1,071,700,000   606,400,000
  Secured notes payable in foreign currency (Exhibit F)
                                                                                                         -     4,131,712
  Unsecured notes payable in foreign currency (Exhibit F)
                                                                                               747,233,793   874,894,998
                                                                                             ------------- -------------

  Total                                                                                      2,265,642,982 1,485,426,710
                                                                                             ============= =============
*T

NOTE 5 - BOND ISSUANCE

On July 13, 1995, Resolution No. 10982 of the CNV authorized the short and
medium term bond program submitted by the branch in Argentina of the foreign
corporation Amoco Argentina Oil Company for a total maximum amount of US$
200,000,000, nominal value. The bonds are issued as 'Obligaciones Negociables'
(negotiable obligations).

In September 1995, Amoco Argentina Oil Company (Argentine Branch) issued the
First Series of bonds in the amount of US$ 100,000,000 due in ten years with an
interest rate of 6.63% p.a. Principal was repaid at maturity.

On February 11, 1997, Amoco Argentina Oil Company (Argentine Branch) issued the
Second Series of bonds in the amount of US$ 100,000,000 due in ten years.
Principal is to be repaid in a single payment at maturity and accrues interest
at a rate of 6.75% p.a. This issuance completes the maximum amount of the short
and medium term bond program referred to above.

The funds obtained from both bond issues were used to repay loans granted by
affiliated companies of Amoco Argentina Oil Company (Argentine Branch).

As a result of the transfer of assets and liabilities referred to in the second
paragraph of Note 1, Amoco Argentina Oil Company (Argentine Branch) transferred
the above mentioned bonds to Pan American Energy LLC (Argentine Branch). The
First Series of bonds was guaranteed by BP Company North America Inc. until
repayment in September 2005. The Second Series is also guaranteed by this
company.

On February 21, 2002, through Resolution No. 14123, the CNV authorized the
Global Program for the Issuance of Bonds of Pan American Energy LLC (Argentine
Branch) (the 'Global Program') in the total amount of US$ 1,000,000,000. These
bonds are also issued as 'Obligaciones Negociables' (negotiable obligations). On
April 16, 2002, the Branch issued under this Global Program its Bonds Class 1 in
the amount of US$ 20,400,000 becoming due in two years (April 16, 2004) at an
annual 7.5% rate. These Bonds were paid upon maturity. On October 17, 2002, the
Branch issued Bonds Class 2, Sub-Class A in the amount of US$ 500,000 and
Sub-Class B in the amount of US$ 15,000,000 under the Global Program. These
bonds became due in two years (October 17, 2004) and accrued interest at a 7%
rate p.a. These Bonds were paid upon maturity. The funds obtained in the issues
under the Global Program were allocated to the Branch's working capital.

On October 27, 2004, the Branch issued Bonds Class 3 in the amount of US$
100,000,000 under the Global Program for the Issuance of Bonds of Pan American
Energy LLC (Argentine Branch) which become due in five years (October 27, 2009)
with a 7.125% annual interest rate to be paid on a half-yearly basis. The price
of the issuance was 99.483% of the nominal value. The funds derived from this
issuance were allocated to investments in property, plant and equipment and
repayment of loans.

On August 9, 2006, the Branch issued Bonds Class 4 in the amount of US$
250,000,000 under the Global Program for the Issuance of Bonds of Pan American
Energy LLC (Argentine Branch), to be repaid in two equal installments becoming
due on February 9, 2011 and February 9, 2012, with interest accruing at a fixed
annual rate of 7.75% to be paid on a half-yearly basis. The price of the
issuance was 100.00% of the nominal value. The funds derived from this issuance
were allocated to investments in property, plant and equipment, working capital
and repayment of loans.

NOTE 6 - OTHER FINANCIAL LIABILITIES

Pan American Energy LLC (Argentine Branch) obtained the following loans at a
five-year term, with interest compounded bi-annually amortized in monthly
installments: 1) On July 20, 2001, in the amount of US$ 72,051,406, with
interest accruing at an annual rate of 7.54%, with the first installment falling
due on April 19, 2002 and the repayment term being completed on June 20, 2006,
and 2) on September 17, 2001, in the amount of US$ 40,001,944, with interest
accruing at an annual rate of 6.72%, with the first installment falling due on
June 20, 2002 and completing repayment on August 21, 2006.

For the purpose of fixing the interest rate, the Branch has entered into
integrated derivative transactions, the impact of which has been included in the
cost of the transactions. Both loans have been guaranteed by Pan American Energy
LLC until the repayment thereof in June and August 2006.

On July 11, 2005, the Branch obtained from the International Finance Corporation
(IFC) a loan in the amount of US$ 250,000,000 guaranteed by Head Office and
consisting of three tranches:

- 'A' in the amount of US$ 100,000,000, with interest accruing at an annual
fixed rate of 7.56%, through an interest rate swap with IFC, amortizable on a
six-month basis and becoming due in July 2015;

- 'B' in the amount of US$ 135,000,000, at an annual fixed rate of 6.97%,
through an interest rate swap with IFC, amortizable on a six-month basis, and
becoming due in July 2012, and

- 'C' in the amount of US$ 15,000,000, at an annual fixed base rate of 5.66%
plus additional interest calculated based on Head Office's economic performance,
becoming due in July 2016.

As of December 31, 2005, the total amount of loans has been fully disbursed.

The first principal installment for tranches 'A' and 'B' became due on January
15, 2007.

The funds obtained were used to partially fund the 2005 investment program in
Golfo San Jorge.

The Branch considers that it has an adequate access to credit lines to meet its
trade and financial obligations, even though its liquidity ratio is lower than
1.

NOTE 7 - ACCOUNT WITH HEAD OFFICE The changes in the account with Head Office
during the fiscal years ended December 31, 2006 and 2005 are as follows:

-0-
*T
                                                                                                Fiscal year ended
                                                                                          ------------------------------
                                                                                            12/31/2006      12/31/2005
                                                                                          --------------- --------------

Balance at beginning of year with Head Office                                               2,290,686,326  1,846,528,170
Adjustment to prior-year results (Note 3.2.m)                                              ( 229,088,577) ( 210,939,575)
                                                                                          --------------- --------------
Balance at beginning of year with Head Office subsequent to adjustment                      2,061,597,749  1,635,588,595

Exchange gains/losses (included in Financial Results provided by liabilities of the
 Statement of Income)                                                                                   -  ( 11,557,926)
Remittances made to Head Office - net                                                     (2,050,114,950) ( 648,654,555)
Contribution made by Head Office for the year (Note 8)                                                  -     21,779,007
Capital allocated to the Branch                                                                         -  ( 21,779,007)
Transfer of net income                                                                      1,645,037,122  1,086,221,635
                                                                                          --------------- --------------
Net changes for the year                                                                   ( 405,077,828)    426,009,154
                                                                                          --------------- --------------

Balance at year-end with
Head Office (1)                                                                             1,656,519,921  2,061,597,749
                                                                                          =============== ==============

(1) As of December 31, 2006 and December 31, 2005 balances are stated in local currency.
*T

NOTE 8 - CAPITAL ALLOCATED TO THE BRANCH

Pursuant to the Consent Action taken by the members on December 27, 2001, Pan
American Energy LLC allocated capital to the Branch in the amount of $
200,000,000. Such capital is registered with the Public Registry of Commerce. In
accordance with Consent Action dated February 1, 2005, Pan American Energy LLC
allocated capital to the Branch in the amount of $ 21,779,007. Such capital
contribution represents the contribution of assets and liabilities of the areas
Anticlinal Funes and Río Barrancas made by Head Office (Note 2, line 2) within
the scope of the corporate reorganization registered in the State of Delaware,
USA and in the Public Registry of Commerce of the City of Buenos Aires on
December 12, 2005 under number 2106, Book 58, Volume B of Foreign Companies.

NOTE 9 - TRANSACTIONS AND BALANCES WITH AFFILIATED COMPANIES

The transactions and balances with Pan American Energy LLC, the Branch's Head
Office, are disclosed in note 7.

The transactions and balances with affiliated companies are detailed below:

-0-
*T
                                          2006            2005
                                         ------          ------

TRANSACTIONS

 Pan American Continental S,R,L,
     Sales and recovery of expenses            -       15,558,481
 Pan American Fueguina S,A,
     Recovery of receivables                   -          126,888
     Purchases                             899,281             -
     Financing                         446,709,189             -
 Pan American Sur S,A,
     LPG loan                            8,181,231             -
 PAE E & P Bolivia Ltd,
     Purchases of goods and services           -          24,234
 PAE Oil & Gas Bolivia Ltd,
     Purchases of goods and services        52,482        10,622
 BP West Coast Products LLC
     Sales                            1,197,372,640 1,928,082,148
 BP America Production Company
     Services                             5,299,091     8,194,968


                                         12/31/2006     12/31/2005
                                        ------------   ------------
BALANCES

 Pan American Fueguina S,A,
     Accounts payable                     899,281        126,888
     Loans                            446,709,189              -
 Pan American Sur S,A,
      Accounts payable                  8,181,231              -
 PAE E & P Bolivia Ltd,
     Other receivables                    293,683       1,082,193
 PAE Oil & Gas Bolivia Ltd,
     Other receivables                    105,599          53,117
 BP West Coast Products LLC
     Accounts receivable                        -      238,250,029
 BP America Production Company
     Accounts payable                     896,899        2,307,632
*T

NOTE 10 - GUARANTEES AND OTHER COMMITMENTS

In terms of investment commitments, the Branch has not granted any guarantees as
of December 31, 2006. The terms agreed in certain loan agreements include
commitments assumed by the Branch referring to the maintenance of certain
indebtedness and debt service ratios and certain restrictions on the
distribution of dividends. As of December 31, 2006, the Branch complied with all
the commitments assumed in loan agreements.

The Branch signed the agreement entered into between producers and refineries on
January 2, 2003 for the stability of the prices of crude oil, gasoline and gas
oil (Resolution No. 85/2003 of the Energy Department), in force until April 30,
2004.

The Branch has complied with the quotas set forth in the crude oil agreement.
Such deliveries were stated at spot price upon carrying out the transaction,
giving rise to a receivable of $ $ 28,995,153 as of December 31, 2006, in favor
of the Branch, contingent on the decrease in the crude oil WTI price to an
amount lower than US$28.50 per barrel. The price thereof was US$ 61.15 as of
December 31, 2006.

On February 27, 2006 the Branch executed an agreement with Shell C.A.P.S.A.
whereby Shell agreed to pay the Branch a total negotiated price of $86.499.326
in connection with deliveries of crude oil made in 2003 and 2004 under the price
stabilization agreement referred to in the preceding paragraph, and $ 14,032,834
as interest accrued since each delivery. The Branch agreed to waive further
claims in connection with said deliveries. The related revenue was recognized in
the year ended December 31, 2006.

NOTE 11 - INCOME TAX The breakdown of the main deferred tax assets and
liabilities is as follows:

-0-
*T
                                                                                           12/31/2006      12/31/2005
                                                                                        ---------------- ---------------

Deferred tax assets
   Allowance for materials obsolescence                                                        1,002,446         846,977
   Inventories - materials and spare parts                                                             -         329,834
   Provision for future compensation to personnel                                              4,296,053       2,432,628
   Accrual for lawsuits                                                                        7,082,362       7,869,259
   Provision for environmental remediation                                                     9,835,326       2,112,951
   Other provisions and allowances                                                            18,174,616      10,452,004
   Accumulated tax loss carryforwards                                                                  -      16,183,519
                                                                                        ---------------- ---------------

Total deferred tax assets                                                                     40,390,803      40,227,172
                                                                                        ---------------- ---------------

Deferred tax liabilities
   Inventories - materials and spare parts                                                       962,248               -
   Property, plant and equipment                                                             458,338,264     459,441,253
   Other                                                                                      23,041,425      19,273,808
                                                                                        ---------------- ---------------

Total deferred tax liabilities                                                               482,341,937     478,715,061
                                                                                        ---------------- ---------------

Net deferred tax liabilities                                                                 441,951,134     438,487,889
                                                                                        ================ ===============
*T

-0-
*T
The total deferred tax liabilities relate to the following:

- deferred tax liabilities provided by the contribution of assets and liabilities made by Head
 Office (Note 8)                                                                                           -   1,432,764
- deferred tax liabilities provided by the Branch                                                441,951,134 437,055,125
                                                                                                 =========== -----------

  Total                                                                                          441,951,134 438,487,889
                                                                                                 =========== ===========
*T

The reconciliation between the income tax expense for the year and the
theoretical expense resulting from applying the prevailing tax rate to income
before tax is as follows:

-0-
*T
                                                                                                2006           2005
                                                                                           -------------- --------------


Net income before taxes                                                                     2,544,907,819  1,681,171,750

Prevailing tax rate                                                                                   35%            35%
                                                                                           -------------- --------------
Net income at prevailing tax rate                                                          ( 890,717,737) ( 588,410,113)

Permanent differences at the tax rate:
   Miscellaneous - net                                                                       ( 9,152,960)   ( 6,540,002)
                                                                                           -------------- --------------

Subtotal permanent differences at the tax rate                                               ( 9,152,960)   ( 6,540,002)
                                                                                           -------------- --------------

Income tax - total                                                                         ( 899,870,697) ( 594,950,115)
                                                                                           ============== ==============

Current income tax expense                                                                 ( 896,407,452) ( 609,797,133)

Deferred income tax benefit (expense)                                                        ( 3,463,245)     14,847,018
                                                                                           -------------- --------------

                                                                                           ( 899,870,697) ( 594,950,115)
                                                                                           ============== ==============
*T

NOTE 12 - RESTRICTED ASSETS In November 2006, the Branch collected a bank
deposit made in its own name as a collateral for a loan from a foreign bank in
fiscal year 2003. Such bank deposit amounted to US$ 2,505,878 as of December 31,
2005.

In May 2005, the Branch made a bank deposit in its own name as a collateral for
a loan from a foreign bank. The balance of the deposit was US$ 1,764,705 as of
December 31, 2006 and 2005.

Four generators were pledged in the amount of US$ 13,985,376 as a collateral for
outstanding accounts payable as of December 31, 2006 and 2005 in the amount of
US$ 1,362,702 and US$ 5,716,960, respectively.

There are no other restricted assets.

NOTE 13 - INFORMATION ON LITIGATION AND OTHER SUPPLEMENTARY MATTERS

Lawsuits were filed against the Branch, particularly with courts in labor and
commercial matters. Based on the information available, the Legal Representative
of the Branch on the basis of the opinion of legal counsel considers that the
contingent liability that might arise from such lawsuits would not have a
material adverse effect on the financial position of the Branch or the results
of its operations.

NOTE 14 - SUBSEQUENT EVENTS

No events or transactions have occurred between December 31, 2006 and the date
of issuance of these financial statements that would have a material effect on
the financial position of the Branch or the results of its operations as of that
date.

EXHIBIT A

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

PROPERTY, PLANT AND EQUIPMENT (in pesos) as of December 31, 2006 and December
31, 2005

-0-
*T
                                                                              Original value
                                                  ----------------------------------------------------------------------


                                                                                              Decreases
                                                                                                for the
                                                   At beginning  Increases for                    year
                  Main account                       of year        the year      Transfers                At year-end
------------------------------------------------- -------------- ------------- -------------------------- --------------


Land and buildings                                    41,790,165     2,356,994       9,755,044         -      53,902,203
Plants, wells and exploration and
production facilities                             10,590,679,855    99,298,958   1,374,665,19019,272,564  12,045,371,439
Furniture and fixtures                                 8,075,589             -          15,056         -       8,090,645
Equipment                                            104,806,729         6,561      25,713,616         -     130,526,906
Vehicles                                              28,564,843        39,418       8,922,505   208,685      37,318,081
Work in progress                                     417,946,801 1,572,969,034 (1,380,438,758)         -     610,477,077
Advances to suppliers                                 23,210,178    39,462,540   ( 38,632,653)         -      24,040,065
                                                  -------------- ------------- -------------------------  --------------

Total as of 12/31/2006                            11,215,074,160 1,714,133,505               -19,481,249  12,909,726,416
                                                  ============== ============= =========================  ==============

Total as of 12/31/2005                             9,973,486,390 1,253,752,672               -12,164,902  11,215,074,160
                                                  ============== ============= =========================  ==============

                                                            Depreciation
                                         ---------------------------------------------------
                                          Accumulated                           Accumulated
                                         at beginning                               at
              Main account                  of year       Increases Decreases    year-end
---------------------------------------- ------------- ------------ ---------- -------------
                                                            (1) (2)

Land and buildings                          22,865,571    2,315,917          -    25,181,488
Plants, wells and exploration and
production facilities                    6,280,951,714  615,759,826 16,038,333 6,880,673,207
Furniture and fixtures                       7,765,827      129,861          -     7,895,688
Equipment                                   86,743,376   15,707,201          -   102,450,577
Vehicles                                    18,953,499    4,265,013    181,212    23,037,300
Work in progress                                     -            -          -             -
Advances to suppliers                                -            -          -             -
                                         ------------- ------------ ---------- -------------

Total as of 12/31/2006                   6,417,279,987  638,177,818 16,219,545 7,039,238,260
                                         ============= ============ ========== =============

Total as of 12/31/2005                   5,843,746,089  575,601,999  2,068,101 6,417,279,987
                                         ============= ============ ========== =============


                                                                                                  Net           Net
                                                                                                 as of         as of
                                        Main account                                           12/31/06      12/31/05
-------------------------------------------------------------------------------------------- ------------- -------------


Land and buildings                                                                              28,720,715    18,924,594
Plants, wells and exploration and
production facilities                                                                        5,164,698,232 4,309,728,141
Furniture and fixtures                                                                             194,957       309,762
Equipment                                                                                       28,076,329    18,063,353
Vehicles                                                                                        14,280,781     9,611,344
Work in progress                                                                               610,477,077   417,946,801
Advances to suppliers                                                                           24,040,065    23,210,178
                                                                                             ------------- -------------

Total as of 12/31/2006                                                                       5,870,488,156
                                                                                             =============

Total as of 12/31/2005                                                                                     4,797,794,173
                                                                                                           =============
*T

-0-
*T

(1)  See Exhibit G.
(2)  See depreciation policies in Note 3.2.f.
*T

EXHIBIT B

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) INTANGIBLE ASSETS (in pesos) as of
December 31, 2006 and December 31, 2005

-0-
*T

*T

-0-
*T
                                                                                    Original values
                                                                --------------------------------------------------------
                                                                 At beginning   Increases for  Decreases for
                         Main account                              of year        the year        the year   At year end
--------------------------------------------------------------- -------------- --------------- ------------- -----------

Pre-operating expenses and dry wells                                48,740,915               -             -  48,740,915
Acquisition cost of blocks                                           6,487,247               -             -   6,487,247
Deferred expenditures                                               63,070,921         417,106             -  63,488,027
                                                                -------------- --------------- ------------- -----------

Total as of 12/31/2006                                             118,299,083         417,106             - 118,716,189
                                                                ============== =============== ============= ===========

Total as of 12/312005                                              117,521,784       1,297,879       520,580 118,299,083
                                                                ============== =============== ============= ===========

                                                                                      Amortization
                                                                 -------------------------------------------------------
                                                                  Accumulated at                Decreases
                                                                   beginning of                  for the   Accumulated
                          Main account                                  year       For the year    year    at year-end
---------------------------------------------------------------- ----------------- ------------ --------- --------------
                                                                                        (1) (2)
Pre-operating expenses and dry wells                                    48,017,778      283,191         -     48,300,969
Acquisition cost of blocks                                               5,513,300      763,529         -      6,276,829
Deferred expenditures                                                   61,051,285    1,168,339         -     62,219,624
                                                                 ----------------- ------------ --------- --------------

Total as of 12/31/2006                                                 114,582,363    2,215,059         -    116,797,422
                                                                 ================= ============ ========= ==============

Total as of 12/312005                                                  112,803,984    2,298,959   520,580    114,582,363
                                                                 ================= ============ ========= ==============



                              Main account                                Net as of 12/31/06      Net as of 12/31/05
------------------------------------------------------------------------ --------------------- -------------------------

Pre-operating expenses and dry wells                                                   439,946                   723,137
Acquisition cost of blocks                                                             210,418                   973,947
Deferred expenditures                                                                1,268,403                 2,019,636
                                                                         --------------------- -------------------------

Total as of 12/31/2006                                                               1,918,767
                                                                         =====================

Total as of 12/312005                                                                                          3,716,720
                                                                                               =========================
*T

-0-
*T

(1)  See Exhibit G.
(2)  See depreciation policies in Note 3.2.f.
*T

EXHIBIT C

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) OTHER INVESTMENTS (in pesos) as of
December 31, 2006 and December 31, 2005

-0-
*T
                                                                                        Amount             Amount
                                                                                       recorded           recorded
             Main account                                                             12/31/2006         12/31/2005
--------------------------------------------------------------------------------- ------------------- -----------------

Short-term investments

Mutual funds in foreign currency (Exhibit F)                                              215,056,665       374,163,381

   Class: Citi Institutional Liquid Reserves
   Amount: 71,163,688 units
   Quoted value: US$ 1
         (US dollar)

                                                                                  ------------------- -----------------

         Total short-term investments                                                     215,056,665       374,163,381
                                                                                  ------------------- -----------------


Long-term investments

Government securities:
   Bonos de la República Argentina - discount bonds
   in pesos 5.83% final maturity in 2033
   Amount: 4,821,350
   Face value: $ 1
         Quoted value: $ 1.455                                                              7,015,064         5,689,193
   GDP coupon in pesos
   Amount: 14,306,676
   Face value: $ 1
         Quoted value: $ 0.1190                                                             1,702,494                 -

Shares:
   Garantizar S.A.
   Number: 2000
   Class: B
         Face value: $ 1                                                                        2,000             2,000
                                                                                  ------------------- -----------------

         Total long-term investments                                                        8,719,558         5,691,193
                                                                                  ------------------- -----------------

         Total investments                                                                223,776,223       379,854,574
                                                                                  =================== =================
*T

EXHIBIT D

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) ALLOWANCES, PROVISIONS AND ACCRUALS
(in pesos) as of December 31, 2006 and December 31, 2005

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*T
                                                 Balances at
                                                 beginning of      Increases for      Decreases for      Balances as of
               Main account                          year             the year           the year           12/31/06
------------------------------------------- ---------------------- --------------     -------------     ----------------

Deducted from current assets:

Allowance for bad debtors in local
currency                                                 3,547,930      1,537,807 (1)       102,721 (2)        4,983,016
Allowance for bad debtors in foreign
currency                                                12,236,893      2,012,560 (1)       219,594 (2)       14,029,859
Allowance for obsolescence of
materials                                                2,419,934        502,300 (3)        58,104 (2)        2,864,130
                                            ---------------------- --------------     -------------     ----------------

Total deducted from assets                              18,204,757      4,052,667           380,419           21,877,005
                                            ====================== ==============     =============     ================

Included in current liabilities:

Provision for future compensation
to personnel                                             1,841,405        127,003 (4)             -            1,968,408
                                            ---------------------- --------------     -------------     ----------------

Subtotal current liabilities                             1,841,405        127,003                 -            1,968,408
                                            ---------------------- --------------     -------------     ----------------

Included in non current liabilities:

Accrual for lawsuits                                    22,152,066      4,042,257 (5)     6,290,537 (6)       19,903,786
Provision for environmental
remediation                                            100,386,197     23,408,806 (7)     1,241,753 (2)      122,553,250
Provision for future compensation
to personnel                                             4,704,049      7,395,291 (8)     2,302,322 (9)        9,797,018
                                            ---------------------- --------------     -------------     ----------------

Subtotal non current liabilities                       127,242,312     34,846,354         9,834,612          152,254,054
                                            ---------------------- --------------     -------------     ----------------

Total included in liabilities                          129,083,717     34,973,357         9,834,612          154,222,462
                                            ====================== ==============     =============     ================

(1) Charges for the year. Included in Administrative Expenses of the Statement of Income (See Exhibit G)
(2) Recoveries for the year.
(3) Charges for the year. Included in Cost of Sales of the Statement of Income (See Exhibit G).
(4) Transfer from the non current provision for future compensation to personnel.
(5) Charges for the year. It is made up of $ 3,502,488 included in Production Costs (See Exhibit G), $ 410,796 included
 in Administrative Expenses (see Exhibit G) and $ 128,973 arising from Exchange gains/losses included in Financial
 Results provided by liabilities of the Statement of Income.
(6) It is made up of payments made in the year in the amount of $ 859,383 and recoveries for the year in the amount of $
 5,431,154.
(7) Charges for the year. It is made up of $ 5,720,113 included in Financial Results provided by liabilities of the
 Statement of Income and $ 17,688,693 included in Property, plant and equipment.
(8) Charges for the year. Included in Other Income and Expenses of the Statement of Income.
(9) Made up of compensations paid during the year in the amount of $ 2,175,319 and the transfer referred to in line 4
 above in the amount of $ 127,003.
*T

EXHIBIT E

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) COST OF SALES (in pesos) For the year
beginning January 1, 2006 and ended December 31, 2006, comparative with the
prior year

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*T
                                                                                                2006           2005
                                                                                           -------------- --------------


Inventories at the beginning of the year                                                      104,612,667     82,192,971

Purchases                                                                                     231,050,230    192,616,666

Production costs (Exhibit G)                                                                2,151,344,603  1,550,545,556

Inventories at year-end                                                                    ( 114,837,226) ( 104,612,667)
                                                                                           -------------- --------------

Cost of sales                                                                               2,372,170,274  1,720,742,526
                                                                                           ============== ==============
*T

EXHIBIT F

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) ASSETS AND LIABILITIES IN FOREIGN
CURRENCY as of December 31, 2006 and December 31, 2005

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*T

                                                                            Amount in    Amount and type     Amount in
                                                                           Argentine             of         Argentine
                                    Amount and type of      Prevailing     currency as  foreign currency    currency as
                                  foreign currency as of      exchange          of             as of             of
              Item                       12/31/2006             rate       12/31/2006       12/31/2005      12/31/2005
-------------------------------- ------------------------- -------------- ------------- ------------------ -------------
                                         US$         Euros              $           (1)     US$      Euros           (2)
ASSETS

CURRENT ASSETS

Cash on hand and in banks
  Cash on hand                                     - 4,370          3.986        17,419            - 4,200        14,865
                                              71,245                3.022       215,303       89,265             267,081
  Cash in banks
    Domestic                                   3,472                3.022        10,491        2,638               7,893
    Foreign                                3,138,368                3.022     9,484,147    1,540,043           4,607,809

Investments
  Foreign mutual funds                    71,163,688                3.022   215,056,665  125,054,606         374,163,381

Accounts receivable
      Domestic                           106,460,311                3.022   321,723,060   74,788,050         223,765,845
  Foreign                                119,506,796                3.022   361,149,538    9,529,223          28,511,433
  Foreign affiliated companies                     -                    -             -   79,629,020         238,250,029
       Allowances for bad
        debtors                         ( 4,642,574)                3.022 ( 14,029,859) ( 4,089,871)       ( 12,236,893)

Other receivables
      Expenses recoverable -
       foreign                               425,037                3.022     1,284,463      689,599           2,063,279
      Tax credit certificate                       -                    -             -   12,361,402          36,985,316
      Miscellaneous - domestic             2,675,304                3.022     8,084,768    2,903,281           8,686,614
      Miscellaneous - foreign              6,600,871                3.022    19,947,831    8,995,881          26,915,674
      Foreign affiliated
       companies                             132,125                3.022       399,282      379,448           1,135,310

Inventories
  Advances to suppliers -
  Foreign                                     93,245                3.022       281,786      480,647           1,438,095
                                                                          -------------                    -------------

      Total current assets                                                  923,624,894                      934,575,731
                                                                          -------------                    -------------

NON CURRENT ASSETS

Other receivables
      Miscellaneous - domestic             4,641,053                3.022    14,025,263    5,392,323          16,133,829
                                                                          -------------                    -------------

      Total non current assets                                               14,025,263                       16,133,829
                                                                          -------------                    -------------

      Total assets                                                          937,650,157                      950,709,560
                                                                          =============                    =============

US$ = United States dollars
(1) As per buyer exchange rate as of December 31, 2006.
(2) As per buyer exchange rate as of December 31, 2005.
*T

EXHIBIT F

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) ASSETS AND LIABILITIES IN FOREIGN
CURRENCY as of December 31, 2006 and December 31, 2005

-0-
*T
                Item                 Amount and type of    Prevailing     Amount in     Amount and type of   Amount in
                                      foreign currency      exchange      Argentine     foreign currency    Argentine
                                      as of 12/31/2006        rate         currency     as of 12/31/2005      currency
                                                                          12/31/2006                        12/31/2005
------------------------------------ ------------------- -------------- -------------- ------------------- -------------
                                             US$                      $            (1)         US$                   (2)
LIABILITIES

CURRENT LIABILITIES

Accounts payable
  Trade - domestic                            37,552,721          3.062    114,986,434          47,080,435   142,747,880
  Trade - foreign                             17,072,909          3.062     52,277,247           6,019,779    18,251,968
  Affiliated companies - domestic              2,965,550          3.062      9,080,512              41,850       126,888
  Affiliated companies - foreign                 292,913          3.062        896,899             761,092     2,307,632

Loans
  Bonds - Foreign                            100,000,000          3.062    306,200,000                   -             -
  Secured notes payable -
        Foreign                                1,362,702          3.062      4,172,593           4,354,259    13,202,113
  Unsecured notes payable -
    Foreign                                   73,842,446          3.062    226,105,569          60,243,932   182,659,601
       Interest accrued from
  bonds and notes payable - Foreign           21,386,973          3.062     65,486,912          14,713,055    44,609,982
                                                                        --------------                     -------------

  Total current liabilities                                                779,206,166                       403,906,064
                                                                        --------------                     -------------

NON CURRENT LIABILITIES

Accounts payable
  Miscellaneous liabilities -
   domestic                                    2,747,698          3.062      8,413,450                   -             -
  Miscellaneous liabilities -
   foreign                                     5,510,148          3.062     16,872,072           5,510,148    16,706,768

Loans
  Bonds -
    Foreign                                  350,000,000          3.062  1,071,700,000         200,000,000   606,400,000
  Secured notes payable -
    Foreign                                            -              -              -           1,362,702     4,131,712
  Unsecured notes payable -
    Foreign                                  244,034,550          3.062    747,233,793         288,553,759   874,894,998
                                                                        --------------                     -------------

  Total non current liabilities                                          1,844,219,315                     1,502,133,478
                                                                        --------------                     -------------

  Total liabilities                                                      2,623,425,481                     1,906,039,542
                                                                        ==============                     =============

US$ = United States dollars
(2) As per seller exchange rate as of December 31, 2005.
(1) As per seller exchange rate as of December 31, 2006.
*T

EXHIBIT G

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

INFORMATION REQUIRED BY ART. 64, CLAUSE 1b) OF LAW 19550, for the year beginning
January 1, 2006 and ended December 31, 2006, comparative with the prior year (in
pesos)

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*T
                                                                 Production   Administrative
  Items                                                             costs        expenses      Total 2006    Total 2005
--------------------------------------------------------------- ------------- -------------- ------------- -------------

Fees and compensation for services                                  7,985,098     11,098,801    19,083,899    17,803,331
Salaries, wages and benefits to
personnel                                                         101,367,908     36,482,059   137,849,967    99,956,544
Social security contributions                                      11,949,650      7,424,820    19,374,470    10,116,515
Taxes, assessments and other contributions                        747,992,287    116,826,764   864,819,051   466,471,514
Depreciation of property, plant and equipment (Exhibit A)         633,784,176      4,393,642   638,177,818   575,601,999
Intangible asset amortization (Exhibit B)                           2,215,059              -     2,215,059     2,298,959
Transportation, freight and storage expenses                       90,794,902         22,335    90,817,237    60,849,709
Contracted services                                               369,629,305        657,223   370,286,528   297,101,364
Travel and accommodation expenses                                   5,193,013      7,355,771    12,548,784     9,437,892
Building rentals and maintenance                                      788,102     10,992,714    11,780,816     8,016,864
Environmental remediation                                          11,992,347              -    11,992,347     6,775,743
Bad debtors (Exhibit D)                                                     -      3,550,367     3,550,367     8,132,301
Lawsuits (Exhibit D)                                                3,502,488        410,796     3,913,284     1,335,134
Obsolescence of materials (Exhibit D)                                 502,300              -       502,300       477,340
Production, exploration and administrative
  general expenses                                                163,647,968     13,476,822   177,124,790   135,287,625
                                                                ------------- -------------- ------------- -------------

Total 2006                                                      2,151,344,603    212,692,114 2,364,036,717
                                                                ============= ============== =============

Total 2005                                                      1,550,545,556    149,117,278               1,699,662,834
                                                                ============= ==============               =============
*T

EXHIBIT H

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) Balance sheet as of December 31, 2006
and December 31, 2005

TERMS, INTEREST RATES AND ADJUSTMENT CLAUSES OF SHORT-TERM INVESTMENTS, LOANS,
RECEIVABLES AND PAYABLES (in pesos)

-0-
*T
                                                                    Investments                    Receivables
                                                           ------------------------------ ------------------------------
                                                              12/31/2006     12/31/2005       12/31/2006     12/31/2005
                                                           ---------------- ------------- ------------------ -----------

Total amount without an established term                      (1) 1,704,494         2,000     (3) 61,217,175 105,728,106

To become due:

Up to 3 months                                                  215,056,665   374,163,381        821,770,799 643,548,180
From 3 to 6 months                                                        -             -          1,780,744   2,221,420
From 6 to 9 months                                                        -             -          1,087,619   1,329,307
From 9 to 12 months                                                       -             -            697,929  14,295,203
From 1 to 2 years                                                         -             -          2,814,716   3,636,492
From 2 to 3 years                                                         -             -            903,215     467,666
From 3 to 4 years                                                         -             -            491,328     222,071
From 4 to 5 years                                                         -             -            332,877      90,892
From 5 to 6 years                                                         -             -             59,678      30,993
From 6 to 7 years                                                         -             -                  -           -
From 7 to 8 years                                                         -             -                  -           -
From 8 to 9 years                                                         -             -                  -           -
From 9 to 10 years                                                        -             -                  -           -
From 10 to 11 years                                                       -             -                  -           -
Over 11 years                                                 (2) 7,015,064 (2) 5,689,193                  -           -
                                                           ---------------- ------------- ------------------ -----------
Subtotal                                                        223,776,223   379,854,574        891,156,080 771,570,330

Other items that are not to be collected or paid in cash                  -             -         12,183,347   2,996,588
                                                           ---------------- ------------- ------------------ -----------

Total                                                           223,776,223   379,854,574        903,339,427 774,566,918
                                                           ================ ============= ================== ===========

                                                                          Payables                      Loans
                                                                ---------------------------- ---------------------------
                                                                  12/31/2006    12/31/2005    12/31/2006    12/31/2005
                                                                -------------- ------------- ------------- -------------

Total amount without an established term                           703,702,130   657,214,133             -             -

To become due:

Up to 3 months                                                     746,810,041   543,420,481   793,674,710   437,960,556
From 3 to 6 months                                                 391,765,651   288,497,381    12,719,548    49,782,408
From 6 to 9 months                                                     492,102       460,351    59,108,848    33,709,776
From 9 to 12 months                                                 22,356,302     5,699,851    11,519,244    24,983,680
From 1 to 2 years                                                      215,609       190,682   614,032,179   494,086,030
From 2 to 3 years                                                            -             -   420,959,321   165,683,640
From 3 to 4 years                                                            -             -   111,306,762   365,062,888
From 4 to 5 years                                                            -             -   485,663,820   110,216,232
From 5 to 6 years                                                            -             -   485,663,820   101,905,520
From 6 to 7 years                                                            -             -    34,018,820   101,905,520
From 7 to 8 years                                                            -             -    34,018,820    33,685,520
From 8 to 9 years                                                            -             -    34,049,440    33,685,520
From 9 to 10 years                                                           -             -    45,930,000    33,715,840
From 10 to 11 years                                                          -             -             -    45,480,000
Over 11 years                                                                -             -             -             -
                                                                -------------- ------------- ------------- -------------
Subtotal                                                         1,865,341,835 1,495,482,879 3,142,665,332 2,031,863,130

Other items that are not to be collected or paid in cash                     -             -             -             -
                                                                -------------- ------------- ------------- -------------

Total                                                            1,865,341,835 1,495,482,879 3,142,665,332 2,031,863,130
                                                                ============== ============= ============= =============
*T

-0-
*T

(1) It includes $ 1,702,494 relating to GDP coupons in pesos. The
    government securities linked to the GDP become due on 12/31/2035.
    However, in the event a certain GDP rate growth is exceeded in the
    country, the bondholders shall be entitled to annual payments.
(2) It is amortized as from 06/30/2024 in 20 semiannual installments
    (on 06/30 and 12/31 of each year), the final maturity of which is
    on 12/31/2033.
(3) It includes the overdue receivables detailed in item 3.a of the
    supplementary information.
*T

EXHIBIT H PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) Balance sheet as of
December 31, 2006 and December 31, 2005 TERMS, INTEREST RATES AND ADJUSTMENT
CLAUSES OF SHORT-TERM INVESTMENTS, LOANS, RECEIVABLES AND PAYABLES (in pesos)

-0-
*T
                                                            Investments                          Receivables
                                              --------------------------------------- ----------------------------------
                                                    12/31/2006          12/31/2005       12/31/2006       12/31/2005
                                              ---------------------- ---------------- ---------------- -----------------
                                                 Rate         Pesos  Rate      Pesos  Rate      Pesos  Rate       Pesos
                                              ---------- ----------- ---- ----------- ---- ----------- ----- -----------

Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           -    -           -     -           -
Annual fixed rate in US$                               -           -    -           - 8,00   2,362,909  8,00   7,870,836
Annual fixed rate in $                                 -           -    -           -    -           - 11,00  48,000,000
Average annual variable rate in $                      -           -    -           - 8,00   7,906,016  8,00   4,568,565
Average annual variable rate in $                      -           -    -           -    -           -     -           -
Average annual variable rate in US$                    -           -    -           -    -           -     -           -
Annual variable rate in US$                         5,26 215,056,665 4,20 374,163,381 4,50      28,574  4,50      42,858
Annual fixed rate in $ plus CER                     5,83   7,015,064 5,83   5,689,193    -           -     -           -
Non-interest bearing                                   -   1,704,494    -       2,000    - 893,041,928     - 714,084,659
                                                         -----------      -----------      -----------       -----------

Total                                                    223,776,223      379,854,574      903,339,427       774,566,918
                                                         ===========      ===========      ===========       ===========

                                         Receivables                                       Loans
                          ------------------------------------------ --------------------------------------------------
                              12/31/2006            12/31/2005              12/31/2006               12/31/2005
                          ------------------- ---------------------- ------------------------ -------------------------
                          Rate        Pesos   Rate          Pesos    Rate            Pesos     Rate            Pesos
                          ---- -------------- ----- ---------------- ----- ------------------ ------ ------------------

Annual fixed rate in US$     -              -     -                -  6,75        306,200,000   6,75        303,200,000
Annual fixed rate in US$     -              -     -                - 7,125        306,200,000  7,125        303,200,000
Annual fixed rate in US$     -              -     -                -     -                  -   7,50          5,356,586
Annual fixed rate in US$     -              -     -                -  7,00          4,172,594   7,00         11,977,240
Annual fixed rate in US$     -              -     -                -     -                  -   7,54         22,278,132
Annual fixed rate in US$     -              -     -                -     -                  -   6,72         16,843,633
Annual fixed rate in US$     -              -     -                -  5,45          5,565,507   5,45          9,252,848
Annual fixed rate in US$     -              -     -                -  6,18            187,272   6,18            309,064
Annual fixed rate in US$     -              -     -                -     -                  -   7,60         66,704,000
Annual fixed rate in US$     -              -     -                -  7,56        306,200,000   7,56        303,200,000
Annual fixed rate in US$     -              -     -                -  6,97        413,370,000   6,97        409,320,000
Annual fixed rate in US$     -              -     -                -  5,66         45,930,000   5,66         45,480,000
Annual fixed rate in US$     -              -     -                -  8,00         30,620,000   8,00         30,320,000
Annual fixed rate in US$     -              -     -                -  5,00         76,550,000      -                  -
Annual fixed rate in US$     -              -  4,00        9,839,552  7,75        765,500,000      -                  -
Annual fixed rate in $       -              -     -                -     -                  -      -                  -
Average annual variable
 rate in $                   -              -     -                -  7,78        275,057,276   7,51        305,964,724
Average annual variable
 rate in $                                  -     -                - 10,25        446,709,189      -                  -
Average annual variable
 rate in US$                 -              -     -                -  6,48         94,916,582   5,54        153,846,921
Annual variable rate in
 US$                         -              -     -                -     -                  -      -                  -
Annual fixed rate in $
 plus CER                    -              -     -                -     -                  -      -                  -
Non-interest bearing         -  1,865,341,835     -    1,485,643,327     -                  -      -                  -
                               --------------       ----------------       ------------------        ------------------

Total                           1,865,341,835          1,495,482,879        (1) 3,077,178,420         (1) 1,987,253,148
                               ==============       ================       ==================        ==================
*T

-0-
*T

(1) It only includes principal at face value.
*T

EXHIBIT I

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) Balance sheet as of December 31, 2006
and December 31, 2005 PARTICIPATION IN JOINT VENTURES (in pesos)

-0-
*T


                                        Lindero          Lindero                       Aguada
                                       Atravesado       Atravesado   Aguada Pichana    Pichana   San Roque   San Roque
                                         62.50%           62.50%         18.18%        18.18%      16.47 %     16.47 %
Balance sheet                           12/31/2006      12/31/2005      12/31/2006    12/31/2005  12/31/2006  12/31/2005
----------------------------------- ----------------- -------------- --------------- ----------- ----------- -----------


ASSETS
-----------------------------------
CURRENT ASSETS
-----------------------------------
Cash on hand and in banks                       8,006         25,794         132,325     109,965      46,796      74,588
Other receivables                             885,345      1,330,694       1,608,315   1,535,137      27,819     841,192
Inventories                                 5,608,560      5,737,494      10,779,553  21,104,717   8,325,385   4,346,767
                                    ----------------- -------------- --------------- ----------- ----------- -----------

Total current assets                        6,501,911      7,093,982      12,520,193  22,749,819   8,400,000   5,262,547
                                    ----------------- -------------- --------------- ----------- ----------- -----------

NON CURRENT ASSETS
-----------------------------------
Property, plant and equipment             100,752,309     88,332,865     210,261,214 160,476,554 211,498,427 170,692,555
Intangible assets                                   -              -           8,059      24,184           -           -
                                    ----------------- -------------- --------------- ----------- ----------- -----------

Total non current assets                  100,752,309     88,332,865     210,269,273 160,500,738 211,498,427 170,692,555
                                    ----------------- -------------- --------------- ----------- ----------- -----------

Total assets                              107,254,220     95,426,847     222,789,466 183,250,557 219,898,427 175,955,102
                                    ================= ============== =============== =========== =========== ===========



                                                                         Estancia    Estancia La
                                                Acambuco    Acambuco   La Escondida   Escondida  Bandurria   Bandurria
                                                 52.00 %     52.00 %      25.00%       25.00%      18.18%      18.18%
Balance sheet                                   12/31/2006  12/31/2005   12/31/2006   12/31/2005  12/31/2006  12/31/2005
---------------------------------------------- ----------- ----------- ------------- ----------- ----------- -----------


ASSETS
----------------------------------------------
CURRENT ASSETS
----------------------------------------------
Cash on hand and in banks                          681,589   1,631,159         1,384     188,621      88,614      88,335
Other receivables                                2,503,876   1,546,694       395,342     123,516      31,301     207,412
Inventories                                      1,881,612   2,844,356        76,352     181,101           -           -
                                               ----------- ----------- ------------- ----------- ----------- -----------

Total current assets                             5,067,077   6,022,209       473,078     493,238     119,915     295,747
                                               ----------- ----------- ------------- ----------- ----------- -----------

NON CURRENT ASSETS
----------------------------------------------
Property, plant and equipment                  599,158,484 493,183,604     5,090,205   5,627,729   4,519,810           -
Intangible assets                                        -       1,112       210,418     973,947           -           -
                                               ----------- ----------- ------------- ----------- ----------- -----------

Total non current assets                       599,158,484 493,184,716     5,300,623   6,601,676   4,519,810           -
                                               ----------- ----------- ------------- ----------- ----------- -----------

Total assets                                   604,225,561 499,206,925     5,773,701   7,094,914   4,639,725     295,747
                                               =========== =========== ============= =========== =========== ===========


                                                   Costa       Costa       Costa       Costa
                                                   Afuera      Afuera      Afuera      Afuera
                                                  Argentina   Argentina   Argentina   Argentina  Anticlinal  Anticlinal
                                                  Bloque 40   Bloque 40   Bloque 46   Bloque 46     Funes       Funes
                                                   50.00%      50.00%      50.00%      50.00%      80.00%      80.00%
Balance sheet                                     12/31/2006  12/31/2005  12/31/2006  12/31/2005  12/31/2006  12/31/2005
------------------------------------------------ ----------- ----------- ----------- ----------- ----------- -----------


ASSETS
------------------------------------------------
CURRENT ASSETS
------------------------------------------------
Cash on hand and in banks                                  -           -           -           -       1,644       4,620
Other receivables                                     65,562      26,980      29,264      26,980   1,087,844     561,302
Inventories                                                -           -           -           -           -           -
                                                 ----------- ----------- ----------- ----------- ----------- -----------

Total current assets                                  65,562      26,980      29,264      26,980   1,089,488     565,922
                                                 ----------- ----------- ----------- ----------- ----------- -----------

NON CURRENT ASSETS
------------------------------------------------
Property, plant and equipment                     11,175,237  11,175,237     588,337     588,337   2,262,167   4,759,282
Intangible assets                                          -           -           -           -           -           -
                                                 ----------- ----------- ----------- ----------- ----------- -----------

Total non current assets                          11,175,237  11,175,237     588,337     588,337   2,262,167   4,759,282
                                                 ----------- ----------- ----------- ----------- ----------- -----------

Total assets                                      11,240,799  11,202,217     617,601     615,317   3,351,655   5,325,204
                                                 =========== =========== =========== =========== =========== ===========
*T

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

Balance sheet as of December 31, 2006 and December 31, 2005 PARTICIPATION IN
JOINT VENTURES (in pesos)

-0-
*T


                                             Lindero      Lindero       Aguada       Aguada
                                             Atravesado   Atravesado    Pichana      Pichana    San Roque    San Roque
                                              62.50%       62.50%       18.18%       18.18%       16.47%       16.47%
Balance sheet                                12/31/2006   12/31/2005   12/31/2006   12/31/2005   12/31/2006   12/31/2005
------------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------

LIABILITIES
------------------------------------------
CURRENT LIABILITIES
------------------------------------------
Accounts payable                              3,103,235    2,783,143   39,892,511   15,439,407   14,087,777   11,671,186
Payroll and social security contributions       500.717      461,536            -            -            -            -
Taxes payable                                    85,849       20,123            -            -      307,032            -
                                           ------------ ------------ ------------ ------------ ------------ ------------

Total current liabilities                     3.689.801    3,264,802   39,892,511   15,439,407   14,394,809   11,671,186
                                           ------------ ------------ ------------ ------------ ------------ ------------

NON CURRENT LIABILITIES
-------------------------------------------
Accounts payable                              2,036,355    1,115,984      219,132      219,132      876,528      876,528
Provision for environmental remediation       9.177.151    3,890,123    3,737,323    2,584,332    7,186,139    5,915,268
Accruals                                      5,137,832    2,489,331      365,027      271,113      325,076      212,049
                                           ------------ ------------ ------------ ------------ ------------ ------------

Total non current liabilities                16.351.338    7,495,438    4,321,482    3,074,577    8,387,743    7,003,845
                                           ------------ ------------ ------------ ------------ ------------ ------------

Total liabilities                            20,041,139   10,760,240   44,213,993   18,513,984   22,782,552   18,675,031
                                           ------------ ------------ ------------ ------------ ------------ ------------

Owner's equity                               87,213,081   84,666,607  178,575,473  164,736,573  197,115,875  157,280,071
                                           ------------ ------------ ------------ ------------ ------------ ------------

Total                                       107,254,220   95,426,847  222,789,466  183,250,557  219,898,427  175,955,102
                                           ============ ============ ============ ============ ============ ============



                                                                    Estancia La  Estancia La
                                           Acambuco     Acambuco     Escondida    Escondida    Bandurria     Bandurria
                                            52.00%       52.00%       25.00%       25.00%        18.18%        18.18%
Balance sheet                              12/31/2006   12/31/2005   12/31/2006   12/31/2005    12/31/2006    12/31/2005
---------------------------------------  ------------ ------------ ------------ ------------ ------------- -------------

LIABILITIES
---------------------------------------
CURRENT LIABILITIES
---------------------------------------
Accounts payable                           71,445,119   21,357,795      250,581    1,319,261       823,060             -
Payroll and social security
 contributions                                574,386    1,071,545            -            -             -             -
Taxes payable                                 899,221      259,774       95,443       61,709             -         2,000
                                         ------------ ------------ ------------ ------------ ------------- -------------

Total current liabilities                  72,918,726   22,689,114      346,024    1,380,970       823,060         2,000
                                         ------------ ------------ ------------ ------------ ------------- -------------

NON CURRENT LIABILITIES
----------------------------------------
Accounts payable                            1,521,884      907,017            -            -             -             -
Provision for environmental remediation     2,928,406    2,071,144       92,200      155,596             -             -
Accruals                                    2,098,309    7,565,318            -            -             -             -
                                         ------------ ------------ ------------ ------------ ------------- -------------

Total non current liabilities               6,548,599   10,543,479       92,200      155,596             -             -
                                         ------------ ------------ ------------ ------------ ------------- -------------

Total liabilities                          79,467,325   33,232,593      438,224    1,536,566       823,060         2,000
                                         ------------ ------------ ------------ ------------ ------------- -------------

Owner's equity                            524,758,236  465,974,332    5,335,477    5,558,348     3,816,665       293,747
                                         ------------ ------------ ------------ ------------ ------------- -------------

Total                                     604,225,561  499,206,925    5,773,701    7,094,914     4,639,725       295,747
                                         ============ ============ ============ ============ ============= =============

                                                 Costa       Costa       Costa       Costa
                                                 Afuera      Afuera      Afuera      Afuera
                                                Argentina   Argentina   Argentina   Argentina   Anticlinal   Anticlinal
                                                Bloque 40   Bloque 40   Bloque 46   Bloque 46      Funes        Funes
                                                 50.00%      50.00%      50.00%      50.00%       80.00%       80.00%
Balance sheet                                   12/31/2006  12/31/2005  12/31/2006  12/31/2005   12/31/2006   12/31/2005
---------------------------------------------  ----------- ----------- ----------- ----------- ------------ ------------

LIABILITIES
---------------------------------------------
CURRENT LIABILITIES
---------------------------------------------
Accounts payable                                         -     186,969      13,283      80,867    1,376,434      781,505
Payroll and social security contributions                -           -           -           -        1,928          138
Taxes payable                                            -           -           -       3,854       10,000          886
                                               ----------- ----------- ----------- ----------- ------------ ------------

Total current liabilities                                -     186,969      13,283      84,721    1,388,362      782,529
                                               ----------- ----------- ----------- ----------- ------------ ------------

NON CURRENT LIABILITIES
----------------------------------------------
Accounts payable                                         -                       -           -            -            -
Provision for environmental remediation                  -           -                       -      972,617      775,539
Accruals                                                 -           -           -           -            -            -
                                               ----------- ----------- ----------- ----------- ------------ ------------

Total non current liabilities                            -           -           -           -      972,617      775,539
                                               ----------- ----------- ----------- ----------- ------------ ------------

Total liabilities                                        -     186,969      13,283      84,721    2,360,979    1,558,068
                                               ----------- ----------- ----------- ----------- ------------ ------------

Owner's equity                                  11,240,799  11,015,248     604,318     530,596      990,676    3,767,136
                                               ----------- ----------- ----------- ----------- ------------ ------------

Total                                           11,240,799  11,202,217     617,601     615,317    3,351,655    5,325,204
                                               =========== =========== =========== =========== ============ ============
*T

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

Statement of income for the year ended December 31, 2006, comparative with the
prior year PARTICIPATION IN JOINT VENTURES (in pesos)

-0-
*T



                                            Lindero      Lindero       Aguada       Aguada
                                           Atravesado   Atravesado     Pichana      Pichana     San Roque    San Roque
                                           62,50% 2006  62,50% 2005  18,18% 2006   18,18% 2005  16,47% 2006  16,47% 2005
                                          ------------ ------------ ------------- ------------ ------------ ------------

STATEMENT OF INCOME
Sales (1)                                            -            -             -            -            -            -
Cost of sales                             (48,257,651) (39,866,255) (133,494,672) (70,421,430) (49,848,064) (39,293,948)
                                          ------------ ------------ ------------- ------------ ------------ ------------

Gross result                              (48,257,651) (39,866,255) (133,494,672) (70,421,430) (49,848,064) (39,293,948)
Administrative expenses                              -            -             -            -            -            -
                                          ------------ ------------ ------------- ------------ ------------ ------------
Operating result                          (48.257.651) (39,866,255) (133,494,672) (70,421,430) (49,848,064) (39,293,948)

Financial results - net                     ( 484.699)   ( 611,649)    ( 148,551)   ( 726,601)   ( 340,800)    1,737,191
Other income and expenses -
Net                                       ( 2.801.292)   ( 262,360)     ( 50,634)      169,414   ( 435,176)      386,791
                                          ------------ ------------ ------------- ------------ ------------ ------------

Net results                               (51,543,642) (40,740,264) (133,693,857) (70,978,617) (50,624,040) (37,169,966)
                                          ============ ============ ============= ============ ============ ============



                                                                             Estancia La Estancia La
                                                                              Escondida   Escondida  Bandurria Bandurria
                                                    Acambuco     Acambuco      25,00%      25,00%     18,18%    18,18%%
                                                   52,00% 2006   52,00% 2005     2006        2005       2006      2005
                                                  ------------- ------------ ----------- ----------- --------- ---------

STATEMENT OF INCOME
Sales (1)                                                     -            -           -           -         -         -
Cost of sales                                     (169,999,936) (95,651,580) (4,849,585) (3,254,494)         -         -
                                                  ------------- ------------ ----------- ----------- --------- ---------

Gross result                                      (169,999,936) (95,651,580) (4,849,585) (3,254,494)         -         -
Administrative expenses                                       -            -           -           -         -         -
                                                  ------------- ------------ ----------- ----------- --------- ---------
Operating result                                  (169,999,936) (95,651,580) (4,849,585) (3,254,494)         -         -

Financial results - net                              ( 246,753)      722,166   ( 17,359)       1,643  ( 1,994)       535
Other income and expenses -
Net                                                  ( 534,930)   ( 752,240)           -           - (768,580) (803,959)
                                                  ------------- ------------ ----------- ----------- --------- ---------

Net results                                       (170,781,619) (95,681,654) (4,866,944) (3,252,851) (770,574) (803,424)
                                                  ============= ============ =========== =========== ========= =========

                                                 Costa       Costa       Costa       Costa
                                                 Afuera      Afuera      Afuera      Afuera
                                                Argentina   Argentina   Argentina   Argentina
                                                Bloque 40   Bloque 46   Bloque 46   Bloque 46  Anticlinal   Anticlinal
                                                 50,00%      50,00%      50,00%      50,00%       Funes        Funes
                                                   2006        2005        2006        2005     80,00% 2006  80,00% 2005
                                               ----------- ----------- ----------- ----------- ------------ ------------

STATEMENT OF INCOME
Sales (1)                                                -           -           -           -            -            -
Cost of sales                                            -           -           -           - (14,246,684) (19,174,390)
                                               ----------- ----------- ----------- ----------- ------------ ------------

Gross result                                                                                 - (14,246,684) (19,174,390)
Administrative expenses                                  -           -           -           -            -            -
                                               ----------- ----------- ----------- ----------- ------------ ------------
Operating result                                         -           -           -           - (14,246,684) (19,174,390)

Financial results - net                                  -           -           -           -    ( 52,968)       33,826
Other income and expenses -
Net                                            (4,327,370) (8,356,350) (3,563,307) (3,550,982)       ( 101)       ( 147)
                                               ----------- ----------- ----------- ----------- ------------ ------------

Net results                                    (4,327,370) (8,356,350) (3,563,307) (3,550,982) (14,299,753) (19,140,711)
                                               =========== =========== =========== ----------- ============ ============
*T

-0-
*T

(1) No sales were recorded in the joint ventures because is directly
    assigned to each participant.
*T

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

FINANCIAL STATEMENTS as of December 31, 2006

REPORTING SUMMARY REQUIRED BY RESOLUTION No. 290/97 OF THE NATIONAL SECURITIES
COMMISSION

1. Comment on the Branch's activity

1.1. Operating activities

Pan American Energy LLC (Argentine Branch) is mainly engaged in the exploration,
development and production of hydrocarbons. The Head Office of the Branch is Pan
American Energy LLC, which also has various subsidiaries and affiliates that
carry out activities in Argentina and other Mercosur countries. BP and Bridas
Corporation hold interests that account for 60% and 40%, respectively of the
Branch's ownership.

As of December 31, 2006, with a daily average production of 220.2 thousand
barrels of oil, the Branch together with subsidiaries of Head Office rank second
in the production of natural gas and oil in Argentina.

1.2. Issuance of bonds

On July 13, 1995, Resolution No. 10982 of the CNV authorized the short and
medium term bond program submitted by the Argentine branch of the foreign
corporation Amoco Argentina Oil Company for a total maximum amount of US$
200,000,000, nominal value. The bonds are issued as 'Obligaciones Negociables'
(negotiable obligations).

In September 1995, Amoco Argentina Oil Company (Argentine Branch) issued the
First Series of bonds in the amount of US$ 100,000,000 due in ten years with an
interest rate of 6.63% p.a. Principal was repaid at maturity.

On February 11, 1997, Amoco Argentina Oil Company (Argentine Branch) issued the
Second Series of bonds in the amount of US$ 100,000,000 due in ten years.
Principal is to be repaid in a single payment at maturity and accrues interest
at a rate of 6.75% p.a. This issuance completes the maximum amount of the short
and medium term bond program referred to above.

The funds obtained from both bond issues were used to repay loans granted by
affiliated companies of Amoco Argentina Oil Company (Argentine Branch).

As a result of the transfer of assets and liabilities referred to in the first
paragraph of note 1 to the financial statements, Amoco Argentina Oil Company
(Argentine Branch) transferred the above mentioned bonds to Pan American Energy
LLC (Argentine Branch). The First Series of bonds was guaranteed by BP Company
North America Inc. until repayment in September 2005. The Second Series is also
guaranteed by this company.

On February 21, 2002, through Resolution No. 14123, the CNV authorized the
Global Program for the Issuance of Bonds of Pan American Energy LLC (Argentine
Branch) (the 'Global Program') in the total amount of US$ 1,000,000,000. These
bonds are also issued as 'Obligaciones Negociables' (negotiable obligations). On
April 16, 2002, the Branch issued under this Global Program its Bonds Class 1 in
the amount of US$ 20,400,000 becoming due in two years (April 16, 2004) at an
annual 7.5% rate. These Bonds were paid upon maturity. On October 17, 2002, the
Branch issued Bonds Class 2, Sub-Class A in the amount of US$ 500,000 and
Sub-Class B in the amount of US$ 15,000,000 under the Global Program. These
bonds became due in two years (October 17, 2004) and accrued interest at a 7%
rate p.a. The funds derived from the issues under the Global Program were
allocated to the Branch's working capital.

On October 27, 2004, the Branch issued Bonds Class 3 in the amount of
US$ 100,000,000 under the Global Program which shall become due in five years
(October 27, 2009) with a 7.125% annual interest rate to be paid on a
half-yearly basis. The price of the issuance was 99.483% of the nominal value.
The funds derived from this issuance were allocated to investments in property,
plant and equipment and repayment of loans.

On August 9, 2006, the Branch issued Bonds Class 4 in the amount of
US$ 250,000,000 under the Global Program, to be repaid in two equal installments
becoming due on February 9, 2011 and February 9, 2012, with interest accruing at
a fixed annual rate of 7.75% to be paid on a half-yearly basis. The price of the
issuance was 100.00% of the nominal value. The funds derived from this issue
were allocated to investments in property, plant and equipment, working capital
and repayment of loans.

1.3. Loan agreements

Pan American Energy LLC (Argentine Branch) obtained the following loans at a
five-year term, with interest compounded bi-annually amortized in monthly
installments: 1) On July 20, 2001, in the amount of US$ 72,051,406, with
interest accruing at an annual rate of 7.54%, with the first installment falling
due on April 19, 2002 and the repayment term being completed on June 20, 2006,
and 2) on September 17, 2001, in the amount of US$ 40,001,944, with interest
accruing at an annual rate of 6.72%, with the first installment falling due on
June 20, 2002 and completing repayment on August 21, 2006.

For the purpose of fixing the interest rate, the Branch has entered into
integrated derivative transactions, the impact of which has been included in the
cost of the transactions. Both loans have been guaranteed by Pan American Energy
LLC until the repayment thereof in June and August 2006.

On July 11, 2005, the Branch obtained from the International Finance Corporation
(IFC) a loan in the amount of US$ 250,000,000 guaranteed by Head Office and
consisting of three tranches:

- 'A' in the amount of US$ 100,000,000, at an annual fixed rate of 7.56%,
through an interest rate swap with IFC, amortizable on a six-month basis, which
becomes due in July 2015,

- 'B' in the amount of US$ 135,000,000, at an annual fixed rate of 6.97%,
through an interest rate swap with IFC, amortizable on a six-month basis, which
becomes due in July 2012, and

- 'C' in the amount of US$ 15,000,000, at an annual fixed base rate of 5.66%
plus additional interest calculated based on Head Office's economic performance,
becoming due in July 2016.

As of December 31, 2005, the amount of the loans had been fully disbursed. The
first principal installment for tranches 'A' and 'B' was paid on January 15,
2007.

The funds obtained were used to partially fund the 2005 investment program in
Golfo San Jorge.

2. Balance sheet items as of December 31, 2006 (in pesos)

-0-
*T
                                                   Balance as of Balance as of Balance as of Balance as of Balance as of
                                                     12/31/2006    12/31/2005    12/31/2004    12/31/2003    12/31/2002
                                                   ------------- ------------- ------------- ------------- -------------
Current assets                                     1,235,627,955 1,193,228,984   659,203,025   508,446,665   408,008,904

Non current assets                                 5,910,041,926 4,879,105,847 4,198,334,101 3,928,522,138 4,464,761,958
                                                   ------------- ------------- ------------- ------------- -------------

Total                                              7,145,669,881 6,072,334,831 4,857,537,126 4,436,998,803 4,872,770,862
                                                   ============= ============= ============= ============= =============

Current liabilities                                2,038,446,446 1,384,514,484 1,416,818,735 1,193,557,856 1,160,989,564

Non current liabilities                            2,989,464,507 2,164,983,591 1,367,102,560 1,561,029,726 1,958,822,130
                                                   ------------- ------------- ------------- ------------- -------------

Subtotal                                           5,027,910,953 3,549,498,075 2,783,921,295 2,754,587,582 3,119,811,694
                                                   ------------- ------------- ------------- ------------- -------------
Account with Head Office                           1,656,519,921 2,061,597,749 1,634,155,831 1,242,951,221 1,313,499,168

Capital allocated to the Branch                      221,779,007   221,779,007   200,000,000   200,000,000   200,000,000

Capital adjustment                                   239,460,000   239,460,000   239,460,000   239,460,000   239,460,000
                                                   ------------- ------------- ------------- ------------- -------------

Total                                              7,145,669,881 6,072,334,831 4,857,537,126 4,436,998,803 4,872,770,862
                                                   ============= ============= ============= ============= =============
*T

3. Income statement items as of December 31, 2006 (in pesos)

-0-
*T
                                                Fiscal year    Fiscal year    Fiscal year   Fiscal year    Fiscal year
                                                   ended          ended          ended          ended         ended
                                                 12/31/2006     12/31/2005     12/31/2004     12/31/2003    12/31/2002
                                               -------------- -------------- -------------- ------------- --------------
Ordinary operating income                       2,764,810,199  1,892,940,989  1,345,594,475   962,439,720  1,072,778,036

Financial results                              ( 142,933,551) ( 111,002,384) ( 162,139,929) (278,812,283) ( 732,904,923)

Other income and expenses - net                 ( 76,968,829) ( 100,766,855)  ( 95,409,580) ( 89,107,077)  ( 54,865,120)
                                               -------------- -------------- -------------- ------------- --------------

Income before taxes                             2,544,907,819  1,681,171,750  1,088,044,966   594,520,360    285,007,993

Income tax/minimum deemed income tax           ( 896,407,452) ( 609,797,133) ( 409,943,143) (248,894,158)   ( 4,414,296)

Deferred tax                                     ( 3,463,245)     14,847,018     86,414,740   161,016,474 ( 535,569,778)
                                               -------------- -------------- -------------- ------------- --------------

Net income (loss)                               1,645,037,122  1,086,221,635    764,516,563   506,642,676 ( 254,976,081)
                                               ============== ============== ============== ============= ==============
*T

4. Statistical data

-0-
*T

                                                             Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
                                                                ended       ended       ended       ended       ended
                                                              12/31/2006  12/31/2005  12/31/2004  12/31/2003  12/31/2002
                                                             ----------- ----------- ----------- ----------- -----------
                                                              In cubic    In cubic    In cubic    In cubic    In cubic
                                                                meters      meters      meters      meters      meters
                                                             ----------- ----------- ----------- ----------- -----------
Production of crude oil                                        6,123,609   5,899,233   5,721,813   5,279,853   4,641,839
Sale of crude oil                                              6,146,250   5,688,359   5,534,021   5,289,407   4,519,763
*T

4. Statistical data (cont.)

-0-
*T

                                                             Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year
                                                                ended       ended       ended       ended       ended
                                                              12/31/2006  12/31/2005  12/31/2004  12/31/2003  12/31/2002
                                                             ----------- ----------- ----------- ----------- -----------
                                                             In thousand In thousand In thousand In thousand In thousand
                                                                cubic       cubic       cubic       cubic       cubic
                                                                meters      meters      meters      meters      meters
                                                             ----------- ----------- ----------- ----------- -----------

Production of natural gas                                      4,887,081   4,447,626   4,187,349   3,411,061   2,889,003
Sale of natural gas                                            4,777,025   4,457,984   3,972,402   3,149,750   2,627,115
Transportation of natural gas                                     15,159     307,242     358,903     281,921     213,267
*T

-0-
*T
                                                                           In tons    In tons   In tons In tons  In tons
                                                                          ---------- ---------- ------- -------- -------

Production of L.P.G.                                                         104,647     66,910  64,577   58,940  37,496
Sale of L.P.G.                                                               105,810     60,480  69,597   72,585  33,122
*T

5. Ratios

-0-
*T
                                                             Financial   Financial   Financial   Financial   Financial
                                                              statements  statements  statements  statements  statements
                                                                as of       as of       as of       as of       as of
                                                             12/31/2006  12/31/2005  12/31/2004  12/31/2003  12/31/2002
                                                             ----------- ----------- ----------- ----------- -----------

Liquidity                                                           0.61        0.86        0.47        0.43        0.35
Indebtedness                                                        2.37        1.41        1.34        1.64        1.78
Tied -up funds                                                      0.83        0.80        0.86        0.89        0.92
Solvency                                                            0.42        0.71        0.74        0.61        0.56
Ordinary profitability before income tax / minimum deemed
 income tax                                                         1.01        0.81        0.65        0.34        0.19
Net profitability                                                   0.65        0.52        0.45        0.29      (0.17)
*T

6. Business prospects

Pan American Energy LLC (Argentine Branch) is working to maintain and increase
its operating efficiency in connection with the oil and gas exploration and
production, to continue increasing its share in hydrocarbons production in
Argentina, satisfying in this way the energy needs derived from a sustained
growth rate of the country's economy. The Branch strives to provide its
personnel and contractors with healthy and safe working conditions while
preserving the environment.

Pan American Energy is strongly engaged with the concerns and challenges posed
by the communities where it operates, by developing different social
responsibility programs (CSR).

During 2006 fiscal year, the Branch's oil production rose by 3.8% and the
natural gas output increased by 9.9% with respect to the prior year. This growth
results from the investment program carried out by the Branch in recent years
which enabled it to double its hydrocarbon production from 1999 to 2006.

After the 2002 crisis, the country went through a period where there was a high
GDP growth along with relatively low inflation rates and a steady currency. Even
though the levels of unemployment decreased, they are still high.

In 2006, the GDP increased by 8.5% with respect to the prior year, continuing
the growth trend initiated 19 quarters ago. It is estimated that the GDP will
rise by 7.8 % in 2007. The unemployment rate fell to approximately 8.7 % and the
inflation measured through the Consumer Price Index amounted 9.8% in 2006.

As regards fiscal issues, the National Government met its goal of exceeding the
primary fiscal surplus established for 2006 by 19.5%, reaching a record primary
fiscal surplus of 23,158 million pesos, surpassing the surplus of 2005 by 18%.
The level of foreign indebtedness as of December 31, 2006 went down as compared
to the same date of the prior year. The country's level of international
reserves as of December 31, 2006 rose to US$ 32,037 million, 14.1% higher than
those of a year ago.

The increase in the oil industry costs is a source of concern for management,
since it clearly exceeds the general increase in prices.

Revenues from the exploration and production of oil and gas were affected by the
amendments to the regulations in force. In the case of oil, as from March 2002,
an increasing rate of up to 45% of export tariffs on exports has been applied,
which has also affected the sales prices in the domestic market. In the case of
natural gas, in January 2002, the wellhead price of natural gas was
redenominated into pesos and frozen and, afterwards, restrictions on exports
were established. In April 2004, the Secretary of Energy and the natural gas
producers signed an agreement to tend to market the wellhead prices. This
agreement terminated on December 31, 2006 and a new agreement is currently being
negotiated between natural gas producers and the related authorities.

On June 29, 2006, the National Government entered into an agreement with the
Republic of Bolivia for the purpose of importing gas from that country. The
agreement stated a price in the amount of US$ 5 per million BTU with a maximum
daily volume of 7.7 million cubic meters up to December 31, 2006. The referred
agreement provides for imports of an additional daily volume of approximately up
to 20 million cubic meters, once the so-called Noreste pipeline is built. On
July 25, 2006, the Ministry of Economy, through Resolution Nr. 534/2006,
increased the tariffs rate on exports of gas to US$ 2,2 per million BTU.

Pursuant to Resolution 776 issued by the Argentine Ministry of Economy on
October 11, 2006, the national government provided for the retroactive
application of export tariffs on exports of hydrocarbons made from the Special
Customs Area of the Province of Tierra del Fuego. The oil companies operating in
this province consider that pursuant to the provisions of Law Nr. 19640 that
establishes a special regime applicable to economic activities in Tierra del
Fuego, the application of export tariffs on future exports becomes a
challengeable issue and that the retroactive application of export tariffs
becomes absolutely invalid and therefore these companies have commenced all
relevant actions before administrative authorities and the courts. On January
15, 2007, Law Nr. 26217 was enacted in Argentina. This law, in addition to
extending for another five years the application of export tariffs on exports of
hydrocarbons in general, mandates the application of the above mentioned export
tariffs on exports from Tierra del Fuego.

During the last quarter of 2006, unionized workers went on strike to demand that
income tax on their salaries be borne by the employers. This strike mainly
affected the drilling activities of the Branch. This situation had a partial
impact on the drilling and production programs. Due to the above-mentioned
strikes, the National Government sent a bill to the Congress which was
subsequently passed, to exempt certain portions of the salaries from income tax.

During the first half of 2006, the unions and the industry associations agreed
to increase the regional ratios collected by workers at different percentages as
per the different country regions. For example, in the provinces of Chubut and
Santa Cruz such ratios changed from 42% to 85% approximately.

For the fiscal year 2007, the Branch has projected to continue with its
investment plans with a view to expanding its business and contributing to
satisfying the growing energy demand.

Buenos Aires, March 9, 2007

Daniel Grinstein

Attorney in-fact

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

FINANCIAL STATEMENTS as of December 31, 2006

SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2006
REQUIRED BY SECTION 68 OF THE REGULATIONS OF THE BUENOS AIRES STOCK EXCHANGE

Overall issues about the Branch's activity:

1. Specific and significant legal requirements which imply contingent
suspensions or changes of benefits provided for by such regulations:

The Branch is not subject to specific and significant legal requirements, which
may imply the contingent suspension or change of benefits provided for by such
regulations, except as disclosed in notes to the financial statements.

2. Significant changes in the Branch's activities or other similar circumstances
that affect the comparison of the financial statements with prior years, or with
those to be presented in future years.

There are no changes in the Branch's activities that significantly affect the
comparison of the financial statements as of December 31, 2006.

3. Breakdown of receivables and payables as per section 68, subsection 3.

3.a) The breakdown of receivables and payables based on the maturity thereof is
disclosed in Exhibit H to the financial statements.

The following receivables without any established term included in the referred
Exhibit H are due:

-0-
*T
                                                                                              Current receivables
                                                                                                        $
                                                                                              --------------------


   Due from October to December 2006                                                                  6,094,558
   Due from July to September 2006                                                                    9,736,334
   Due from April to June 2006                                                                        3,754,184
   Due from January to March 2006                                                                     3,611,278
   Due from January to December 2005                                                                  7,925,261
   Due from January to December 2004                                                                  7,142,424
   Due from January to December 2003                                                                  2,065,637
   Due from January to December 2002                                                                    775,981
   Due from January to December 2001                                                                    332,528
                                                                                                    ------------
              Total                                                                                  41,438,185
                                                                                                    ============
*T

There are no overdue payables.

3.b) In connection with the receivables and payables in foreign currency, see
Exhibit F to the financial statements. There are no significant receivables and
payables represented by securities.

3.c) There are no receivables and payables subject to adjustment clauses.

3.d) In connection with the receivables and payables that accrue interest as of
December 31, 2006, see Exhibit H to the financial statements.

4. Corporations Art. 33 Law 19550

None.

5. Receivables or loans with directors, statutory auditors, and relatives
including up to the second degree:

None as of the date of issuance of these financial statements.

6. Physical counts of inventories

Based on the nature of the activity, the Branch carries out physical counts of
most of its inventories. There are no significant slow-moving inventories as of
December 31, 2006 for which an allowance has not been set up.

7. Current values

The valuation method of inventories is disclosed in Note 3.2.d) to the financial
statements.

8. Property, plant and equipment No items of property, plant and equipment have
been subject to appraisal. To date, there are no property, plant and equipment
items that are not in use due to obsolescence.

9. Interests in other companies None. The Branch's participating interests in
joint operations and other entities are disclosed in Note 2 to the financial
statements.

10. Recoverable value The recoverable value of inventories and fixed assets,
used as a limit to their valuation for financial reporting purposes, have been
determined based on the net realizable values and values in use, the latter
defined as the expected net cash flows that would result from both the use of
the assets and the disposal thereof at the end of their useful life.

11. Insurance

As of December 31, 2006, the insurance taken on the Branch's assets are as
follows:

-0-
*T
                                                                                                                Covered
                Insured assets                                   Insured risk                                    amount
----------------------------------------------            ---------------------------                       ------------
                                                                                                            Thousand US$
Equipment, facilities and pipelines
applied to exploitation and transportation                Physical damage                                        288,274
Equipment, facilities and pipelines applied to
exploitation and transportation                           Liability insurance                                     10,000
Wells                                                     Control, re-drilling, spill                             25,000
*T

Additionally, the Branch has taken the following policies: workers compensation
insurance, directors and officers liability insurance and automobile liability
insurance.

12. Negative and positive contingencies

To calculate the related accruals, all available elements of judgment and
likelihood of occurrence have been considered (see Notes 10, 13 and Exhibit D to
the basic financial statements).

13. Contingent events as of the date of issuance of the financial statements
with moderate likelihood of occurrence, the financial effects of which have not
been fully recorded as of December 31, 2006.

None.

Irrevocable advances for future subscriptions

14. As of December 31, 2006 there are no irrevocable advances for future
subscriptions.

15. There are no preferred shares as of the date of issuance of these financial
statements.

16. As of the date of issuance of these financial statements, the Branch has no
restrictions on the distributions of earnings, except as indicated in Note 10.

Buenos Aires, March 9, 2007

Daniel Grinstein

Attorney in-fact
                                                                                                                                  

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