Pan Andean is pleased to announce the spudding of an exploration well on our
Vrazel lease which is part of the Danbury Dome area onshore Texas.



The well has as targets three zones which may contain up to 7 billion cubic feet
of gas. At a cost of $1 million, the well will take 12 days to reach the target
depth of 9,200 feet and, if successful, can be tied in to existing pipelines
within three weeks. Pan Andean holds a 21 per cent interest in the project with
Houston Petroleum Inc, the majority partner.



Meanwhile, formal discussions continue in relation to the 75 billion cubic feet
target on our Danbury Dome leases. Pan Andean currently holds 100 per cent of
these leases and is examining proposals which may lead to a 20 per cent carry on
a $ 3 million 14,000 foot deep well.



John Teeling, Chairman commented, "Actions to develop our operations in the
highly prospective Danbury Dome area of onshore Texas continue to bear fruit.
Following the successful discovery on our, Zachery lease, I am very hopeful that
the Vrazel well will further enhance, not only our cash flow, but also the
potential and prospectivity of our 100 per cent owned Danbury Dome leases.

seawallwalker: That would seem to be a silly drop. Pan Andean is already underpriced but now even more so. They've abandoned this prospect after only a few days and have moved the rig elsewhere. Lets see what happens next week. Could be fun!

'The rig is being moved to block High Island 52, where Pan Andean holds a 45 pct interest. Operations on this block, also in the Gulf of Mexico, will start early next week.'

I agree it is a rubbish move by the mm, but they have to make money tto, even if at everyones expense

seawallwalker: Agreed! I'm keeping a close eye on these as I'm wondering whether to top up.

WWW.PANANDEANRESOURCES.COM

The website has had a complete makoever. Now looks very professional and alot of the information is now upto date and very informative.

Worth a look for all..

PanAndean Resources US Assets:
High Island A68 (Gulf of Mexico) - 50.00% working interest
High Island 52 (Gulf of Mexico) -50% working interest
High Island 30L (Gulf of Mexico) - 62.91% working interest
Vrazel (Texas) -21% working interest
Danbury Dome (Texas) - 20% carried interest through one well
Zachary (Texas) -7.3% working interest
Eugene Island 255 (Gulf of Mexico) - Working interest (4.375%)
North Bob West (Texas) - 1% Royalty

Pan Andeans activities in the USA (Gulf of Mexico and on shore Texas) are operated by its wholly owned subsidiary Endeavour Oil and Gas Inc. The US assets were acquired during 2000 and 2001 and have proved to be a profitable acquisition generating the majority of the Group Profits and Cash flow. The oil and gas prices were favourable during the period, averaging US$29 per barrel of oil and $4.62 per thousand cubic feet of gas (mcf). The current gas price is just under $6 per mcf and is expected to remain strong for the rest of the year. Production on our blocks is on a slow decline but recent workovers and drilling have reversed this trend.

US Natural Gas Market

Over the past 10 years the US has become increasingly dependent on Natural gas as efforts are made to move away from traditional energy sources. However over this time Natural gas supplies have not kept pace with this increase in demand. As such the market price for natural gas reflects the tight balance between natural gas supply and demand. During the 1990's price was kept low due to abundant demand however this situation has changed. Increased gas penetration, public policies and scarcity of large exploration targets will make the USA dependent on imported supplies, including LNG. US demand for natural gas is expect to grow by 38% by 2025. The impact increasing natural gas prices might have on the US economy has lead to this topic been touched upon by Alan Greenspan, Chairman of the Federal Reserve. "Today's tight natural gas markets have been a long time in coming, and futures prices suggest that we are not apt to return to earlier periods of relative abundance and low prices anytime soon" Alan Greenspan, June 10, 2003.

Pan Andean Bolivian Operations

PETROLEX SA a wholly owned subsidiary of Pan Andean was acquired in September 2000. A long established private Bolivian company it has non-operating interests in two Bolivian oil concessions Monteagudo 30% and El Dorado 10%. Both blocks are joint ventured with oil majors. In Monteagudo, Repsol is a 50% partner with Petrobras of Brazil holding the remaining 20%. The El Dorado block is operated by Pan American a consortium of BP/Amoco and Bridas of Argentina.

Pan Andean produces high quality crude oil and natural gas from our 30% stake in the Monteagudo Field, in southern Bolivia. The Monteagudo Field has produced over 37 million barrels of oil since its discovery in 1968. The field is operated by Maxus, with a 30% stake and is now owned by Repsol- YPF. Repsol owns an additional 20% stake via its ownership of the privatized Bolivian oil company Andina. The remaining 20 % is held by Petrobras, the Brazilian semi-state oil company. Oil output from relatively shallow reservoirs has remained strong. There is scope to enhance production through work-overs and new infield wells.

Pan Andean owns a 10% stake in the large, strategically situated gas discovery at El Dorado, some 40 km south of the city of Santa Cruz. We have been working hard to find a market for the gas to optimize cash flow from the associated liquids production, including condensate, natural gasoline, and GTL. Pan American Energy, part of the BP GROUP, owns the balance of the block. BP has large interests elsewhere in Bolivia, primarily via the privatized state company Chaco. Pan American's main current focus is on their Liquefied Natural Gas project aiming to sell gas form their stake in the mega - gas fields of southern Bolivia, via a pipeline to the Pacific Ocean and or by tanker to Mexico and the Californian market. We are working on a number of options to generate early value added for shareholders from the El Dorado discovery. The best option is to tap into the nearby gas export pipeline to Brazil. We are situated within 30 km of the gas gathering station and appear to have a considerable transport cost advantage. However, lower than expected volumes into the Brazil gas market has delayed securing a market in Brazil for the El Dorado Field. Accordingly our priority is to secure an early gas market and produce the associated liquids. For this purpose we are working on a gas to liquids facility, which would process 20 million cubic feet per day of natural gas. This is the sustainable production capacity today available from the two discovery wells at El Dorado.

Why Bolivia? Other contributing factors:

Recent gas finds include discoveries by Total, Petrobras and British Gas.
Discovered gas has risen from 7 tcf to 46 tcf.
High commercial hit rate at 1 in 6 exploration wells.
Low taxation and royalties. Freely convertible currency (informal dollar link).
Low inflation (<15% yearly).
No restrictions on foreign ownership.
Established, fair legal system.
Very low crime levels (lowest in the Americas).
1996 Hydrocarbon Law provides low taxes and good title, as well as reasonable work commitments but includes an annual rent of $1 per hectare per concession.

8th July 2004 - Drilling Update

Pan Andean Resources announces that the well drilled on High Island A-68, in which Pan Andean holds a 50% interest, reached target depth yesterday. Although gas shows were reported and one potentially productive sand identified from logs, overall it was felt that this was insufficient for commercial production. The hole is therefore being plugged and abandoned. The rig is being moved to block High Island 52, where Pan Andean holds a 45% interest. Operations on this block will commence early next week.

PanAndean Resources PLC
US Assets:
High Island A68 (Gulf of Mexico) - 50.00% working interest
High Island 52 (Gulf of Mexico) -50% working interest
High Island 30L (Gulf of Mexico) - 62.91% working interest
Vrazel (Texas) -21% working interest
Danbury Dome (Texas) - 20% carried interest through one well
Zachary (Texas) -7.3% working interest
Eugene Island 255 (Gulf of Mexico) - Working interest (4.375%)
North Bob West (Texas) - 1% Royalty

Pan Andeans activities in the USA (Gulf of Mexico and on shore Texas) are operated by its wholly owned subsidiary Endeavour Oil and Gas Inc. The US assets were acquired during 2000 and 2001 and have proved to be a profitable acquisition generating the majority of the Group Profits and Cash flow. The oil and gas prices were favourable during the period, averaging US$29 per barrel of oil and $4.62 per thousand cubic feet of gas (mcf). The current gas price is just under $6 per mcf and is expected to remain strong for the rest of the year. Production on our blocks is on a slow decline but recent workovers and drilling have reversed this trend.

US Natural Gas Market

Over the past 10 years the US has become increasingly dependent on Natural gas as efforts are made to move away from traditional energy sources. However over this time Natural gas supplies have not kept pace with this increase in demand. As such the market price for natural gas reflects the tight balance between natural gas supply and demand. During the 1990's price was kept low due to abundant demand however this situation has changed. Increased gas penetration, public policies and scarcity of large exploration targets will make the USA dependent on imported supplies, including LNG. US demand for natural gas is expect to grow by 38% by 2025. The impact increasing natural gas prices might have on the US economy has lead to this topic been touched upon by Alan Greenspan, Chairman of the Federal Reserve. "Today's tight natural gas markets have been a long time in coming, and futures prices suggest that we are not apt to return to earlier periods of relative abundance and low prices anytime soon" Alan Greenspan, June 10, 2003.

Danbury Dome:

The Danbury Dome area is located 40 miles south of the city of Houston, Texas. In September 2003 Endeavour acquired the 60% interest in the Korenek leases held by El Paso Production Oil and Gas. Endeavour now owns 100% of the Korenek and Vieman leases covering 1,029 acres. In addition, Endeavour has leased 253 acres adjoining the Block. Geologic and seismic studies have identified three drilling prospects with potential reserves of 75 billion cubic feet of gas at depths between 12,000 ft. to 14,000 ft. in the Deep Frio Sands and Anomalina Sands. The wells are estimated to cost 3 million US$ per well completed. In addition we are studying the potential of the "Golden Eye Yegua Project" at 17,000 ft estimated to contain 100 billion cubic feet of gas. Endeavour also owns the Korenek no. 4 well - a 12,550 ft. deep producing gas well. Although the no. 4 well is only marginally productive, at present, it has significant work over potential. The gas pipeline infrastructure is in place so any new discovery can be rapidly developed.

What does Pan Andean do ?

Pan Andean formed in 1988 is listed on AIM with 7000 shareholders.
Pan Andean is debt free, cash positive producing oil & gas in the US and Bolivia.
Pan Andean has proven and probable reserves of over 3 million barrels equivalent in the US and over 2mbbls proven and probable oil equivalent in Bolivia.
Pan Andean has exploration projects in the US and in South America.
Pan Andean Oil & Gas Production
Pan Andean produces over 300 bbls oil a day.

Pan Andean Development Strategy
Pan Andean's strategy is to lever management's hydrocarbon experience, South American knowledge and financial market access, to develop into a significant oil and gas producer in South America. Political uncertainty is delaying implementation.
Bolivia will be the prime energy supplier to Brazil. We have the best placed reserves in El Dorado and up to 3.6 tcf deep gas potential at Monteagudo.
A major investment in producing assets, with exploration potential, in Venezuela is on hold due to political uncertainty.
An acquisition in Argentina, which has production and exploration potential, is developing slowly due to uncertainty.

THE FUTURE

The future looks good. Pan Andean is profitable and cash generative with significant drilling opportunities on our US assets and an exciting GTL project in Bolivia. Our increasing cash flow, AIM listing, liquid share and 7000 shareholder base attracts many exploration and development proposals. We are examining high potential projects in the Americas with one close to a decision. Outside of the Americas we are working our way through three projects. We are fully aware of the need to build shareholder value.

John Teeling

Chairman

Nice tight spread this morning. Bid/offer now 15.2 to 15.44p

It's hard to believe that this stock has such a tiny market cap of only 18 million.

From another BB:

This is the first time that anything definite has been written about drilling plans in Bolivia? Everything up to now has been rumour? If so this is tremendous news. A joint drilling program with BP would probably make it into the newspapers.

BP are already exporting gas to Brazil, but the referendum on the 18th... wey hey a week to go, would mean a bigger customer base (and perhaps a better price). At $7m it sounds like a proper job to me !

Perhaps we should ring Pan up and ask why no RNS ? My guess would be that its down to BP, but a megga blue sky project to us, is small spuds to BP.

We should get an RNS on Monday. Their drilling ship should be at its new location in the Gulf of Mexico by then.

The buyers return!

We should get an RNS today or on Tomorrow to say the drilling rig has arrived at its new location in the Gulf of Mexico and is about to start drilling. This should be enough to provoke speculative interest in this stock.

All this 'drilling news' reminds me of four years ago when the price dropped from 70 odd p to 12p on the 'drilling news'!!!!! much hot air but NO hot OIL!!!
I seem to remember. DYOR ;

chartist2004: Point taken, but the company is doing much better now. It still has a tiny market cap of only 18 million. Have a look at the heading of this thread and compare it to the following announcement. On top of this, those huge finds in Bolivia could bear fruit, especially as BP are behind the biggest of them.

30 June 2004 Pan Andean, the listed oil and gas producer, announces successful completion of Drilling Onshore Texas Pan Andean plc., explorers for and producers of oil and gas in South America and in the U.S., is pleased to announce that the Vrazel No. 2 well in the Danbury Dome area onshore Texas, is a commercial discovery expected to produce at a rate of 1.9 million cubic feet of gas per day. Tie in to existing pipelines will be completed within days. Pan Andean holds a 21% interest in this project.

John Teeling, Chairman said, "Finally Vrazel is commercial. Drilling confirmed
the presence of a number of gas zones. Technical problems greatly delayed the
completion process, but now all is in place for commercial production. Current
gas prices make this a profitable venture for Pan Andean. Expected production
and cash flow from Vrazel complements our other successful producer in the area,
The Zachry - Korenek No. 1 discovery. These two discoveries bode well for the
forthcoming drilling program on our 100% owned properties in the Danbury Dome
area. Pan Andean expects to make an announcement specific to this venture in the coming weeks.

The City is full of hot air.

That is how it works!