Drilling Report

Pan Andean Resources PLC
22 July 2004


                              Danbury Dome Update
                                   Highlights


  • Drilling to 14,500 feet at a cost of $4m will begin within 60 days.
  • Additional acreage leased covers the entire target zone.
  • Joint venture with three US companies. Pan Andean has a 20% free carried
    interest in the first well.

Pan Andean, explorers for and producers of oil and gas in South America and in
the US, has put together a package of leases covering 1,700 acres in the Danbury
Dome area of Texas. Work done by Pan Andean has identified prospects with
potential reserves of 75 billion cubic feet of gas, at depths between 13,000 and
14,500 feet. The Anomalina sands at 13,000 feet will be drilled within the next
60 days. The well, costing $4m will take 45 days to drill and an additional 30
days to test and complete.

The lease area also covers the separate Golden Eye Yegua/Vicksburg prospect
which may contain up to 100 billion cubic feet of gas. This totally separate
target is estimated to be at 17,000 to 18,000 feet.

A consortium has been formed to drill Danbury Dome in which Pan Andean will have
a 20 per cent free carry through the first well. The consortium is made up as
follows:

Pan Andean                                                            20%
Palace Exploration Company/Zinke & Trumbo, Inc. (Operator)            55%
LaRose Texas Interests, Inc.                                          20%
Radiant Energy, L.C.                                                   5%

Zinke & Trumbo, Inc. who will operate the consortium, is a large privately owned
US oil and gas company, with specific expertise in drilling deep onshore wells.

Commenting, John Teeling, Chairman said, 'Danbury Dome became a high priority
target in 2003 when we acquired 100 percent ownership of the disputed Korenek
lease. Our studies suggested that the target reservoir stretched between our
Korenek and Vieman leases but we did not have rights on the intervening ground.
With great skill and patience, our US team negotiated and acquired leases on the
ground between Korenek and Vieman. We now believe that we have leases covering
the entire structures.

Deep onshore drilling is not only expensive but technically challenging. We
wanted a partner with a strong track record in this area.  Zinke & Trumbo, Inc.
has been built on successful onshore gas drilling. We are delighted to have them
as a partner and operator.

High gas prices make Danbury Dome a most desirable target. Drilling is uncertain
but with skill and luck, we could have a very lucrative discovery'.


Contacts:

John Teeling - Pan Andean Resources -                     Tel: [phone]
James White/Emma Kane - Redleaf Communications -          Tel.[phone]
Ian Rice - Rowan Dartington -                             Tel.[phone]


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