Drilling Report

Pan Andean Resources PLC
01 October 2004



                              Pan Andean Resources plc

01 October 2004

                         Gas Found in Bolivian Drilling

Significant gas shows have been encountered in the first target zone in the deep
El Dorado gas well near Santa Cruz Bolivia.  The well, which is a joint venture
between Pan Andean (10%) and Chaco, a BP subsidiary, (90%) is currently at 4,210
metres depth with a further 80 metres to go to the final depth.

The gas shows, encountered in the Iquiri formation, are currently being logged.
Rock porosity and permeability are thought to be excellent.

Within days the target Tacabo reservoir at 4,290 metres will be drilled.  It is
anticipated that a full open hole well test will follow completion of drilling.

Contacts:

Pan Andean Resources

John Teeling / Jim Finn                          Tel: [phone]


Bell Pottinger Corporate & Financial

Nick Lambert                                     Tel: [phone]


Rowan Dartington

Barrie Newton                                    Tel: [phone]


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