Drilling Report

Pan Andean Resources PLC
09 September 2004


DRILLING COMMENCES ON THE 50 BILLION CUBIC FEET GAS TARGET IN DANBURY DOME

Pan Andean Resources plc, explorer for, and producer of, Oil and Gas in the US
and South America, is pleased to announce the commencement of drilling of an
exploration well on our Danbury Dome leases onshore Texas.

The target is the Anomolina sands which 3D seismic surveys indicate could
contain 50 billion cubic feet of gas at depths between 13,000 and 14,500 ft. The
Blackstone Ivory No. 1 well, costing US$5m, will take 45 days to drill and an
additional 30 days to test and complete. Pan Andean has a 20% carry in the well,
which will be drilled and operated by Zinke and Trumbo ('Z&T'). Oklahoma-based 
Z&T is one of the largest US independent oil explorers.

Commenting, John Teeling, Chairman of Pan Andean Resources, said:

'This is an important development for Pan Andean. A target of this size onshore
Texas with current high US gas prices represents an exciting market opportunity.
The availability of local infrastructure means rapid cash flow if we are
successful.

The Danbury Dome area is a prolific gas producer and our existing exploration
track record there is good, as shown by our successful Zachary and Vrazel wells.
Success here would not only be much bigger but will also enhance the
prospectivity of the entire lease area.'


Contacts:

Pan Andean Resources
John Teeling / Jim Finn                    Tel: [phone]


Bell Pottinger Corporate & Financial
Nick Lambert                               Tel: [phone]



Rowan Dartington
Ian Rice                                   Tel.[phone]



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