Interim Results

Pan Andean Resources PLC
18 January 2001


                           Pan Andean Resources PLC

                   Interim Statement to September 30th 2000

In the last six months we have drilled wells, made money, generated cash and
acquired new partners, Pan Andean has never been stronger.

The coming twelve months will see us build on this base by further drilling
and by increasing our stake in existing operations.

A number of positive milestones have been reached recently:

-     We have a major gas discovery on the El Dorado block in Bolivia;

-     We have become an oil and gas producer in both the US and in Bolivia;

-     We are making money.  A maiden profit of £207,000 represents the return   
      from only three months of operations in the US;

-     New and attractive drilling opportunities are opening up on our blocks.   
      We expect to drill at least one well in 2001.

To add to the good news, record gas prices in the US and high world oil prices
are having a very positive effect on our cash flow.  The June 2000 Endeavour
acquisition in the US is giving us 1 million cubic feet of gas a day and 325
barrels of oil.  In September we bought two additional interests in the Gulf
which produce an extra 1.75 million cubic feet of gas a day.  High prices mean
that the investment in this project will be recovered in six months.


El Dorado and Monteagudo

The US is an important cash generator for Pan Andean but is not the focus of
our efforts.  We intend to become a significant oil and gas producer in South
America.  We are well on the road toward this objective.

Monteagudo produces 800 barrels of oil and 8m cubic feet of gas a day.  We own
30%.  There are additional exploration opportunities on this block particularly
the deep Huamapampa reservoirs which are very large and gas prone.

El Dorado is our star asset.  We currently own 10% but we are looking at ways
to increase this percentage.  The recently completed well has confirmed a gas
field of probably 600 billion cubic feet.  Located only 25 kms from the
Brazilian pipeline and 25 kms from the fast growing Santa Cruz gas market, El
Dorado is going to have a rapid development.  Early stage plans look for an
interim output level of up to 120 million cubic feet of gas a day.

Exploration opportunities exist in El Dorado both for oil and gas.  The gas
targets lie adjacent to the current discovery while the oil prone structure is
on the border with a neighbouring block where a successful well has recently
been drilled.  Pan Andean is considering ways in which our interest in El
Dorado can grow.  One such avenue is to drill one or more of the current
prospects.


Chapare

We continue to do some work on this huge block. The dry hole at Chipiriri was
a setback and reduces the probability of a hit to less than 1 in 10.  These
figures make it difficult to attract partners to drill expensive wells.  An
annual rent of $777,500 and the need to find a bond to cover new work
commitments is forcing the consideration of a range of options from reducing
the block size to handing over the concession.

There is oil and gas in the Chapare but there may be better opportunities
elsewhere.  One such drilling opportunity is being examined.  It is close to
the Chapare block.


Finances

Our balance sheet has been transformed.  We now have substantial producing
assets generating revenue in excess of $1 million a month and throwing off a
free cash flow of at least $350,000 a month.

We have invested substantially in exploration.  The final cash cost of
Chipiriri will be US$4.2m.  El Dorado has cost $1.2m to date while almost $3
million has been spent on Monteagudo.  Of the $15 million spent in the US,
$1.4m was debt, $6.6 million was cash and $7m was in shares priced at 50p.

Financing requirements in 2001 will depend on our exploration activities.  Our
cash flow will fund a certain amount of exploration but more drilling may
require additional debt or equity.


Future Strategy

There is a host of opportunities open to Pan Andean in Bolivia and elsewhere.
We are an explorer and so we are looking at high potential drilling ventures
for 2001.  These will most likely take place on El Dorado or close to the
Chapare.

The success of the Bolivian and US acquisitions has resulted in other
privately owned oil and gas ventures talking to Pan Andean about possible
co-operation.  Our strong cash flow gives us options.

While Bolivia is our focus we continue to monitor oil and gas opportunities in
other areas.  Given our very strong shareholder base, good institutional
support and high liquidity, we are an attractive partner for oil explorers and
producers seeking to expand their horizons.


Financial information (unaudited)

                  SIX MONTHS ENDED
                                                           30 Sept.   30 Sept.
                                                               2000       1999
                                                               £000       £000

Group Profit and Loss

Turnover                                                        931         -
Operating Costs                                               (720)       (77)

Operating Profit (Loss)                                         211       (77)
Interest Receivable                                             111         6

Profit (Loss) before Taxation                                   322       (71)
Taxation                                                        115         -

Profit (Loss) for the period                                    207       (71)

Profit (Loss) per share                                       0.26p    (0.15)p


                                                           30 Sept.   30 Sept.
                                                               2000       1999
                                                               £000       £000
Group Balance Sheet
Fixed Assets                                                 15,720      1,196

Current Assets                                                2,319        283
Current Liabilities                                         (2,439)       (63)

Current Assets less Current Liabilities                       (120)        220
Creditors (amounts falling due after one year)                (323)          -


Total Assets less Liabilities                                15,277      1,416

Share Capital and Reserves                                   15,277      1,416