Pan Andean Spuds DRD X-1004 Well in Bolivia

Pan Andean Resources has started drilling of DRD X-1004 on its gas and condensate field at El Dorado, near Santa Cruz, Bolivia. The interest is held through its subsidiary, Petrolex.

The well spuds this week and will be drilled to 4,290 meters (14,100 feet). The operator is our 90% partner, Chaco, which was formerly part of the Bolivian National Petroleum Company (YPFB) and is now part of the BP Group. The well is projected to take 90 days, including testing. Targets are the Petaca sands (approximately 1,600m), the Ichoa Formation (2,200m), Iquiri and Los Monos (4,000 to 4,500m).

In addition to anticipated exploratory upside, Pan Andean expects to convert approximately 60% of the currently classified probable reserves to proven, subject only to development of the Brazilian gas export market. This equates to 100 billion cubic feet of gas and 1.6 million barrels of oil-condensate.

Following recent remapping and regional work, technical staff believes that the DRD X-1004 well may increase the proportion of oil-condensate contained in future production from the reservoir. Pan Andean also hopes that significant new reserves may be added to the west of a geological fault running through the structure.

Pan Andean and Chaco have launched a Gaffney, Cline technical validation / due diligence review of the Energy Technology Gas-to-Liquids project. This technology offers a pioneering low capital cost method of generating diesel fuel from the gas available at El Dorado. This may offer accelerated access to market.

Managing Director, David Horgan, commented: "The El Dorado X-1004 well marks a return to vigorous development of our South American interests. After three years of regional retrenchment, energy demand is bouncing back. High oil prices make gas-to-liquids projects economic. Pan Andean hopes that these developments will position El Dorado for early development as a GTL project and/or to exploit the rapidly recovering gas demand in Brazil and Argentina".