Pan Andean Says Hurricane Damage Minimal

Pan Andean Resources says gas production platform on High Island 52 and the High Island 30 oil platform received minimal damage. The Gryphon platform on High Island 52, the source of the Pan Andean royalty, is reported to be intact and as far as is ascertainable, pipelines to shore are intact. The gas/oil gathering facilities being installed on High Island 24 are reported to be safe. The onshore facility in Johnson Bayou, Louisiana, which gathers and distributes the gas from a number of offshore platforms including High Island 52 and Gryphon was flooded and damaged. It may not be back in operation before year end.

The net effect of the storm is that Pan Andean production facilities are intact but our monthly income from offshore Texas averaging $200,000 US a month will be deferred for at least 3 months. It is also foreseeable that the restart of oil production on High Island 30 will be further delayed as lift boats and crew boats are diverted to emergency situations.

Jim Finn, Director, responsible for US operations, commented:
"Fortunately for Pan Andean, damage to our facilities is minimal. The deferral of some revenue from our offshore facilities for three or four months is a negative but, given the extraordinary high gas prices which are likely to last well into next year, we will quickly recover our losses. Meanwhile income from our onshore Texas production is more than sufficient to cover ongoing costs."