PanOcean Announces 22% Increase in Proved Reserves Net of 2005 Production

Pan-Ocean Energy Corporation Limited announces a 22% increase in proved reserves to 35.9 million barrels ("mmbbl") and a 14% increase in proved plus probable reserves (2P) to 67.5 mmbbl for the year ended December 31, 2005. Proved plus probable plus possible (3P) reserves were 121 mmbbl.

In accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, McDaniel & Associates Consultants Ltd. ("McDaniel"), independent petroleum engineering consultants, prepared a report (the "McDaniel Report") dated 30th January 2006. The McDaniel Report evaluated, as at 31 December 2005, the Company's crude oil reserves. Following is a summary of the crude oil reserves of the Company and the net present value of future net revenue attributable to such reserves as evaluated in the McDaniel Report based on forecast price and cost assumptions in effect at year-end.

                                                      Crude Oil Reserves(1)
                                                  Property  Company  Company
                                                     Gross    Gross    Net
    Reserve Category                                 Mbbl     Mbbl     Mbbl
    Proved Producing Reserves                       32,916   14,100   10,268
    Proved Undeveloped Reserves                     40,533   21,798   15,110
    Total Proved Reserves                           73,449   35,898   25,378
    Probable Reserves                               56,431   31,569   19,207
    Proved Plus Probable
     Reserves (2P)                                 129,880   67,468   44,585
    Possible Reserves                               95,295   53,864
    Proved Plus Probable Plus
     Possible (3P)                                 225,174  121,331

                                           Summary of Company Share of
                                             Net Present Values(2,3)
                                            US$ millions -- unrisked
    Reserve Category                0.0%     5.0%    10.0%    15.0%    20.0%
    Proved Producing Reserves      221.3    201.4    184.4    170.6    158.9
    Proved Undeveloped Reserves    313.4    259.8    218.0    185.0    158.3
    Total Proved Reserves          534.7    460.8    402.5    355.5    317.2
    Probable Reserves              446.6    344.1    272.0    219.8    180.8
    Proved Plus Probable
     Reserves (2P)                 981.3    804.9    674.5    575.3    498.0
    Possible Reserves
    Proved Plus Probable Plus
     Possible (3P)
    1.  Company Gross reserves are based on the Company working interest
        share of the property gross reserves. Company Net reserves are based
        on the Company share of total Cost Oil and Profit Oil in accordance
        with the terms of each Production Sharing Contract.
    2.  McDaniel & Associates Ltd. 1st January 2006 Brent oil price forecast,
        being $55.00 - 2006; $53.40 - 2007; $50.40 - 2008; $47.30 - 2009;
        $44.70 - 2010 ($/bbl). The complete forecast is available on
    3.  Includes all in-country operating, transportation, administrative
        costs, government royalties, burdens and government share of Profit
        Oil but excludes corporate interest expense and overhead. All income
        taxes in Gabon arising from the Company's operations are settled
        under each Production Sharing Contract from the government's share of
        Profit Oil.
    4.  Some numbers may not add due to rounding.

Proved reserves increased 9.9 mmbbl during 2005, replacing production of 3.43 mmbbl by 289%. Proved plus probable reserves increased 11.6 mmbbl. Increases were primarily due to extensions and revisions of existing fields resulting from the development drilling activity undertaken by the Company during 2005. NPV 10% using constant prices and costs based on the year-end Brent oil price of $58.87 per barrel was $522 million and $883 million for proved and 2P reserves respectively. The NPV 10% sensitivity to a $1.00/bbl change in Brent oil price is approximately $0.29/bbl of 2P reserves.

The net present value of future net revenue attributable to the Company's reserves above is stated without provision for corporate interest costs and corporate general and administrative costs, but after providing for estimated royalties and government burdens, production and in-country administrative costs, development costs, other income, government share of Profit Oil, future capital expenditures and abandonment costs. It should not be assumed that the undiscounted or discounted net present value of future net revenue attributable to the Company's reserves estimated by McDaniel represent the fair market value of those reserves. The recovery and reserve estimates of the Company's crude oil reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.

The McDaniel Report is based on certain factual data supplied by the Company and McDaniel's opinion of reasonable practice in the industry. In preparing its report, McDaniel relied upon certain factual information including ownership, well data, production data, prices, revenues, operating costs, capital costs, contracts, and other relevant data supplied by the Company. The supplied information was only relied upon where in McDaniel's opinion it appeared reasonable and consistent with its knowledge of the properties however no independent verification of the information was made. McDaniel also relied upon representations made by the Company as to the completeness and accuracy of the data provided. A field inspection was conducted by McDaniel in the course of preparing its report.

PanOcean is an international energy company engaged in the exploration, production and marketing of oil and natural gas. PanOcean's asset portfolio is focused on conventional light oil production in Gabon, West Africa. PanOcean's Class B Subordinate Voting Shares and Class A Common Shares are listed for trading on Toronto Stock Exchange under the symbols POC.SV.B and POC.MV.A respectively. In accordance with the discontinuation of the symbol extension program by Toronto Stock Exchange, effective 31st May 2006, the Company's Class B and Class A Shares will trade under the symbols POC.B and POC.A respectively. PanOcean has 24,697,511 Class A and Class B Shares outstanding.