Danbury Dome Well Comes Up All Wet

The testing of the Vieman No.1 well at Danbury Dome Texas has not produced commercial levels of gas. The Anomalina sands produced water and after initial gas flows the higher "S" sands also watered out.

There were significant technical difficulties in drilling and testing the well. It proved impossible to reach the target depth of 13,500 feet. The partners have plugged the well while reviewing the data. An option to side track the well to reach the target depth is under consideration.

Pan Andean holds a 15% interest rising to 30.25% after payout. The well was drilled on a turnkey basis. Pan Andean's total cost is $500,000.

John Teeling, Chairman of Pan Andean Resources, commented: "While the plugging of the Danbury Dome well is disappointing, Pan Andean remains cash generative and profitable and its Board considers that it remains very well positioned to take advantage of emerging opportunities."

Danbury Dome, Brazoria County, Texas

Situated onshore Texas, 40 miles south of Houston, this is a salt dome lease covering over 800 acres. The Danbury Dome area is a prolific producer of oil and gas, having produced 67 billion cubic feet (bcf) of gas and 91 million barrels of oil to date. Pan Andean and its technical team have identified the Anomalina Danbury Prospect which is on trend with other Frio-Age Anomalina production at Chocolate Bayou, southwest Danbury, and other prolific fields.  The prospect reserves are estimated at approximately 28bcf of low-risk attic reserves up-dip from a well that tested 85 million cubic feet of gas daily and watered out in 1965.

In August 2008, a consortium of North American companies was formed to drill Danbury Dome. Under the terms of the agreement, Pan Andean will have a 20% free carry after pay-out following commercial discovery. In addition, Pan Andean will participate for an additional 15%. This will give Pan Andean a net 31.25% interest if this well is a discovery. The well, which will take approximately 45 days to drill to a target depth of 13,500 feet is being drilled and operated by Turnkey E&P Corporation. Drilling commenced on September 16, 2008.