Pan Andean Resources PLC
6 September 2000
Pan Andean Resources PLC ('Pan Andean' or the 'Company') wishes to announce
that it is in negotiations to acquire a Bolivian exploration and production
company, which has both, oil and gas production. In addition, the company is
drilling two deep holes in Bolivia as part of multi-national consortia.
Discussions are at an advanced stage and a further announcement is expected
within days.
Having undertaken a detailed review of the results of the Chipiriri well, the
management of Pan Andean has deferred drilling the Alana X-1 well in Chapare.
It is estimated that a full geological and technical assessment will take 3
months.
The imminent start of the rainy season in the Chapare meant that a decision to
drill was required immediately. Rains commence in November. It would take
40/50 days to build a road to the Alana site and at least 30 days to drill.
While it is possible to drill before the rains, geological and technical
questions arising from the results of the Chipiriri drilling cannot be
adequately answered in time.
Commenting, the chairman John Teeling said:'the opportunity for Pan Andean to
buy into a highly prospective drilling opportunity in Bolivia made easier the
decision to defer the Alana well. If we use all of our cash to drill Alana
and it is dry our credibility will be further damaged as will our ability to
undertake and finance other ventures in Bolivia and elsewhere. Chipiriri was
our best target. The results were disappointing. The problems of migration
and leaky seals found in the Todos Santos well were repeated in the Chipiriri
well. The geological results from Chipiriri suggest that there is a reduced
chance of finding gas in Alana while the expected oil bearing structure is
smaller than we would like. The Chapare is a block of vast but unknown
potential. We have spent seven years and many millions of dollars trying to
make the first discovery.'
While the prospectivity of the vast Chapare block remains good, deep pockets
are needed to explore. More seismic research is needed not only in the bottom
third where the Company is working but also on the totally unexplored northern
two thirds. Drilling in the jungle is expensive. The Chipiriri well at $5
million cost a fraction of the cost of the Eva Eva well which Repsol has
commenced drilling on the Company's western flank. Remember in 1996 that the
Company's then partner BHP spent $ million drilling Todos Santos.
Ideally, Pan Andean needs a multinational partner who is able to take a
medium/long term view which includes a seismic and multi-hole drilling
program. Over the coming months, while the data is re-interpreted, the
Company will talk to a number of potential partners.
Pan Andean remains committed to Bolivia. The prospective acquisition will not
only make Pan Andean an oil and gas producer in Bolivia but will enhance the
Company's exploration activities.