Annual Financial Report

BUENOS AIRES--(BUSINESS WIRE)--

Translation from the original prepared in Spanish for publication in Argentina

FINAL – 23/6/11

PAN AMERICAN ENERGY LLC
(ARGENTINE BRANCH)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010
COMPARATIVE WITH THE PRIOR FISCAL YEAR
CONTENTS	Page
Independent auditors’ report	2
Legal information	4
Balance sheet	5
Statement of income	6
Statement of cash flows	7
Notes to the financial statements	8
Exhibits A, B, C, D, E, F, G, H and I	23
Reporting summary	36
Supplementary information required by the Buenos Aires Stock Exchange	41

INDEPENDENT AUDITORS’ REPORT

To the Legal Representative of
Pan American Energy LLC (Argentine Branch)
Legal address: Av. Leandro N. Alem 1180 – 11^th floor
Buenos Aires
Taxpayer identification (CUIT) No. 30-69554247-6

1.	We have examined the balance sheet of Pan American Energy LLC (Argentine Branch) as of December 31, 2010, and the related statements of income and cash flows, notes 1 to 18 and exhibits A, B, C, D, E, F, G, H and I for the fiscal year then ended, comparatively presented with the prior year.
2.	The Branch’s Legal Representative and Management are responsible for the preparation and fair presentation of these financial statements in accordance with professional accounting standards in force in City of Buenos Aires, Argentina, and the related regulations of the National Securities Commission (“CNV”). This responsibility includes: (a) designing, implementing and maintaining internal control so that the financial statements are free from material misstatements, whether due to fraud or error, (b) selecting and applying appropriate accounting policies, and (c) making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these financial statements based on our audit.
3.	We conducted our audit in accordance with auditing standards generally accepted in Argentina. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4.	In our opinion, the financial statements referred to in paragraph 1 present fairly, in all material respects, the financial position of the Branch as of December 31, 2010, the results of its operations and the changes in cash flows for the year then ended, in conformity with professional accounting standards in force in the City of Buenos Aires.
5.	In relation to the financial statements as of December 31, 2009 and for the year then ended, presented for comparative purposes, we issued an unqualified report dated March 11, 2010.
6.	In compliance with rules and regulations in force, we report that:

a. the financial statements comply with the provisions of the Companies Law and the regulations on accounting documentation of the National Securities Commission, they are transcribed in the Inventory Book and they derive from the accounting records of the Branch which, in their formal aspects, are kept pursuant to legislation in force. The information systems used to process the data included in the financial statements are kept under the security and integrity conditions based on which they were duly authorized;

b. we read the information included in the reporting summary (sections “Balance sheet items”, “Income statement items” and “Ratios”) and in the supplementary information to the financial statements required by section 68 of the regulations of the Buenos Aires Stock Exchange, based on which, as far as it relates to our area of responsibility, we have no observations;

c. we have performed the anti-money laundering and terrorist financing procedures set forth by the applicable professional standards issued by the Professional Council of Economic Sciences of the City of Buenos Aires;

d. as of December 31, 2010, the accrued liability for pension contributions arising from the accounting records amounted to $ 27,489,686.42, no amounts being due as of that date, and

e. as required by General Resolution No. 400 of the National Securities Commission:

• the ratio between the total audit services invoiced to the Branch and the total amount invoiced to the Branch, including audit services, for the year ended December 31, 2010 is 0.55;
• the ratio between the total audit services invoiced to the Branch and the total audit services invoiced to the Branch and its Head Office and Temporary Union of Enterprises is 0.97, and
• the ratio between the total audit services invoiced to the Branch and the total amount invoiced to the Branch and its Head Office and Temporary Union Enterprises is 0.54.

Buenos Aires, March 10, 2011

    SIBILLE

    Néstor R. García
    Partner

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

FINANCIAL STATEMENTS as of December 31, 2010 for the for the fiscal year No. 14 beginning January 1, 2010 and ended December 31, 2010, comparatively presented with the prior fiscal year.

Stated in pesos

Legal address of the Branch: Av. Leandro N. Alem 1180 - 11^th floor - Buenos Aires

Main activity of the Branch: Oil and gas exploration and production

Date of registration with the Public Registry of Commerce: October 17, 1997

Registration number with the Inspection Board of Legal Entities: 1868, Book 54, Volume B of Foreign Companies

Subscribed capital (paid in full): $ 221,779,007 (See Note 8)

HEAD OFFICE

Name: Pan American Energy LLC

Legal address: The Corporation Trust Company, Trust Corporation Center, 1209 Orange Street, Wilmington, Delaware - 19801 - United States of America

Main activity: Oil and gas exploration and production

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH) BALANCE SHEET as of December 31, 2010 comparative with the prior fiscal year (in pesos)
	12/31/2010	12/31/2009
ASSETS CURRENT ASSETS
Cash and banks (Note 4 a)	27,075,883	26,188,313
Investments (Exhibit C)	928,205,571	741,623,699
Accounts receivable (Note 4 b)	1,196,699,783	1,156,824,402
Other receivables (Note 4 c)	198,941,399	223,138,351
Inventories (Note 4 d)	245,421,453	266,673,290
Total current assets	2,596,344,189	2,414,448,055
NON CURRENT ASSETS
Other receivables (Note 4 e)	117,243,114	83,802,832
Investments (Exhibit C)	136,064,539	135,388,922
Property, plant and equipment (Exhibit A)	14,000,122,687	11,857,405,042
Intangible assets (Exhibit B)	300,830	326,988
Total non current assets	14,253,731,170	12,076,923,784
Total assets	16,850,075,359	14,491,371,839
LIABILITIES CURRENT LIABILITIES
Accounts payable (Note 4 f)	991,253,765	831,656,938
Loans (Note 4 g)	873,455,876	1,375,474,292
Financial bonds (Note 4 h)	544,513,784	29,859,028
Payroll and social security contributions	184,240,683	144,259,946
Taxes payable (Note 4 i)	396,405,076	1,110,850,180
Other liabilities (Note 3 2 j)	38,333,365	28,957,454
Provision for future compensation to personnel (Exhibit D)	3,420,000	4,464,598
Total current liabilities	3,031,622,549	3,525,522,436
NON CURRENT LIABILITIES
Accounts payable (Note 4 j)	71,834,795	68,244,336
Loans (Note 4 k)	2,999,919,832	3,324,848,000
Financial bonds (Note 4 l)	2,478,612,556	950,000,000
Taxes payable (Note 4 m)	54,122,919	61,503,316
Other liabilities (Note 3 2 j)	233,779,130	215,516,431
Deferred tax (Note 11)	139,165,184	155,749,038
Provision for future compensation to personnel (Exhibit D)	26,838,820	21,707,215
Provision for environmental remediation (Exhibit D)	458,587,401	250,732,619
Accruals (Exhibit D)	17,482,881	17,787,688
Total non current liabilities	6,480,343,518	5,066,088,643
Total liabilities	9,511,966,067	8,591,611,079
Account with Head Office (Note 7)	6,876,870,285	5,438,521,753
Capital allocated to the Branch (Note 8)	221,779,007	221,779,007
Capital adjustment	239,460,000	239,460,000
Total	16,850,075,359	14,491,371,839

The accompanying notes and exhibits are an integral part of these financial statements.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

STATEMENT OF INCOME for the fiscal year ended December 31, 2010 comparative with the prior fiscal year

(in pesos)

	2010		2009
Sales (Note 4 n)		9,676,308,060		9,108,283,415
Cost of sales (Exhibit E)		(5,345,854,565)		(4,493,900,459)
Gross profit		4,330,453,495		4,614,382,956
Administrative expenses (Exhibit G)		( 438,427,206)		( 339,046,364)
Operating income		3,892,026,289		4,275,336,592
Financial results
Generated by assets
Interest	28,677,366		13,141,942
Exchange gains	103,092,431		84,060,090
Other financial results	6,446,369	138,216,166	8,291,289	105,493,321
Generated by liabilities
Interest	(404,238,330)		(422,042,216)
Exchange losses	(297,245,470)		(569,414,219)
Other financial results	(137,169,440)	( 838,653,240)	( 87,447,076)	(1,078,903,511)
Other income and expenses – net		22,199,103		19,401,517
Income before income tax		3,213,788,318		3,321,327,919
Income tax expense - current (Note 11)		(1,119,118,582)		(1,369,505,178)
Income tax benefit - deferred (Note 11)		16,583,854		203,675,537
Net income (Note 7)		2,111,253,590		2,155,498,278

The accompanying notes and exhibits are an integral part of these financial statements.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

STATEMENT OF CASH FLOWS for the fiscal year ended December 31, 2010 comparative with the prior fiscal year
(in pesos)

	2010	2009
Cash provided by operations:
Net income	2,111,253,590	2,155,498,278
Adjustment to reconcile net income with the cash provided by operations
Depreciation of property, plant and equipment	1,225,599,304	1,071,008,680
Amortization of intangible assets	26,158	29,820
Income tax expense	1,119,118,582	1,369,505,178
Net increase (decrease) in allowances for bad debtors, lawsuits and
obsolescence of materials	2,062,540	( 25,641,813)
Loss (gain) on property, plant and equipment	49,812,694	62,185
Increase in provision for future compensation to personnel	7,422,107	9,148,719
Net increase in the provision for environmental remediation	30,681,110	39,050,396
Other non-cash items (1)	649,582,191	619,534,741
Changes in assets, liabilities and account with Head Office:
Increase in accounts receivable	( 40,326,398)	( 579,521,498)
Decrease in inventories	19,335,507	5,067,450
Decrease in other current receivables	24,196,952	228,647,421
Increase in other non current receivables	( 33,440,282)	( 19,023,136)
Increase in accounts payable, payroll and social security contributions, taxes payable and other liabilities	183,893,291	189,943,956
Compensation paid to personnel for benefit plans	( 3,335,100)	( 3,084,534)
Use of provisions	( 15,456,457)	( 24,607,239)
Income tax paid	(1,794,030,741)	( 442,543,077)
Net cash provided by operations	3,536,395,048	4,593,075,527
Cash used in investing activities:
Increase in investments	( 12,777,243)	( 131,478,880)
Acquisition of property, plant and equipment	(3,226,837,544)	(3,119,149,783)
Collection due to the sale of property, plant and equipment	1,338,030	1,596,676
Cash used in investing activities	(3,238,276,757)	(3,249,031,987)
Cash used in financing activities
Decrease in loans (net)	(1,232,019,781)	( 501,622,098)
Increase (decrease) in bonds (net)	1,782,174,464	( 480,419,034)
Net activity with Head Office	( 672,905,058)	( 242,380,211)
Cash used in financing activities	( 122,750,375)	(1,224,421,343)
Net increase in cash	175,367,916	119,622,197
Cash at the beginning of the fiscal year	766,142,783	646,520,586
Cash at fiscal year-end	941,510,699	766,142,783

(1) It is made up of:
Exchange gains/losses and other financial results
relating to loans and other	666,166,045	823,210,278
Deferred income tax benefit	( 16,583,854)	( 203,675,537)
Total	649,582,191	619,534,741
The accompanying notes and exhibits are an integral part of these financial statements.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

NOTES TO THE FINANCIAL STATEMENTS as of December 31, 2010 comparative with the prior fiscal year (in pesos)

NOTE 1 - THE BRANCH

Pan American Energy LLC (Argentine Branch) is engaged in the exploration, development and production of hydrocarbons.

NOTE 2 - OPERATIONS OF THE BRANCH

The following table summarizes the main operations, blocks and joint ventures in which the Branch is or was involved during the fiscal year ended December 31, 2010.

Activity	Operations	Interest	Participation
Oil and gas production and development	Cerro Dragón (1)	100.00%	Operator
	Piedra Clavada (1)	100.00%	Operator
	Koluel Kaike (1)	100.00%	Operator
	Lindero Atravesado (2)	62.50%	Operator
	Anticlinal Funes	80.00%	Operator
	Acambuco	52.00%	Operator
	Aguada Pichana (2)	18.18%	Non operator
	San Roque (2)	16.47%	Non operator
	Estancia La Escondida	25.00%	Non operator
Oil and gas exploration and development	Acambuco "B" (3)	100.00%	Operator
	Bandurria	18.18%	Non operator
	Costa Afuera Argentina “CAA-40”	33.50%	Non operator
	Costa Afuera Argentina “CAA-46”	33.50%	Non operator
	Centro Golfo San Jorge Marina Chubut	90.00%	Operator
	Centro Golfo San Jorge Marina Santa Cruz	90.00%	Operator
	Nueva Lubecka (4)	100.00%	Operator
	Paso de Indios	100.00%	Operator
	Paso Moreno	100.00%	Operator

Explanations:

(1)	See Note 15.1.
(2)	See Note 15.2.
(3)	Corresponds to the Macueta Oeste and San Pedrito Sur fields.
(4)	On December 24, 2010, the Branch relinquished the Nueva Lubecka area in the province of Chubut.

NOTE 3 - ACCOUNTING PRINCIPLES

3.1 Reporting currency

In accordance with Decree 664/2003 and General Resolution No. 441/2003 of the National Securities Commission (“Comisión Nacional de Valores” or CNV), the Branch discontinued the application of inflation accounting as from March 1, 2003.

From January 1, 2002 to February 28, 2003, the Branch applied the inflation accounting methodology set forth by Technical Resolution No. 6, amended by Technical Resolutions Nos. 17 and 19 of the Argentine Federation of Professional Councils of Economic Sciences (FACPCE) and by the Professional Council of Economic Sciences of the City of Buenos Aires (CPCECABA), using indexes derived from the Internal Wholesale Price Index.

3.2 Valuation and presentation principles

a) Presentation

The financial statements are presented in accordance with the presentation principles established by the accounting standards generally accepted in the Republic of Argentina and pursuant to the provisions of the CNV.

The accompanying financial statements were translated into the English language from those issued in Spanish in conformity with the regulations of the National Securities Commission (“CNV”) of Argentina. Certain accounting practices applied by the Branch that conform to the accounting standards set forth by the CNV do not conform to accounting principles generally accepted in the United States. The effects of these differences have not been quantified by the Company.

Investments to become due or to be realized in the short term (within 3 months of fiscal year-end) are considered a cash equivalent in the statement of cash flows.

Certain reclassifications were made to the financial statements presented as comparative information to conform them to the presentation used in this fiscal year.

b) Participating interest in joint ventures

The Branch is engaged in exploration and production activities in certain areas through its participation in joint ventures with other companies. The account balances reflecting the joint ventures’ assets, liabilities, income and expenses are proportionately consolidated in these financial statements.

c) Foreign currency

Assets and liabilities denominated in foreign currency as listed in Exhibit F have been stated in Argentine Pesos at the exchange rate prevailing at the end of each fiscal year. The resulting exchange gains/losses are presented in the financial results line (provided by either assets or liabilities, as applicable) of the Statement of Income.

d) Inventories

Crude oil is stated at reproduction cost. Spare parts, materials and raw materials commonly used have been stated at replacement cost, while spare parts, materials and raw materials of slow turnover have been stated at the latest acquisition value, as indicated in Note 3.1. Goods in transit have been stated at acquisition cost plus import expenses, while advances to suppliers are valued at cost effectively incurred.

After considering the allowance for obsolescence set up (see note 3.2.g), the book value of inventories, taken as a whole, does not exceed their recoverable value.

e) Property, plant and equipment

Property, plant and equipment are stated at acquisition cost as indicated in Note 3.1., less the related accumulated depreciation. The acquisition cost includes all the necessary costs incurred in order to put the assets in working condition.

Depreciation is calculated by applying the straight-line method over the estimated useful lives of the assets and/or the duration of the contracts, as applicable, except for production wells, equipment and services, which are depreciated as per the units of production method.

The pre-operating costs of the properties in the exploration stage, except for geology and geophysics related expenses that are charged to the Statement of Income as incurred, remain capitalized for a given period based on the characteristics of each property, without exceeding five years considered as from the completion of the exploration stage or, if applicable, as from production interruption, unless:

1. it is expected that explored areas will proceed to the commercial production stage, in which case the referred costs remain capitalized, or

2. during the referred five year period, management estimates that commercial production will not be feasible, in which case, the referred costs are expensed.

For Property, plant and equipment existing as of January 6, 2002, the acquisition or construction of which resulted in outstanding liabilities denominated in foreign currency - exchange gains/losses resulting from restating such liabilities totaling $ 1,832,303,600 through July 28, 2003 were capitalized pursuant to specific accounting principles, based on the determination of the direct or indirect ratio between the assets subject to capitalization and the outstanding liabilities in foreign currency. The assets or group of assets eligible for the capitalization of exchange gains/losses have remained unchanged. Such capitalization of exchange gains/losses was performed in proportion to the balance of the original value of the referred assets not subject to depreciation. Additionally, exchange gains and losses were capitalized up to the limit arising from the comparison between the replacement or reproduction cost of the assets and their recoverable value.

For the purposes of presenting the financial statements in constant currency (see Note 3.1), the capitalized exchange gains/losses amounting to $ 1,832,303,600 are considered an anticipated inflation adjustment until such differences are absorbed thereby. The excess of capitalized exchanges losses over the amounts in constant currency totals $ 85,358,131 as of December 31, 2010 (see Note 3.1).

The net carrying value of property, plant and equipment, taken by group of assets of similar characteristics, does not exceed their estimated value in use based on the information available as of the date of issuance of the financial statements.

f) Intangible assets

These are pre-production geological expenditures and acquisition cost of blocks valued at restated cost as indicated in Note 3.1, less the related accumulated amortization. Amortization is calculated as per the units of production method.

g) Allowances, Accruals and Provisions

Allowances deducted from assets:

- For bad debtors: they are determined following the detailed analysis of the credit status of each customer.

- For obsolescence of materials: the Branch creates an allowance for those assets evidencing significant slow movement based on a specific analysis.

Provisions and accruals:

- For lawsuits: they are determined considering the potential costs of those lawsuits filed against the Branch based on the opinion of the legal counsels.

- For future compensation to personnel: they are estimated as a percentage of compensation paid, calculated in terms of actuarial methods, and can be applied to compensate employees of the Branch who have complied with certain seniority requirements defined by the Branch. Payments are debited from the related provision.

- For environmental remediation: calculated on the basis of well-abandonment forecasts until the expiration of agreements, at present values.

h) Income tax

The Branch applies the deferred tax method to account for income tax. Based on the referred method, the current income tax is calculated by applying the rates prevailing as of December 31, 2010 and 2009 on taxable income; and the future tax effect of the temporary differences in the book and tax values of assets and liabilities and the tax loss carryforwards, if any, are recognized as deferred tax assets or liabilities. The adjustment for inflation of property, plant and equipment is considered to be a temporary difference for deferred tax computations making use of the option established in the General Resolution No. 487/06 of the CNV.

The deferred tax assets are recognized only to the extent of their recoverability.

i) Use of estimates

The preparation of the financial statements in accordance with generally accepted accounting principles requires that the Branch management makes estimates about the value of certain assets and liabilities, including contingent liabilities, as well as the amounts informed of certain income and expenses generated during the period.

The final amounts may differ from the estimates used in the preparation of the financial statements.

j) Defined benefit and contributions plans

As from July 1, 2009, the Branch discontinued the pension plan for the benefit of its personnel called “Plan Puente” with no significant impact on the Branch’s financial position and the results of operations. Consequently, up to the settlement thereof, such plan will not accrue further years of service and the liability will only be increased as a result of general salary increases in pesos. Most of the employees have already chosen to change the benefit accrued for a personal savings plan (defined Branch contribution). Additionally, each employee is entitled to contribute a portion of their salaries to such savings plan. The Branch then makes its own contribution and transfers such amounts to a trust fund.

The accrued cost as of December 31, 2010 of the different defined benefit plans amounts to $ 344,868,857 ($ 304,653,429 as of December 31, 2009).

As of December 31, 2010 and 2009, the relevant actuarial information related to the pension plans for the benefit of personnel included herein and in Note 3.2.g under Accounts payable, Other liabilities and Provisions for future compensation to personnel is as follows:

	2010	2009
Cost of benefits accrued at beginning of fiscal year	304,653,429	234,535,530
Services cost (1)	-	11,741,542
Interest (2)	55,286,105	57,641,917
Benefits paid	( 45,195,472)	( 32,426,213)
Actuarial losses (1)	30,124,795	48,924,997
Effect of the discontinuance of “Plan Puente” (1)	-	( 15,764,344)
Obligations at fiscal year-end	344,868,857	304,653,429

(1) Included under Cost of sales and Administrative expenses of the statement of income (See Exhibit G).
(2) Included under Other financial results provided by liabilities of the statement of income.

Main actuarial assumptions used:
Actual rate of long term salaries increase (net of inflation)	1%	1%
Interest discount rate	4%	4%

k) Revenue recognition

Revenue derived from the sale of hydrocarbons is recognized when the significant risks and rewards of ownership have been transferred to the purchaser. Sales thus determinated are presented net of export tariffs and tax credit certificates related to the program set forth by Decree 2014/08 (see Note 14) created for the purposes of incentivizing the production and addition of oil reserves.

The Branch uses the production method to recognize revenues from the sale of oil. In those cases where the Branch has a shared interest with other producers, revenues are recorded upon the basis of the interest held in each joint venture.

In order to recognize revenues from the sale of gas, the Branch uses the sales method, whereby these revenues are recorded on the basis of the actual volumes delivered to purchasers irrespective of whether they result form the Branch’s own output or from the output shared with other producers.

l) Lease agreements

The Branch leases the space occupied by its offices, which agreements are of an operating nature and, therefore, the expenses incurred are recognized in the Statement of income to the extent they are accrued.

The amount of the present agreements, broken down by maturity dates, is reported below:

		Nominal value
Up to one year	U$S	493,300 and $ 2,605,444
Over one year and up to five years	U$S	542,400 and $ 3,246,993

During the fiscal year ended December 31, 2010, the Branch recognized an expense of $ 14,922,078 related to such lease agreements presented in the line Buildings Rentals, Maintenance and others in Exhibit G.

m) Foreign exchange forward contracts

As of December 31, 2008, the Branch was a party to four non-deliverable forward contracts for the purchase of foreign currency (US Dollar) in a total amount of U$S 25,410,000 with maturities between January 30, 2009 and March 31, 2009, which were settled in Pesos at their respective maturities. During the fiscal year ended December 31, 2009, the Branch recognized gains of $ 1,614,175 on these transactions. As of December 31, 2010, the Branch has no outstanding transactions and balances related to foreign exchange forward contracts.

NOTE 4 - BREAKDOWN OF CERTAIN BALANCE SHEET AND STATEMENT OF INCOME ITEMS

	12/31/2010	12/31/2009
ASSETS CURRENT ASSETS   a) Cash and banks
Cash on hand in local currency	71,138	200,839
Cash on hand in foreign currency (Exhibit F)	201,521	213,779
Cash in banks in local currency	10,768,165	6,460,769
Cash in banks in foreign currency (Exhibit F)	16,035,059	19,312,926
Total	27,075,883	26,188,313
b) Accounts receivable
Accounts receivable in local currency	110,861,995	98,135,951
Accounts receivable in foreign currency (Exhibit F)	1,078,668,938	1,057,052,626
Allowance for bad debtors in local currency (Exhibit D)	( 14,221,288)	( 13,287,657)
Allowance for bad debtors in foreign currency (Exhibits D and F)	( 7,711,245)	( 8,193,859)
Notes receivable in foreign currency (Exhibit F)	25,732,238	19,898,849
Affiliated companies in foreign currency (Note 9 and Exhibit F)	3,369,145	3,218,492
Total	1,196,699,783	1,156,824,402
c) Other receivables
Loans to personnel	23,764,899	19,149,201
Tax credits	55,173,581	81,659,003
Expenses recoverable in local currency	4,618,533	6,474,296
Expenses recoverable in foreign currency (Exhibit F)	244,806	1,043,702
Prepaid expenses	23,779,941	24,695,908
Miscellaneous in local currency	64,775,932	59,644,859
Miscellaneous in foreign currency (Exhibit F)	4,318,289	14,834,946
Affiliated companies in local currency (Note 9)	1,715,405	19,455
Affiliated companies in foreign currency (Note 9 and Exhibit F)	20,550,013	15,616,981
Total	198,941,399	223,138,351
d) Inventories
Crude oil in stock	118,301,715	161,726,211
Spare parts, materials and raw materials	82,880,311	77,387,035
Subtotal (Exhibit E)	201,182,026	239,113,246
Allowance for obsolescence of materials (Exhibit D)	( 5,989,499)	( 4,073,169)
Subtotal	195,192,527	235,040,077
Goods in transit	39,981,242	26,976,178
Advances to suppliers in local currency	8,962,005	4,657,035
Advances to suppliers in foreign currency (Exhibit F)	1,285,679	-
Total	245,421,453	266,673,290

	12/31/2010	12/31/2009
ASSETS NON CURRENT ASSETS
e) Other receivables
Loans to personnel	19,443,157	18,104,169
Prepaid expenses in local currency	48,336,896	16,013,244
Miscellaneous in local currency	35,111,125	35,285,847
Miscellaneous in foreign currency (Exhibit F)	14,351,936	14,399,572
Total	117,243,114	83,802,832
LIABILITIES   CURRENT LIABILITIES   f) Accounts payable
Trade payables in local currency	687,666,489	553,477,024
Trade payables in foreign currency (Exhibit F)	221,482,105	205,280,502
Notes payable in foreign currency (Exhibit F)	-	29,069,812
Expenses payable in local currency	31,021,801	22,126,651
Personnel compensation (Note 3.2.j.)	5,889,789	4,355,145
Affiliated companies in local currency (Note 9)	2,601,613	1,303,364
Affiliated companies in foreign currency (Note 9 and Exhibit F)	42,591,968	16,044,440
Total	991,253,765	831,656,938
g) Loans
Unsecured notes payable in local currency	-	188,528,381
Unsecured notes payable in foreign currency (Exhibit F)	816,881,127	1,128,258,000
Interest accrued on notes payable in foreign currency	56,574,749	58,687,911
(Exhibit F)
Total	873,455,876	1,375,474,292
h) Financial bonds
Financial bonds in foreign currency (Exhibit F)	490,612,556	-
Interest accrued on financial bonds in foreign currency
(Exhibit F)	53,901,228	29,859,028
Total	544,513,784	29,859,028
i) Taxes payable
Income tax provision net of advanced payments	176,138,845	844,170,462
Tax on sales and production	130,331,546	121,044,614
Installment plan (Law No. 26,476)	7,380,398	7,380,398
Other	82,554,287	138,254,706
Total	396,405,076	1,110,850,180

	12/31/2010	12/31/2009
LIABILITIES (cont.) NON CURRENT LIABILITIES
j) Accounts payable
Miscellaneous liabilities in local currency	13,318,694	17,653,188
Miscellaneous liabilities in foreign currency (Exhibit F)	21,908,348	20,938,562
Personnel compensation (Note 3.2.j)	36,607,753	29,652,586
Total	71,834,795	68,244,336
k) Loans
Unsecured notes payable in foreign currency (Exhibit F)	2,999,919,832	3,324,848,000
Total	2,999,919,832	3,324,848,000
l) Financial bonds
Financial bonds in foreign currency (Exhibit F)	2,478,612,556	950,000,000
Total	2,478,612,556	950,000,000
m) Taxes payable
Installment plan (Law No. 26,476)	54,122,919	61,503,316
Total	54,122,919	61,503,316
	2010	2009
STATEMENT OF INCOME
n) Net sales
Gross sales	12,510,554,622	9,643,938,680
Export tariffs – net	( 2,834,246,562)	( 535,655,265)
Total	9,676,308,060	9,108,283,415

NOTE 5 - FINANCIAL BONDS

In February 2002, the CNV authorized the Branch’s Global Program for the Issuance of Financial Bonds (“ON”) in the medium term (the “2002 Program”) for a five-year term, in the total amount of U$S 1,000,000,000. Under this program, the Branch issued four series of non-convertible financial bonds. The ON series 1 and 2 were paid on due date. The ON series 3, with final maturity in October 2009 (U$S 100,000,000 at an annual fixed interest rate of 7.125%) were paid on due date, and ON series 4 were issued on August 9, 2006 (U$S 250,000,000 at an annual fixed interest rate of 7.75%), payable in two equal installments and becoming due in 2011 and 2012. These ON were issued by the Branch and are guaranteed by Pan American Energy LLC. In June 2010, ON series 4 were repurchased in the amount of U$S 3,213,000, and as of December 31, 2010 there was an outstanding balance of U$S 246,787,000, payable in two equal installments of U$S 123,393,500.

On February 6, 2009, the CNV authorized a new program in the amount of U$S 1,200,000,000, (the “2009 Program”), whereby the Branch is authorized to issue ON during a 5-year period commencing on that same date. Any ON to be issued under this program will be guaranteed by Pan American Energy LLC.

On April 30, 2010, the Branch placed ON Series 1 under the “2009 Program”, with a nominal value of U$S 500,000,000, final maturity in 2021 (an effective average period of 10 years), a nominal fixed annual interest rate of 7.875% and an issuance price of 98.204%. The funds raised through the issuance of these bonds have been applied to the financing of part of the Branch’s investment program and to debt refinancing.

NOTE 6 - OTHER FINANCIAL LIABILITIES

On July 11, 2005, the Branch entered into a loan agreement with the International Finance Corporation (“IFC”) in the total amount of U$S 250,000,000. This loan, which is guaranteed by Pan American Energy LLC, consists of three tranches of U$S 135,000,000, U$S 100,000,000 and U$S 15,000,000, with final maturities in July 2012, July 2015 and July 2016, respectively. The balances as of December 31, 2010 of such tranches are U$S 45,000,000, U$S 55,560,000 and U$S 15,000,000, respectively. In relation to the outstanding balances of the first two tranches of the loan, the LIBOR interest rate payable every 9 months (floating rate) was effectively fixed through an interest rate swap agreed with IFC, thus resulting in annual fixed rates of 6.97% and 7.56%, respectively. A fixed interest rate was set for the third tranch.

On July 13, 2007, the Branch entered into a loan agreement with IFC in the amount of U$S 550,000,000 (at a floating LIBOR rate payable every 6 months). This loan, which is guaranteed by Pan American Energy LLC, consists of three tranches of U$S 158,500,000, U$S 241,500,000 and U$S 150,000,000, with final maturities in April 2014, April 2015 and April 2018, respectively. The balances as of December 31, 2010 of the referred tranches amounted to U$S 100,900,000, U$S 167,100,000 and U$S 118,400,000, respectively. In relation to the tranches of this loan, the LIBOR interest rate payable every 6 months (floating rate) was effectively fixed through an interest rate swap agreed by the Branch on August 14, 2009 with three financial institutions, thus resulting in annual fixed rates of 4.13%, 4.49% and 5.46%, respectively.

On May 21, 2008, the Branch entered into a U$S 200,000,000 loan agreement with an international bank syndicate, which is guaranteed by Pan American Energy LLC. This loan was to be repaid in three equal installments with maturities in May 2010, November 2010 and May 2011. On December 30, 2009 and May 3, 2010, the Branch entered into an agreement in respect of this loan which amended the maturities originally agreed upon. Pursuant to this amendment, the final maturity of this loan was extended from its original maturity to two installments of U$S 100,000,000 each, payable in November 2012 and May 2013.

On September 1, 2009, the Branch entered into a loan agreement with IFC in the amount of U$S 153,000,000. This loan, which is guaranteed by Pan American Energy LLC, consists of three tranches of U$S 103,000,000, U$S 10,000,000 and U$S 40,000,000 with final maturities in August 2013, August 2015 and August 2017, respectively.

On December 10, 2009, the Branch entered into a loan agreement with Corporación Andina de Fomento (“CAF”) in the amount of U$S 30,000,000. This loan is guaranteed by Pan American Energy LLC and its final maturity is in August 2015.

On December 23, 2010, the Branch entered into a loan agreement with an international bank syndicate in the amount of US$ 320,000,000, the final maturity of which is on March 23, 2015. The loan will be repaid in four semiannual installments as from September 23, 2013, accruing interest at a variable rate, base on Libo, payable on a quarterly basis. The amount of the loan has not been disbursed as of December 31, 2010. The loan is guaranteed by Pan American Energy LLC (See Note 18).

The Branch considers that its access to credit lines is appropriate in order to meet its commercial and financial obligations, even though it presents a negative working capital.

NOTE 7 - ACCOUNT WITH HEAD OFFICE

The changes in the account with Head Office during the fiscal year ended December 31, 2010 and 2009 are as follows:

	Fiscal year ended
	12/31/2010	12/31/2009
Balance at beginning of fiscal year of the account with Head Office	5,438,521,753	3,525,403,686
Net activity with Head Office	( 672,905,058)	( 242,380,211)
Net income	2,111,253,590	2,155,498,278
Net changes for the fiscal year	1,438,348,532	1,913,118,067
Balance at fiscal year-end of the account with Head Office (1)	6,876,870,285	5,438,521,753

(1) As of December 31, 2010 and December 31, 2009, balances are in local currency.

NOTE 8 - CAPITAL ALLOCATED TO THE BRANCH

Pan American Energy LLC allocated capital to the Branch in the amount of $ 221,779,007. Such capital is registered with the Public Registry of Commerce.

NOTE 9 - TRANSACTIONS AND BALANCES WITH AFFILIATED COMPANIES

The transactions and balances with Pan American Energy LLC, the Branch’s Head Office, are disclosed in Note 7.

The transactions and balances with affiliated companies are detailed below:

	2010	2009
TRANSACTIONS
Pan American Fueguina S.A.
Payments of loans	-	( 79,672,595)
Pan American Sur S.A.
Purchases of gas	15,400,542	9,961,128
Financing	-	10,290,919
Contracted services	10,550,993	16,333,738
PAE E & P Bolivia Ltd. (Bolivian Branch)
(Collections) Contracted services	( 2,647,017)	436,220
PAE Oil & Gas Bolivia Ltda.
Contracted services	1,420,170	1,576,368
Pan American Energy Chile Limitada
Contracted services	6,159,879	3,854,729
BP West Coast Products LLC (See note 17)
Sales	631,314,166	1,081,065,246
Transportation expenses	671,085	12,964,689

	2010	2009
BP America Production Company (See note 17)
Contracted services	1,072,692	5,071,006
Other related parties
Contracted services	49,192,178	62,804,749
Expenses recovery	345,802	19,455
	12/31/2010	12/31/2009
BALANCES
BP West Coast Products LLC (See note 17)
Current accounts receivable	3,369,145	3,218,492
Current accounts payable	13,635,775	12,964,689
PAE E & P Bolivia Ltd. (Bolivian Branch)
Other current receivables	629,059	3,276,076
PAE Oil & Gas Bolivia Ltda.
Other current receivables	7,453,732	6,033,562
Pan American Energy Chile Limitada
Other current receivables	12,467,222	6,307,343
BP America Production Company (See note 17)
Current accounts payable	1,841,681	2,209,069
Pan American Sur S.A.
Current accounts payable	1,751,594	727,088
Other current receivables	1,369,603	-
Other related parties
Other current receivables	345,802	19,455
Current accounts payable	27,964,531	1,446,958

NOTE 10 - GUARANTEES AND OTHER COMMITMENTS

In terms of investment commitments, the Branch has not granted any guarantees as of December 31, 2010.

The terms agreed in certain loan agreements include commitments assumed by the Branch referring to the maintenance of certain indebtedness and debt service ratios. As of December 31, 2010, and December 31, 2009 the Branch complied with all the commitments assumed in loan agreements.

On October 14, 2008, the Branch, as other companies in the industry, entered into a debt securities payment and subscription agreement with Nación Fideicomiso S.A. for the purpose of obtaining funds in pesos up to the amount equivalent to U$S 30,000,000 to finance the construction and laying of a new gas pipeline at the Strait of Magellan. The referred gas pipeline run parallel to the existing one and join Cape Holy Spirit, in the Province of Tierra del Fuego, with Cape Virgins, in the Province of Santa Cruz, thus increasing the transportation capacity of the General San Martín pipeline. As of December 31, 2009, the Branch made the contributions in the total amount mentioned above.

NOTE 11 - INCOME TAX

The breakdown of the main deferred tax assets and liabilities is as follows:

	12/31/2010	12/31/2009
Deferred tax assets
Allowance for obsolescence of materials	2,096,325	1,425,609
Provision for future personnel compensation	17,842,412	16,003,090
Accrual for lawsuits	6,252,995	6,334,009
Provision for environmental remediation	58,278,803	43,214,415
Other provisions and allowances	24,792,822	19,287,224
Defined benefit pension plan	95,038,147	85,666,349
Inventories - materials and spare parts	-	492,063
Total deferred tax assets	204,301,504	172,422,759
	12/31/2010	12/31/2009
Deferred tax liabilities
Inventories - materials and spare parts	1,237,314	-
Property, plant and equipment and intangible assets	342,229,374	328,171,797
Total deferred tax liabilities	343,466,688	328,171,797
Net deferred tax liabilities	139,165,184	155,749,038

The reconciliation between the income tax expense for the nine-month periods ended December 31, 2010 and 2009 and that resulting from applying the prevailing tax rate to income before tax is as follows:

	2010	2009
Net income before taxes	3,213,788,318	3,321,327,919
Prevailing tax rate	35%	35%
Net income prevailing tax rate	(1,124,825,911)	(1,162,464,772)
Permanent differences at the tax rate:
Miscellaneous - net	( 9,956,839)	( 3,364,869)
Subtotal permanent differences at the tax rate	( 9,956,839)	( 3,364,869)
Subtotal	(1,134,782,750)	(1,165,829,641)
Overstatement of provision 2009	32,248,022	-
Income tax expense – total	(1,102,534,728)	(1,165,829,641)
Current income tax expense	(1,119,118,582)	(1,369,505,178)
Deferred income tax benefit	16,583,854	203,675,537
	(1,102,534,728)	(1,165,829,641)

NOTE 12 -RESTRICTED ASSETS

There are no restricted assets as of December 31, 2010.

NOTE 13 - INFORMATION ON LITIGATION AND OTHER SUPPLEMENTARY MATTERS

Lawsuits were filed against the Branch. Besides, there are some pending administrative proceedings. Based on the information available, the Branch’s Management and legal advisors consider that the contingent liability that might arise from such lawsuits and administrative proceedings would not have a material adverse effect on the financial position of the Branch and on the results of its operations.

NOTE 14 - PROGRAMS ESTABLISHED BY RESOLUTION No. 24/2008 ISSUED BY THE SECRETARY OF ENERGY (as amended by Resolutions Nos. 1031/2008 and 695/2009) AND DECREE No. 2014/2008

In March 2008, the Secretary of Energy implemented a program aimed at increasing domestic gas production. This new regime establishes higher prices than those obtained currently in the domestic market for newly discovered natural gas, gas reservoirs qualifying as “tight gas” or from high investment projects, among others. The Secretary of Energy approved eight projects submitted by the Branch under this program: four in Branch operated areas and four in partner operated areas.

On November 26, 2008, Decree No. 2014/2008 issued by the Argentine Executive was published in the Official Bulletin, whereby a program relating to oil production and reserves was created. This program, which does not have an expiration date, provides for the giving of tax credit certificates, which may be used to pay tariffs on the export of oil, LPG and byproducts. This program stimulates investments in exploration and development projects for oil reserves replacement and production growth. On December 15, 2008, the Branch filed its first applications for tax credit certificates with the Secretary of Energy. Having increased production and having more than replaced the reserves produced, the Branch has qualified for the program and has been receiving tax credit certificates since January 2009. The tax credit certificates have been applied to pay tariffs on the export of oil and LPG.

NOTE 15 - AGREEMENTS WITH THE PROVINCES

15.1) Agreements with the Provinces of Chubut and Santa Cruz

Under the provisions of law N° 26,197, known as “Hydrocarbons Short Law”, the Branch entered into with the Argentine provinces of Chubut (on April 27, 2007) and Santa Cruz (on June 25, 2007) two investment commitments and agreements for the extension of the concession term for hydrocarbon production for a ten-year period in the blocks known as Cerro Dragón, the area of which extends into the territories of both provinces, and Piedra Clavada and Koluel Kaike in the province of Santa Cruz. Before the extension, these concessions had an initial expiring date between 2016 and 2017.

These agreements provide for, among other obligations, minimum capital expenditures of U$S 2,000,000,000 in the province of Chubut and of U$S 500,000,000 in the province of Santa Cruz, to be made by the Branch through 2016. Further expenditures of U$S 1,000,000,000 in the Province of Chubut and of U$S 300,000,000 in the province of Santa Cruz are to be made from 2017 through 2026.

Furthermore, the Branch entered into two operation agreements executed with the state-owned companies Petrominera Chubut S.E. (“Petrominera Chubut”) (in the case of Chubut) and Fomento Minero de Santa Cruz Sociedad del Estado (“Fomicruz”) (in the case of Santa Cruz) within the scope of the Hydrocarbons Law referred to above, which will come into effect as from the years 2026 and 2027 through 2046 and 2047, subject to the Branch’s compliance with the investment requirements and to the exploration success, which will allow Pan American Energy to prove whether it has developed sufficient reserves to continue with the field production in those areas as from 2026 and 2027.

15.1) Agreements with the Provinces of Chubut and Santa Cruz (cont.)

The agreements also provide for a U$S 80,000,000 investment commitment for offshore exploration, at the sole risk of the Branch, through two joint ventures (“UTEs”) with Petrominera Chubut and Fomicruz. If the Branch were to make commercial discoveries, an additional investment commitment would be required in the amount of U$S 500,000,000 for the development of such offshore fields.

As a consequence of said agreements, the Branch undertook the obligation to pay during the remaining period of the concessions, to the respective provinces an additional amount equivalent to 3% of its revenues from sales, net of certain items indicated in the agreements.

It will also disburse certain amounts for infrastructure development and economic diversification in the Provinces of Chubut and Santa Cruz, and carry out other complementary actions, reaffirming its corporate responsibility in the areas in which it operates.

15.2) Agreements with the Province of Neuquén

On January 28, 2009, the Province of Neuquén and the partners in the Aguada Pichana and San Roque blocks, in which the Branch has an interest of 18.18% and 16.47%, respectively (see Note 2), agreed on a 10-year extension of the terms of the concessions for hydrocarbon production from 2017 to 2027.

The Branch assumed a U$S 153,000,000 commitment to invest and incur expenses in the Aguada Pichana and San Roque blocks, as a whole, from September 2008 through 2027, which includes U$S 23,000,000 between both blocks in exploration, particularly for gas.

In addition, the Branch committed to pay to the province the amounts of US$ 11.2 million for Aguada Pichana and US$ 4.7 million for San Roque, which have already been paid. The Branch also agreed to pay an extraordinary amount equivalent to 3% of value of the area monthly production, net of certain items.

Under the terms of the referred agreement, the Branch made donations to the province in the total amount of US$ 1.3 million for Aguada Pichana and US$ 0.5 million for San Roque.

On May 22, 2009, the Province of Neuquén and the partners in the Lindero Atravesado block, in which the Branch has a 62.5% interest and is the operator (see Note 2), agreed on a 10-year extension of the terms of the concessions for hydrocarbon production from 2016 to 2026.

The Branch assumed a U$S 82.4 million commitment to invest and incur expenses from 2009 through 2026, which includes U$S 12.6 million in exploration, particularly for gas.

In addition, the Branch committed to pay to the province the amount of US$ 4.9 million, which have already been paid. The Branch also agreed to pay a monthly extraordinary amount equivalent to 3% of value of the area monthly production, net of certain items.

Under the terms of the referred agreement, the Branch made donations to the province in the total amount of US$ 0.6 million.

Within the framework of these negotiations with the Province of Neuquén to extend the terms of the concessions, on January 28, 2009, the Branch entered into a Settlement Agreement with the province, whereby all administrative and judicial claims and controversies between them were terminated.

NOTE 16 - PLAN FOR THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

On December 29, 2009, the CNV, through Resolution No. 562/09, established the application of Technical Resolution No. 26 of the FACPCE, which adopts the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) for certain entities falling within the scope of the public offering regime set forth by Law No. 17811, because of the public offering of their capital stock or financial bonds or because they applied for the referred regime. The application of these standards by the Branch will be mandatory as from the fiscal year beginning January 1, 2012.

On April 29, 2010, the Branch’s Legal Representative approved the specific implementation plan. In compliance with the referred plan, the effects of the adoption of IFRS are under evaluation and all the personnel involved in the accounting registration process have received appropriate training.

Until the end of 2010 fiscal year, the implementation plan was developed as expected and the diagnostic stage was completed, thus fulfilling the objectives set up, not resulting from the monitoring signs any deviations in respect of the plan or dates established for the implementation.

Resolution No. 576/10, and its clarifications extended the provisions of Resolution No. 562/09, and will be considered for the purposes of implementing the new standards of the Branch.

NOTE 17 -CHANGES IN THE OWNERSHIP INTERESTS HELD IN THE BRANCH’S HEAD OFFICE

On November 28, 2010, Bridas Corporation, one of Pan American Energy LLC’s members, entered into an agreement with BP Argentina Exploration Company and BP Alternative Energy North America Inc. to acquire its 60% interest in Head Office.

Upon completion of such transaction, the shareholders of Head Office will be: Bridas Corporation (99.60%) and Bridas Investments Ltd. (0.40%).

Bridas Corporation is a company in which Bridas Energy Holdings Limited and CNOOC International Limited hold equal ownership interests.

NOTE 18 - SUBSEQUENT EVENTS

On February 7, 2011, the first disbursement of US$ 123,393,498 was made in relation to the loan agreement executed on December 23, 2010 with an international bank syndicate.

EXHIBIT A

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

PROPERTY, PLANT AND EQUIPMENT (in pesos)
as of December 31, 2010 and December 31, 2009

	Original values					Depreciation
Main account	At beginning of the fiscal year	Increases for the fiscal year	Transfers	Decreases	At fiscal year-end	Accumulated at beginning of the fiscal year	Increases	Decreases	Accumulated at fiscal year-end	Net as of 12/31/10	Net as of 12/31/09
							(1) (2)
Land and buildings	97,669,518	459,383	39,562,197	-	137,691,098	36,741,909	6,151,748	-	42,893,657	94,797,441	60,927,609
Plants, wells and exploration and production facilities	20,051,957,170	399,574,706	2,613,314,676	6,579,492	23,058,267,060	9,406,894,887	1,185,636,602	1,332,006	10,591,199,483	12,467,067,577	10,645,062,283
Furniture and office supplies	9,116,897	36,436	141,672	30,562	9,264,443	8,605,902	297,675	30,562	8,873,015	391,428	510,995
Equipment	215,550,405	14,630	28,889,637	-	244,454,672	168,865,520	25,231,672	-	194,097,192	50,357,480	46,684,885
Vehicles	59,332,272	633,359	1,120,268	2,594,258	58,491,641	42,789,723	8,281,607	2,594,258	48,477,072	10,014,569	16,542,549
Work in progress	1,068,591,776	2,973,584,947	(2,670,660,741)	51,049,271	1,320,466,711	-	-	-	-	1,320,466,711	1,068,591,776
Advances to suppliers	19,084,945	50,310,245	( 12,367,709)	-	57,027,481	-	-	-	-	57,027,481	19,084,945
Total as of 12/31/2010	21,521,302,983	3,424,613,706	-	60,253,583	24,885,663,106	9,663,897,941	1,225,599,304	3,956,826	10,885,540,419	14,000,122,687
Total as of 12/31/2009	18,300,024,689	3,250,608,606	-	29,330,312	21,521,302,983	8,601,521,308	1,071,008,680	8,632,047	9,663,897,941		11,857,405,042

(1) See Exhibit G.

(2) See depreciation policies in Note 3.2.e.

EXHIBIT B

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

INTANGIBLE ASSETS (in pesos)
as of December 31, 2010 and December 31, 2009

	Original values			Amortization
Main account	At beginning of the fiscal year	Increases for the fiscal year	At fiscal year-end	Accumulated at beginning of the fiscal year	For the fiscal year	Accumulated at fiscal year-end	Net as of 12/31/10	Net as of 12/31/09
					(1) (2)
Pre-operating expenses	48,740,915	-	48,740,915	48,413,927	26,158	48,440,085	300,830	326,988
Acquisition cost of blocks	6,487,247	-	6,487,247	6,487,247	-	6,487,247	-	-
Deferred charges	63,488,027	-	63,488,027	63,488,027	-	63,488,027	-	-
Total as of 12/31/2010	118,716,189	-	118,716,189	118,389,201	26,158	118,415,359	300,830
Total as of 12/31/2009	118,716,189	-	118,716,189	118,359,381	29,820	118,389,201		326,988

(1) See Exhibit G.
(2) See amortization policies in Note 3 2 f.

EXHIBIT C

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

OTHER INVESTMENTS (in pesos)
as of December 31, 2010 and December 31, 2009

	Book value	Book value
Main account	12/31/2010	12/31/2009
Short-term investments
Mutual funds in local currency
Class: Banco Itaú (Goal Pesos) Class B
Quantity: 3,161,830 units of interest
Quoted value of the unit of interest: $ 3,280715	10,373,063	-
Mutual funds in
foreign currency (Exhibit F)
Class: Citi Institutional Liquid Reserves
Quantity: 385 units	1,515	1,444
Government securities
Certificates evidencing payment of tax liability
(Government of the Province of Chubut)
Coupon No. 23	992,850	1,726,968
Fiduciary fund (Exhibit F)
Fideicomiso Central Termoeléctrica Manuel Belgrano and
Central Termoeléctrica Timbúes
Debt Securities – Fiduciary, Class A U$S
Quantity: 408,521	1,607,940	1,248,436
Nación Fideicomiso S.A.
Debt securities – “VRDA OBRA – 4 Estrecho Definitivo”
Supplementary agreement to “Fideicomiso Financiero de Obra
Gasoducto Sur 2006-2008”
Quantity: 12,813,450	17,598,896	-
Time deposits (Exhibit F)	21,393,030	12,417,936
Special savings accounts (Exhibit F)	876,238,377	726,228,915
Total short-term investments	928,205,671	741,623,699
Long-term investments
Government securities:
Bonos de la República Argentina - Discount bonds
in pesos 5.83% final maturity in 2033
Quantity: 4,821,350
Face value: $ 1
Quoted: $ 1.52	9,040,031	5,399,912
GDP coupon pesos
Quantity: 14,306,676
Face value: $ 1
Quoted: $ 0.1071	2,127,403	663,830
Fiduciary fund
Fideicomiso Central Termoeléctrica Manuel Belgrano and
Central Termoeléctrica Timbúes
Debt Securities – Fiduciary, Class A U$S
Quantity: 2,432,432
(Exhibit F)	9,574,054	10,365,406
Nación Fideicomiso S.A.
Debt securities – “VRDA OBRA – 4 Estrecho Definitivo”
Supplementary agreement to “Fideicomiso Financiero de Obra
Gasoducto Sur 2006-2008”
Quantity: 115,321,051	115,321,051	118,957,774
Shares:
Garantizar S.A.
Quantity: 2000
Class: B
Face value: $ 1	2,000	2,000
Total long-term investments	136,064,539	135,388,922
Total investments	1,064,270,210	877,012,621

EXHIBIT D

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

ALLOWANCES, PROVISIONS AND ACCRUALS (in pesos)
as of December 31, 2010 and December 31, 2009

Main account	Balances at beginning of the fiscal year	Increases for the fiscal year		Decreases for the fiscal year		Balances as of 12/31/10
Deducted from current assets:
Allowance for bad debtors in local Currency	13,287,657	933,631	(1)	-		14,221,288
Allowance for bad debtors in foreign Currency	8,193,859	285,477	(2)	768,091	(3)	7,711,245
Allowance for obsolescence of Materials	4,073,169	1,916,330	(4)	-		5,989,499
Total deducted from assets	25,554,685	3,135,438		768,091		27,922,032
Included in current liabilities:
Provision for future compensation to personnel	4,464,598	2,290,502	(5)	3,335,100	(6)	3,420,000
Subtotal current liabilities	4,464,598	2,290,502		3,335,100		3,420,000
Included in non current liabilities:
Accrual for lawsuits	17,787,688	235,251	(7)	540,058	(8)	17,482,881
Provision for environmental Remediation	250,732,619	228,457,272	(9)	20,602,490	(10)	458,587,401
Provision for future compensation to personnel	21,707,215	7,422,107	(11)	2,290,502	(12)	26,838,820
Subtotal non current liabilities	290,227,522	236,114,630		23,433,050		502,909,102
Total included in liabilities	294,692,120	238,405,132		26,768,150		506,329,102

(1)	Charges for the fiscal year included in the Administrative expenses line (See Exhibit G) of the Statement of Income.
(2)	Charges for the fiscal year included in the Financial Results provided by Assets-exchange gains/losses in the statement of income.
(3)	Recoveries for the fiscal year included in Other income and expenses line of the Statement of Income.
(4)	Charges for the fiscal year included in the Production costs line (See Exhibit G) of the Statement of Income.
(5)	Transfer from non current provisions for future compensation to personnel.
(6)	Compensations paid during the fiscal year.
(7)	Charges for the fiscal year included in Administrative expenses (see Exhibit G) of the Statement of Income.
(8)	Recoveries for the fiscal year included in Other income and expenses line of the Statement of Income.
(9)	Charges for the fiscal year. It is made up of $ 22,868,855 included in Financial results provided by liabilities - other financial results, $ 7,812,255 included in Other income and expenses and $ 197,776,162 included in Property, plant and equipment.
(10)	It is made up of a decrease in property, plant and equipment of $ 5,146,033 and utilizations for the year of $ 15,456,457.
(11)	Charges for the fiscal year. It is made up of $ 2,617,778 included in Administrative expenses - Defined benefit plans for personnel (see Exhibit G), and $ 4,804,329 included in Other financial results generated by liabilities of the Statement of Income.
(12)	Transfer to current provision for future compensation to personnel for the fiscal year.

EXHIBIT E

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

COST OF SALES (in pesos)
for the fiscal year beginning January 1, 2010 and ended December 31, 2010, comparative with the prior fiscal year

	2010	2009
Inventories at the beginning of fiscal year	239,113,246	231,449,361
Purchases	337,402,644	293,831,066
Production costs (Exhibit G)	4,970,520,701	4,207,733,278
Inventories at fiscal year-end	( 201,182,026)	( 239,113,246)
Cost of sales	5,345,854,565	4,493,900,459

EXHIBIT F

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)
ASSETS AND LIABILITIES IN FOREIGN CURRENCY
as of December 31, 2010 and December 31, 2009

	Amount and type of foreign currency		Exchange		Amount in local currency as of	Amount and type of foreign currency			Amount in local currency as of
Item	as of 12/31/2010		rate		12/31/2010	as of 12/31/2009			12/31/2009
	U$S	Euros	$			U$S	Euros
ASSETS
CURRENT ASSETS
Banks
Cash on hand	-	4,370	5.2191	22,807			4,370	23,577
	45,405		3.936	178,714	201,521	50,586		190,202	213,779
Cash in banks	4,073,948		3.936		16,035,059	5,136,416			19,312,926
Investments
Time deposits	5,435,221		3.936		21,393,030	3,302,643			12,417,936
Mutual funds	385		3.936		1,515	384			1,444
Special deposit account	222,621,539		3.936		876,238,377	193,145,988			726,228,915
Fiduciary Fund	408,521		3.936		1,607,940	332,030			1,248,436
Accounts receivable
Accounts receivable	274,052,068		3.936		1,078,668,938	281,131,018			1,057,052,626
Allowance for bad debtors	(1,959,158)		3.936		( 7,711,245)	( 2,179,218)			( 8,193,859)
Notes receivable	6,537,662		3.936		25,732,238	5,292,247			19,898,849
Affiliated companies	855,982		3.936		3,369,145	855,982			3,218,492
Other receivables
Expenses recoverable	62,197		3.936		244,806	277,580			1,043,702
Miscellaneous	1,097,126		3.936		4,318,289	3,945,464			14,834,946
Affiliated companies	5,221,040		3.936		20,550,013	4,153,452			15,616,981
Inventories
Advances to suppliers	326,646		3.936		1,285,679	-			-
Total current assets	518,778,582	4,370			2,041,935,305	495,444,572	4,370		1,862,895,173
NON CURRENT ASSETS
Other receivables
Miscellaneous	3,646,325		3.936		14,351,936	3,829,673			14,399,572
Investments
Fiduciary Fund	2,432,432		3.936		9,574,054	2,756,757			10,365,406
Total non current assets	6,078,757				23,925,990	6,586,430			24,764,978
Total assets	524,857,339	4,370			2,065,861,295	502,031,002	4,370		1,887,660,151

U$S= US dollar

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)
ASSETS AND LIABILITIES IN FOREIGN CURRENCY
as of December 31, 2010 and December 31, 2009

	Amount and type of foreign currency	Exchange	Amount in local currency as of	Amount and type of foreign currency	Amount in local currency as of
Item	as of 12/31/2010	rate	12/31/2010	as of 12/31/2009	12/31/2009
	U$S	$		U$S
CURRENT LIABILITIES
Accounts payable
Trade	55,704,755	3.976	221,482,105	54,021,185	205,280,502
Notes payable	-	-	-	7,649,951	29,069,812
Affiliated companies	10,712,265	3.976	42,591,968	4,222,221	16,044,440
Loans
Unsecured notes payable	205,453,000	3.976	816,881,127	296,910,000	1,128,258,000
Interest accrued on
notes payable	14,229,062	3.976	56,574,749	15,444,187	58,687,911
Financial bonds
Financial bonds	123,393,500	3.976	490,612,556	-	-
Interest accrued on financial bonds	13,556,647	3.976	53,901,228	7,857,639	29,859,028
Total current liabilities	423,049,229		1,682,043,733	386,105,183	1,467,199,693
NON CURRENT LIABILITIES
Accounts payable
Miscellaneous liabilities	5,510,148	3.976	21,908,348	5,510,148	20,938,562
Loans
Unsecured notes payable	754,507,000	3.976	2,999,919,832	874,960,000	3,324,848,000
Financial bonds
Financial bonds	623,393,500	3.976	2,478,612,556	250,000,000	950,000,000
Total non current liabilities	1,383,410,648		5,500,440,736	1,130,470,148	4,295,786,562
Total liabilities	1,806,459,877		7,182,484,469	1,516,575,331	5,762,986,255

U$S= US dollar

EXHIBIT G

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

INFORMATION REQUIRED BY ART. 64, CLAUSE 1b) OF LAW 19550, for the fiscal year beginning January 1, 2010 and ended December 31, 2010, comparative with the prior fiscal year (in pesos)

Items	Production costs	Administrative expenses	Total 2010	Total 2009
Fees and compensation for services	57,395,270	32,024,598	89,419,868	64,846,210
Salaries, wages and benefits to personnel	404,596,823	80,690,442	485,287,265	370,496,686
Defined benefit plans to personnel (Note 3 2 j)	6,713,953	23,410,842	30,124,795	44,902,195
Social security contributions	67,586,811	19,055,510	86,642,321	63,995,001
Taxes, assessments and other contributions	1,641,768,081	214,989,447	1,856,757,528	1,464,484,904
Depreciation of property, plant and equipment (Exhibit A)	1,219,416,744	6,182,560	1,225,599,304	1,071,008,680
Intangible asset amortization (Exhibit B)	26,158	-	26,158	29,820
Transportation, freight and storage expenses	183,638,208	52,910	183,691,118	157,895,969
Contracted services	1,083,023,639	18,904,717	1,101,928,356	902,251,239
Travel and accommodation expenses	7,413,926	11,403,387	18,817,313	16,901,356
Building rentals, maintenance and others	67,034,071	29,454,885	96,488,956	89,934,653
Environmental remediation and rights of way	73,400,506	-	73,400,506	58,981,410
Bad debtors (Exhibit D)	-	933,631	933,631	3,611,104
Lawsuits (Exhibit D)	-	235,251	235,251	6,530,838
Obsolescence of materials (Exhibit D)	1,916,330	-	1,916,330	510,140
Dry wells	7,040,009	-	7,040,009	3,396,526
Geology and geophysics related expenses	55,174,881	-	55,174,881	82,391,583
Production and administrative general expenses	94,375,291	1,089,026	95,464,317	144,611,328
Total 2010	4,970,520,701	438,427,206	5,408,947,907
Total 2009	4,207,733,278	339,046,364		4,546,779,642

EXHIBIT H

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)
Balance sheet as of December 31, 2010 and December 31, 2009
TERMS, INTEREST RATES AND ADJUSTMENT CLAUSES OF SHORT-TERM INVESTMENTS, LOANS, RECEIVABLES AND PAYABLES (in pesos)

	Investments		Receivables		Payables		Loans
	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009
Total amount without any established term	2,129,403	665,830	129,998,125 (1)	231,281,825	930,205,330	711,703,681	-	-
To become due:
Up to 3 months	914,434,816	739,954,470	1,301,814,555	1,185,468,019	1,415,862,744	1,247,493,481	881,384,909	593,634,320
From 3 to 9 months	4,590,285	304,865	4,055,884	3,365,224	178,838,945	851,427,171	207,578,703	554,420,000
From 6 to 9 months	4,590,285	1,059,499	3,898,614	3,270,529	2,700,100	7,256,709	166,387,648	63,859,000
From 9 to 12 months	4,590,285	304,865	3,489,657	3,048,183	16,251,100	14,011,755	162,618,400	193,420,000
From 1 to 2 years	18,361,141	13,115,236	11,076,024	9,960,797	7,380,398	7,626,356	1,546,226,640	1,046,721,400
From 2 to 3 years	18,361,141	17,080,495	6,284,913	4,908,219	7,380,398	7,380,398	1,005,912,096	1,426,884,800
From 3 to 4 years	18,361,141	17,080,495	1,388,481	2,210,106	7,380,398	7,380,398	347,088,896	904,384,800
From 4 to 5 years	18,361,141	17,080,495	552,978	861,909	7,380,398	7,380,398	215,972,344	331,724,800
From 5 to 6 years	18,361,141	17,080,495	140,761	163,138	7,380,398	7,380,398	122,460,800	206,412,200
From 6 to 7 years	18,361,141	17,080,495	-	-	7,380,398	7,380,398	221,860,800	117,040,000
From 7 to 8 years	14,089,991	17,080,495	-	-	7,380,398	7,380,398	31,012,800	212,040,000
From 8 to 9 years	638,268	13,115,240	-	-	2,460,133	7,380,398	662,664,016	29,640,000
From 9 to 10 years	-	609,734	-	-	-	2,460,132	662,666,004	-
Over 10 years	9,040,031	5,399,912	-	-	-	-	662,667,992	-
Subtotal	1,064,270,210	877,012,621	1,462,699,992	1,444,537,949	2,597,981,138	2,893,642,071	6,896,502,048	5,680,181,320
Other items that are not to be collected or paid in cash	-	-	72,116,837	40,709,152	-	-	-	-
Total	1,064,270,210	877,012,621	1,534,816,829	1,485,247,101	2,597,981,138	2,893,642,071	6,896,502,048	5,680,181,320

(1) It includes the overdue receivables detailed in item 3.a of the supplementary information.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)
Balance sheet as of December 31, 2010 and December 31, 2009
TERMS, INTEREST RATES AND ADJUSTMENT CLAUSES OF SHORT-TERM INVESTMENTS, LOANS, RECEIVABLES AND PAYABLES (in pesos)

	Investments				Receivables				Payables				Loans
	12/31/2010		12/31/2009		12/31/2010		12/31/2009		12/31/2010		12/31/2009		12/312010		12/31/2009
	Rate	Pesos	Rate	Pesos	Rate	Pesos	Rate	Pesos	Rate	Pesos	Rate	Pesos	Rate	Pesos	Rate	Pesos
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	7.875	1,988,000,000	-	-
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	7.56	220,906,560	7.56	253,346,000
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	6.97	178,920,000	6.97	256,500,000
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	5.66 (2)	59,640,000	5.66 (2)	57,000,000
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	8.00	39,760,000	8.00	38,000,000
Annual fixed rate in U$S	14.00 (3)	11,181,994	14.00 (3)	11,613,842	-	-	-	-	-	-	-	-	7.75	981,225,111	7.75	950,000,000
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	4.13	401,178,400	4.13	492,860,000
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	4.49	664,389,600	4.49	776,340,000
Annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	5.46	470,758,400	5.46	509,960,000
Annual rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	(5)	608,328,000	(5)	581,400,000
CER plus annual fixed rate in $	4.00	992,850	4.00	1,726,968	-	-	-	-	-	-	-	-	-	-	-	-
Average annual variable rate in $	6.02	10,373,063	-	-	8.00	43,208,056	8.00	31,646,092	-	-	-	-	-	-	9.82	188,528,381
Average annual variable rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	4.45	914,480,000	3.14	874,000,000
Average annual fixed rate in U$S	-	-	-	-	-	-	-	-	-	-	-	-	1.38	258,440,000	3.58	613,700,000
Average annual variable rate in U$S	0.15	897,632,922	0.15	738,648,295	-	-	-	-	-	-	-	-	-	-	-	-
Annual variable rate in $	CER más 8% (4)	132,919,947	-	-	-	-	-	-	-	-			-	-	-	-
Annual fixed rate in $	-	-	15.00 (4)	118,957,774	-	-			9.00	61,503,317	9.00	68,883,714	-	-
Annual fixed rate in $ plus CER	5.83	9,040,031	5.83	5,399,912	-	-	-	-	-	-	-	-	-	-	-	-
Non-interest bearing	-	2,129,403	-	665,830	-	1,491,608,773	-	1,453,601,009	-	2,536,477,821	-	2,824,758,357	-	-	-	-
Total		1,064,270,210		877,012,621		1,534,816,829		1,485,247,101		2,597,981,138		2,893,642,071		6,786,026,071 (1)		5,591,634,381 (1)

(1)	It only includes principal at face value.
(2)	Plus additional interest calculated in relation to the economic performance of Pan American Energy LLC.
(3)	Fideicomiso Central Termoeléctrica Manual Belgrano and Central Termoeléctrica Timbúes.
(4)	Nación Fideicomiso S.A. – “Fideicomiso Financiero de Obra Gasoducto Sur 2006-2008”.
(5)	The weighted average rate was 7.37% as of 12/31/2010 and 7.44% as of 12/31/2009.

EXHIBIT I

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

Balance sheet as of December 31, 2010 and December 31, 2009

PARTICIPATION IN JOINT VENTURES (in pesos)

	Lindero Atravesado		Aguada Pichana		San Roque		Acambuco		Estancia La Escondida		Bandurria		Costa Afuera Argentina Bloque 40		Costa Afuera Argentina Bloque 46		Anticlinal Funes
	62.50%	62.50%	18.18%	18.18%	16.47 %	16.47 %	52.00 %	52.00 %	25.00%	25.00%	18.18%	18.18%	33.50%	33.50%	33.50%	33.50%	80.00%	80.00%
	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009
Balance sheet
ASSETS
CURRENT ASSETS
Cash and banks	171,040	161,756	508,676	351,878	325,847	129,004	33,614	1,197,400	108,067	28,465	495,514	310,879	-	-	-	-	10,168	-
Other receivables	440,339	2,009,703	7,860,375	9,293,265	5,776,817	6,868,665	2,017,982	4,471,493	965,578	822,717	151,522	397,949	9,532,522	596,799	580,221	580,311	1,092,857	1,143,832
Inventories	6,415,617	7,379,376	10,192,806	11,904,216	6,403,843	6,744,552	11,512,108	4,117,891	102,582	94,961	-	-	-	-	-	-	-	-
Total current assets	7,026,996	9,550,835	18,561,857	21,549,359	12,506,507	13,742,221	13,563,704	9,786,784	1,176,227	946,143	647,036	708,828	9,532,522	596,799	580,221	580,311	1,103,025	1,143,832
NON CURRENT ASSETS
Other receivables	215,158	-	-	-	-	-	245,732	193,894	-	-	-	-	-	-	-	-	-	-
Property, plant and Equipment	130,415,412	138,954,407	320,613,232	306,707,586	140,020,504	171,707,344	853,588,977	683,083,674	6,063,112	5,273,526	8,787,758	4,993,039	21,571,597	9,131,471	269,574	269,574	5,653,686	6,714,451
Total non current assets	130,630,570	138,954,407	320,613,232	306,707,586	140,020,504	171,707,344	853,834,709	683,277,568	6,063,112	5,273,526	8,787,758	4,993,039	21,571,597	9,131,471	269,574	269,574	5,653,686	6,714,451
Total assets	137,657,566	148,505,242	339,175,089	328,256,945	152,527,011	185,449,565	867,398,413	693,064,352	7,239,339	6,219,669	9,434,794	5,701,867	31,104,119	9,728,270	849,795	849,885	6,756,711	7,858,283

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

Balance sheet as of December 31, 2010 and December 31, 2009

PARTICIPATION IN JOINT VENTURES (in pesos)

	Lindero Atravesado		Aguada Pichana		San Roque		Acambuco			Estancia La Escondida			Bandurria		Costa Afuera Argentina Bloque 40			Costa Afuera Argentina Bloque 46		Anticlinal Funes
	62.50%	62.50%	18.18%	18.18%	16.47%	16.47%		52.00%	52.00%		25.00%	25.00%	18.18%	18.18%	33.50%	33.50%	33.50%		33.50%	80.00%	80.00%
Balance sheet	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009		12/31/2010	12/31/2009		12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010	12/31/2009	12/31/2010		12/31/2009	12/31/2010	12/31/2009
LIABILITIES
CURRENT LIABILITIES
Accounts payable	7,973,416	8,411,959	49,664,194	47,119,869	17,460,460	9,576,516		63,541,144	22,138,837		2,588,657	1,583,846	-	-	-	-	-		-	852,700	1,146,612
Payroll and social security contributions	1,437,104	1,221,601	-	-	-	-		3,205,720	3,087,195		-	-	-	-	-	-	-		-	-	-
Taxes payable	703,035	85,667	886,059	1,627,432	1,056,829	1,466,121		2,040,657	199,443		160,683	107,729	181,116	185,039	-	-	-		-	3,408	3,234
Provision for future compensation to personnel	1,584,175	1,130,000	-	-	-	-		1,454,597	290,200		-	-	-	-	-	-	-		-	-	-
Total current liabilities	11,697,730	10,849,227	50,550,253	48,747,301	18,517,289	11,042,637		70,242,118	25,715,675		2,749,340	1,691,575	181,116	185,039	-	-	-		-	856,108	1,149,846
NON CURRENT LIABILITIES
Accounts payable	4,087,546	3,935,755	-	219,132	2,417,323	876,528		3,077,540	4,579,757		-	-	-	-	-	-	-		-	-	-
Provision for environmental remediation	7,529,316	5,537,881	21,900,475	16,545,405	10,954,225	9,639,949		28,780,893	16,175,585		156,056	172,832	-	-	-	-	-		-	4,341,233	4,595,592
Accruals	2,449,616	1,532,345	150,722	61,052	165,735	182,065		3,876,743	3,634,430		-	-	-	-	-	-	-		-	-	-
Total non current liabilities	14,066,478	11,005,981	22,051,197	16,825,589	13,537,283	10,698,542		35,735,176	24,389,772		156,056	172,832	-	-	-	-	-		-	4,341,233	4,595,592
Total liabilities	25,764,208	21,855,208	72,601,450	65,572,890	32,054,572	21,741,179		105,977,294	50,105,447		2,905,396	1,864,407	181,116	185,039	-	-	-		-	5,197,341	5,745,438
Owner’s equity	111,893,358	126,650,034	266,573,639	262,684,055	120,472,439	163,708,386		761,421,119	642,958,905		4,333,943	4,355,262	9,253,678	5,516,828	31,104,119	9,728,270	849,795		849,885	1,559,370	2,112,845
Total	137,657,566	148,505,242	339,175,089	328,256,945	152,527,011	185,449,565		867,398,413	693,064,352		7,239,339	6,219,669	9,434,794	5,701,867	31,104,119	9,728,270	849,795		849,885	6,756,711	7,858,283

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

Balance sheet as of December 31, 2010 and December 31, 2009

PARTICIPATION IN JOINT VENTURES (in pesos)

	Lindero Atravesado		Aguada Pichana		San Roque		Acambuco		Estancia La Escondida		Bandurria			Costa Afuera Argentina Bloque 40		Costa Afuera Argentina Bloque 46		Anticlinal Funes
	62.50%	62.50%	18.18%	18.18%	16.47%	16.47%	52.00%	52.00%	25.00%	25.00%		18.18%	18.18%	33.50%	33.50%	33.50%	33.50%	80.00%	80.00%
	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009		2010	2009	2010	2009	2010	2009	2010	2009
INCOME STATEMENT
Sales (a)	-	-	-	-	-	-	-	-		-			-	-	-	-	-	-	-
Cost of sales	(82,792,452)	(66,508,751)	(175,215,942)	(192,596,120)	(125,098,006)	(114,196,049)	(229,629,595)	(247,389,449)	(4,869,111)	(4,195,390)		-	-	-	-	-	-	(10,450,403)	(13,009,118)
Gross result	(82,792,452)	(66,508,751)	(175,215,942)	(192,596,120)	(125,098,006)	(114,196,049)	(229,629,595)	(247,389,449)	(4,869,111)	(4,195,390)		-	-	-	-	-	-	(10,450,403)	(13,009,118)
Administrative expenses	-	-	-	-	-	-	-	-	-	-		-	-	-	-	-	-	-	-
Operating result	(82,792,452)	(66,508,751)	(175,215,942)	(192,596,120)	(125,098,006)	(114,196,049)	(229,629,595)	(247,389,449)	(4,869,111)	(4,195,390)		-	-	-	-	-	-	(10,450,403)	(13,009,118)
Financial results - net	( 2,876,174)	756,699	( 1,402,519)	( 4,500,370)	( 595,853)	( 1,860,950)	( 1,466,180)	( 389,625)	( 4,132)	( 5,134)		42	( 5,636)	( 823)	2,125	( 425)	( 2,234)	( 292,146)	( 155,023)
Other income and expenses – net	689,148	( 635,475)	-	248,542	3,971,769	172,645	637,078	777,407	-	-		(6,384,693)	(3,264,466)	(11,207,880)	(2,827,976)	(4,316,716)	(2,129,626)	( 41,600)	-
Net results	(84,979,478)	(66,387,527)	(176,618,461)	(196,847,948)	(121,722,090)	(115,884,354)	(230,458,697)	(247,001,667)	(4,873,243)	(4,200,524)		(6,384,651)	(3,270,102)	(11,208,703)	(2,825,851)	(4,317,141)	(2,131,860)	(10,784,149)	(13,164,141)

(a) No sales were recorded in the joint ventures because production is directly assigned to each participant.

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010

REPORTING SUMMARY REQUIRED BY RESOLUTION No. 290/97 OF THE NATIONAL SECURITIES COMMISSION

1. Comment on the Branch's activity

Operating activities:

Pan American Energy LLC Argentine Branch (“The Branch”) is mainly engaged in the exploration, development and production of hydrocarbons. The Head Office of the Branch is Pan American Energy LLC.

During the fiscal year ended December 31, 2010, with a daily average production of 232.31 thousand barrels of oil, the Branch together with the subsidiaries of the Head Office that develop their activities in the country rank second in the production of natural gas and oil in Argentina.

2. Balance sheet items (in pesos)

	Balance	Balance	Balance	Balance	Balance
	Sheet	Sheet	Sheet	Sheet	Sheet
	as of	as of	as of	as of	as of
	12/31/2010	12/31/2009	12/31/2008	12/31/2007	12/31/2006
Current assets	2,596,344,189	2,414,448,055	1,928,205,904	1,260,904,810	1,235,627,955
Non current assets	14,253,731,170	12,076,923,784	9,768,495,753	7,446,314,957	5,910,041,926
Total	16,850,075,359	14,491,371,839	11,696,701,657	8,707,219,767	7,145,669,881
Current liabilities	3,031,622,549	3,525,522,436	3,133,204,026	1,706,399,649	2,038,446,446
Non current liabilities	6,480,343,518	5,066,088,643	4,576,854,938	3,669,958,237	2,989,464,507
Subtotal	9,511,966,067	8,591,611,079	7,710,058,964	5,376,357,886	5,027,910,953
Account with Head Office	6,876,870,285	5,438,521,753	3,525,403,686	2,869,622,874	1,656,519,921
Capital allocated to the Branch	221,779,007	221,779,007	221,779,007	221,779,007	221,779,007
Capital adjustment	239,460,000	239,460,000	239,460,000	239,460,000	239,460,000
Total	16,850,075,359	14,491,371,839	11,696,701,657	8,707,219,767	7,145,669,881

3. Income statement items (in pesos)

	Fiscal	Fiscal	Fiscal	Fiscal	Fiscal
	year ended	year ended	year ended	year ended	year ended
	12/31/2010	12/31/2009	12/31/2008	12/31/2007	12/31/2006
Ordinary operating income	3,892,026,289	4,275,336,592	2,210,870,826	2,573,221,966	2,743,659,781
Financial results	( 700,437,074)	( 973,410,190)	( 735,869,887)	( 334,318,829)	( 157,229,580)
Other income and expenses - net	22,199,103	19,401,517	23,405,830	( 24,199,544)	( 41,522,382)
Income before income tax	3,213,788,318	3,321,327,919	1,498,406,769	2,214,703,593	2,544,907,819
Income tax expense - current	(1,119,118,582)	(1,369,505,178)	( 551,629,967)	( 831,214,623)	( 896,407,452)
Income tax - deferred	16,583,854	203,675,537	30,272,746	52,253,813	( 3,463,245)
Net income	2,111,253,590	2,155,498,278	977,049,548	1,435,742,783	1,645,037,122

4. Statistical data

	Fiscal	Fiscal	Fiscal	Fiscal	Fiscal
	year ended	year ended	year ended	year ended	year ended
	12/31/2010	12/31/2009	12/31/2008	12/31/2007	12/31/2006
	in cubic meters	in cubic meters	in cubic meters	in cubic meters	in cubic meters
Production of crude oil (1)	6,543,884	6,638,078	6,145,708	6,150,764	6,123,609
Sale of crude oil	6,746,878	6,703,275	6,009,932	6,135,234	6,146,250
	in thousand cubic meters	in thousand cubic meters	in thousand cubic meters	in thousand cubic meters	in thousand cubic meters
Production of natural gas (2)	5,000,001	5,305,594	5,635,655	5,229,944	4,887,081
Sale of natural gas	4,855,318	5,252,619	5,655,867	5,310,947	4,777,025
Transportation of natural gas	-	-	-	2,756	15,159
	in tons	in tons	in tons	in tons	in tons
Production of L.P.G.	148,466	159,944	138,904	75,337	104,647
Sale of L.P.G.	161,259	160,954	126,354	62,342	105,810

(1)	Includes gasoline from the gas processing plants of Transportadora de Gas del Sur S.A. (Gral. Cerri) and Refinería del Norte S.A.
(2)	The production of natural gas is disclosed net of the amounts reinjected into the reservoir and used up in the operations and processed in the gas processing plants.

5. Ratios

	Financial statements as of 12/31/2010	Financial statements as of 12/31/2009	Financial statements as of 12/31/2008	Financial statements as of 12/31/2007	Financial statements as of 12/31/2006
Liquidity (1)	0.86	0.68	0.62	0.74	0.61
Indebtedness (2)	1.30	1.46	1.93	1.60	2.37
Tied –up funds (3)	0.85	0.83	0.83	0.86	0.83
Solvency (4)	0.77	0.69	0.52	0.62	0.42
Ordinary profitability before income tax/ Minimun deferred income tax (5)	0.54	0.83	0.45	1.05	1.01
Net profitability (6)	0.36	0.54	0.29	0.68	0.65

(1)	Total current assets / Total current liabilities
(2)	Total liabilities / Account with Head Office plus Capital allocated to the Branch plus Capital adjustment
(3)	Non current assets / Total assets
(4)	Account with Head Office plus Capital allocated to the Branch plus Capital adjustment / Total liabilities
(5)	Income before tax / Account with Head Office plus Capital allocated to the Branch plus Capital adjustment at beginning of fiscal year
(6)	Net income / Account with Head Office plus Capital allocated to the Branch plus Capital adjustment at beginning of fiscal year

6. Supplementary Information to the Financial Statements as of December 31, 2010

Information on oil and gas reserves

In compliance with General Resolution N° 541/2008 of the Argentine Securities and Exchange Commission, below are the proved reserves of oil and gas of the Issuer as of December 31, 2010:

The Branch’s reserves are located in the geographic area of Argentina.

The information on reserves is based on the estimates prepared by the international technical consultants RPS and Ryder Scott Company Petroleum Consultants.

Developed and undeveloped proved reserves
	Crude oil, condensate and natural gas liquids (in m3)	Natural gas (in thousands of m3)	Total combined (in m3 of oil equivalent)
Reserves as of December 31, 2009	147,595,139	55,535,760	203,130,899
Addition (decrease) of reserves for the fiscal year	7,827,276	( 106,936)	7,720,340
Production for the fiscal year	( 6,495,744)	( 6,024,098)	( 12,519,842)
Reserves as of December 31, 2010	148,926,671	49,404,726	198,331,397

7. Plan for the implementation of International Financial Reporting Standards

On April 29, 2010, the Branch’s Legal Representative approved the implementation plan of International Financial Reporting Standards (IFRS) in compliance with the requirements of Resolution No. 562/09 issued by the Argentine Securities Commission.

Pursuant to the provisions of FACPCE Technical Resolution No. 26, paragraphs 17 (a) and (b), we report that: (i) in compliance with General Resolution No. 562/09 of the Argentine Securities Commission, the Branch will prepare the quarterly and annual financial statements for the fiscal year beginning January 1, 2012 and subsequent financial statements under IFRS; (ii) in compliance with the approved implementation plan, the effects of the adoption of IFRS are under evaluation and the training process for all the personnel involved in the accounting registration has been completed.

Pursuant to the provisions of Resolution No. 576/10, it is informed that the transition date adopted by the Branch is January 1, 2011.

As a result of monitoring the implementation plan, the Legal Representative informs that he has not become aware of any circumstance calling for any amendment of such plan, which is being executed in accordance with the objectives set.

8. Business prospects

The Branch is working to maintain and increase its operating efficiency in connection with the oil and gas exploration and production, to continue increasing its production and adding hydrocarbons reserves in Argentina, satisfying in this way the energy needs of the country as well as to comply with its pre-existing contractual obligations. The Branch strives to provide its personnel and contractors with healthy and safe working conditions while preserving the environment.

The Branch is strongly engaged with the communities where it operates, by developing different social responsibility programs (CSR).

In the fiscal year ended December 31, 2010, the Branch’s total production of hydrocarbons kept the same level compared with the prior year, despite of the impact of worker union strikes that affected the productivity during the fiscal year. The active investment program mentioned above has allowed the Branch to double its production of hydrocarbons between 1999 and 2009 and 2010 and increase its reserves year by year throughout that period.

The global economic crisis, which arose in 2008 in the financial sector and later impacted the real economy, compelled the governments of many countries, including Argentina, to take actions intended to stimulate the global demand and the maintenance of employment.

During 2009 and 2010, stimulating policies continued to be applied. In the last quarter of 2009 the first recovering signs were evidenced both at a worldwide level and in our country. However, the global economy, particularly United States of America and Europe has not yet adopted a clear trend towards the increase in global demand and the level of employment. For this reason, new measures of encouragement of global demand in these countries were taken.

As a result of the referred crisis, there were also significant reductions in the price of commodities, including oil prices: the WTI type decreased from a maximum amount of U$S 145.31 per barrel in July 2008 to less than one third of such amount in the first quarter of 2009 (U$S 43.10 per barrel). In the fiscal year ended December 31, 2010, the average price of WTI was U$S 79.53 per barrel, 28. 65 % higher compared to 2009, when the price per barrel was U$S 61.82, thus showing a higher worldwide demand for this commodity.

At a sector level, the increased costs in the oil industry are a matter of concern. As such costs broadly exceeded the general rise in prices during the years prior to the 2008/2009 international crisis, they were not properly in line with changes in both the international and domestic macroeconomic variables as from the referred crisis.

The revenues from sales of the production of oil and gas sectors have been affected as in the last years by the regulations currently in force. In the case of oil, as from March 2002, export tariffs have been applied, which has also affected the prices in the domestic market. On November 15, 2007, the Ministry of Economy and Production issued Resolution 394/07, whereby such export tariffs were increased and an effective ceiling price for the export of crude was set, which was ratified by Resolution 813/2010 of the Argentine Secretary of Energy. On the other hand, Resolution 1679/2004 of the Secretary of Energy, which provided for the mandatory registration of export transactions and their prior authorization, remains effective.

The changes in exploration and production costs incurred in relatively low-production and mature fields, as in the case of Argentina, demand a level of crude oil prices in the domestic market and a net export price which have not been yet validated by the oil pricing regulations applicable in the country. Particularly considering the replacement of reserves which must give the activity a proper sustainability level in the long term.

In the case of natural gas, after a four-year period (from 2002) in which the domestic market prices were successively redenominated into pesos and frozen, export tariffs and restrictions were imposed on exports. On the other hand, an agreement named “regularization of wellhead prices” was signed between the Secretary of Energy and the natural gas producers, which expired on December 31, 2006. At the request of the related authorities, a new agreement was entered into which will be in force until December 31, 2011 (confirmed by Resolution 599/07 issued by the Secretary of Energy). Under the referred agreement, producers (including the Branch) undertake to satisfy the domestic demand up to the levels reached in 2006 plus the growth of the residential market during the validity thereof by setting out new guidelines for price changes. On July 28, 2009 the national and provincial authorities, the representatives of main industry unions, together with the gas producers, entered into an agreement – currently in force – tending to restore the balance of the oil and gas sector. On September 28, 2010, the Argentine Gas Regulator Entity (ENARGAS) Resolution No. 1410/2010 was published in the Official Gazette. This resolution established a procedure for gas applications, confirmations and controls of gas applicable to all the entities in the gas industry, including the Branch.

In September 2008, a regime to subsidize low-income liquefied petroleum gas (LPG) consumers was established, whereby funds obtained from the increase in the price of natural gas paid by certain categories of gas consumers are transferred to a fiduciary fund created for that purpose. This regime was established by Resolution No. 1070/2008 issued by the Secretary of Energy and extended until December 31, 2010 and then until December 31, 2011.

At a sector level, on November 18, 2010 the National Agreement for the Promotion of the Social Dialogue in the Hydrocarbons Industry was entered into by representatives of the Ministry of Federal Planning, Public Investment and Services; the Ministry of Labor Employment and Social Security, the hydrocarbon producing provinces, and the unions and producers. This Agreement is aimed at promoting the regional development and dialogue among the parties.

Regarding governmental programs to encourage the increase in oil and natural gas production and reserves, see Notes 14 and 15 to the Financial Statements.

City of Buenos Aires, March 10, 2011

Hernán Pablo Giacumbo

Attorney - in - fact

PAN AMERICAN ENERGY LLC (ARGENTINE BRANCH)

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010

SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010 REQUIRED BY SECTION 68 OF THE REGULATIONS OF THE BUENOS AIRES STOCK EXCHANGE

Overall issues about the Branch’s activity:

1.	Specific and significant legal requirements which imply contingent suspensions or changes of benefits provided for by such regulations:
	The Branch is not subject to specific and significant legal requirements, which may imply the contingent suspension or change of benefits provided for by such regulations, except as disclosed in notes to the financial statements.
2.	Significant changes in the Branch’s activities or other similar circumstances that affect the comparison of the financial statements with prior years, or with those to be presented in future years.
	There are no changes in the Branch’s activities that significantly affect the comparison of the financial statements as of December 31, 2010.
3.	Breakdown of receivables and payables as per section 68, subsection 3.
	3.a) The breakdown of receivables and payables based on the maturity thereof is disclosed in Exhibit H to the financial statements.
	The following receivables without any established term included in the referred Exhibit H are overdue:

	Current receivables
	$
Due from October to December 2010	24,700,784
Due from July to September 2010	24,195,183
Due from April to June 2010	7,271,376
Due from January to March to 2010	876,265
Due from January to December 2009	17,940,879
Due from January to December 2008	5,088,804
Due from January to December 2007	421,323
Due from January to December 2006	13,288
Due from January to December 2004	2,577
Due from January to December 2002	24,585
Total	80,535,064

	There are no overdue payables.
	3.b) In connection with the receivables and payables in foreign currency, see Exhibit F to the financial statements. There are no significant receivables and payables to be cancelled in kind.
	3.c) There are no receivables and payables subject to adjustment clauses.
	3.d) In connection with the receivables and payables that accrue interest as of December 31, 2010, see Exhibit H to the financial statements.
4.	Participation in Art. 33 Corporations Law No. 19550
	None.
5.	Trade accounts receivables or loans with directors, statutory auditors, and relatives including up to the second degree:
	None as of the date of issuance of these financial statements.
6.	Physical counts of inventories
	Based on the nature of the activity, the Branch carries out physical counts of most of its inventories. There are no significant slow-moving inventories as of December 31, 2010 for which an allowance has not been set up.
7.	Current values
	The valuation method of inventories is disclosed in Note 3.2.d) to the financial statements.
8.	Property, plant and equipment
	No items of property, plant and equipment have been subject to technical revaluations.
	To date, there are no property, plant and equipment items that are not in use due to obsolescence.
9.	Interests in other companies
	None. The Branch’s participating interests in joint operations are disclosed in Note 2 to the financial statements.
10.	Recoverable value
	The recoverable value of inventories and fixed assets, used as a limit to their valuation for financial reporting purposes, have been determined based on the net realizable values and values in use, the latter defined as the expected net cash flows that would result from both the use of the assets and the disposal thereof at the end of their useful life.
11.	Insurance
	As of December 31, 2010, the insurance taken in relation to the Branch’s goods and activities are as follows:

		Covered
Insured assets	Insured risks	amount
		Thousand U$S
Equipment, facilities and pipelines
applied to exploitation and transportation	Physical damage	2,927,765 (*)
Third party damage caused by the Branch’s activities
or by the equipment, facilities and pipelines used
for exploration and production purposes	Liability insurance on - shore	100,000
	Liability insurance off - shore	100,000
Wells	Control, re-drilling, spill	(**)
Goods	Transportation	10,000

In addition, the Branch took out workers’ compensation and automobile liability insurance policies.

(*) It is the total amount disclosed in the policy in relation to this item. The referred amount is subject to limits and deductibles depending on the coverage.
(**) In compliance with the limits and deductibles applied to the different fields.

12.	Negative and positive contingencies
All the evidence available and the likelihood of occurrence have been taken into account to evaluate contingencies. Regarding allowances, see Notes 3.2.g, 10 and 14 and Exhibit D to the basic financial statements.
13.	Contingencies as of the date of the financial statements with non remote likelihood of occurrence, the financial effects of which have not been fully recorded as of December 31, 2010
	None.
Irrevocable advances for future subscriptions
14.	As of December 31, 2010 there are no irrevocable advances for future subscriptions.
15.	There are no preferred shares as of December 31, 2010.
16.	As of December 31, 2010 the Branch has no restrictions on the distributions of earnings, except as indicated in Note 10 to the financial statements.

City of Buenos Aires, March 10, 2011

Hernán Pablo Giacumbo

Attorney-in-fact

Category Code: ACS

Sequence Number: 278757

Time of Receipt (offset from UTC): 20110623T210116+0100