Acquisition

Cairn Energy PLC
15 September 2003

EMBARGOED FOR RELEASE AT 0700

                                                               15 September 2003
                                CAIRN ENERGY PLC

              Acquisition of Shell's Upstream Assets in Bangladesh

Cairn announces that, pursuant to the Letter of Intent entered into with Shell
on 3 August 2003 and announced on 4 August 2003, it has today signed an Asset
Purchase Agreement to acquire the following principal assets, with an economic
effective date of 1 July 2003. The acquisition remains subject, inter alia, to
the approval of shareholders and the consent of the Government of Bangladesh.

• a 37.5% operated interest in the Sangu Development Area ('SDA'); and
• a 45% operated interest in Exploration Blocks 5 and 10 in Bangladesh.

The Sangu gas field was discovered by Cairn in 1996 and commenced production in
June 1998.  Remaining proven plus probable reserves net to Cairn's existing
37.5% interest at 30 June 2003 were 423 bcf on a working interest basis (70.5
mmboe) and 242 bcf on an entitlement basis (40.4 mmboe).  Gross production from
Sangu during the first half of 2003 averaged 136 mmscfd.  Cairn's net share of
production on a working interest and entitlement basis was 51 mmscfd (8.5
mboepd) and 47 mmscfd (7.8 mboepd) respectively.

Further information on the SDA and Blocks 5 and 10 is included in the Appendix
to this announcement. Cairn's interests following completion of the acquisition
would be:

• a 75% operated interest in the SDA (the remaining 25% is held by HBR);
• a 90% operated interest in Blocks 5 and 10 (the remaining 10% is held by 
  Bapex).

Further information on the acquisition will be included in a circular to be
posted to shareholders and convening an EGM to seek shareholders' approval of
the acquisition.

The consideration for the acquisition is:

i)    US$50 million payable on closing (the 'Cash Consideration'); and
ii)   A 24 US cents per mscf royalty payable, following receipt of payment by 
      Cairn on entitlement gas production from the acquired interest in the SDA.

The provision in the LOI regarding an additional royalty payable on entitlement
gas production from the acquired interests excluding the SDA has been removed
from the Asset Purchase Agreement.

In addition, the existing carry agreements and area of mutual interest
agreements between Cairn and Shell will be terminated on the closing date.

The Cash Consideration will be adjusted to reflect net working capital movements
between the economic effective date and the closing date including any accrued
royalty payments and carry reimbursements.  It is anticipated that the adjusted
Cash Consideration will be met from Cairn's existing US$150 million revolving
credit facilities.

Shell will retain operatorship of the assets until the closing date, following
which Cairn will assume operatorship under the terms of transfer of operatorship
agreements to be agreed between Cairn and Shell.  The agreements will include
provisions dealing with the transfer of Shell's Bangladesh national employees to
Cairn.

It is anticipated that satisfaction of all the conditions of the acquisition
will take place within 24 months of the economic effective date. As revenues are
expected to exceed expenditure in relation to the assets being acquired in the
period prior to closing, it is anticipated that the working capital adjustment
referred to above will reduce the Cash Consideration.

Bill Gammell, Chief Executive, commented:

'Acquiring Shell's interests in Bangladesh will provide Cairn with additional
low cost and long life production in Cairn's core business area and is expected
to provide excellent financial returns and materially enhance shareholder value.

This deal further enhances Cairn's ability to take advantage of the rising
demand in the Bangladesh domestic gas market and the strong positive cash flow
from the increased interest in Sangu can be utilised to continue to pursue
exploration opportunities in our core focus area of South Asia.'


Enquiries to:

Cairn Energy PLC:
Bill Gammell, Chief Executive                             Tel: [phone]
Kevin Hart, Finance Director                              Tel: [phone]
Mike Watts, Exploration Director                          Tel: [phone]

Brunswick Group Limited:
Patrick Handley, Catherine Bertwistle, Mark Antelme       Tel: [phone]


Notes to Editors:

1.    'Cairn' where referred to in this release means Cairn Energy PLC and/or 
      its subsidiaries, as appropriate.

2.    'Shell' where referred to in this release means Shell International 
      Exploration and Production B.V. and/or its affiliates as appropriate.

3.    'bcf' where referred to in this release means billion cubic feet of gas.

4.    'mmboe' where referred to in this release means million barrels of oil 
      equivalent.

5.    'mmscfd' where referred to in this release means million standard cubic 
      feet of gas per day.

6.    'mboepd' where referred to in this release means thousand barrels of oil 
      equivalent per day.

7.    'HBR' where referred to in this release means HBR Energy, Inc., a 
      subsidiary of Halliburton Company.

8.    'Bapex' where referred to in this release means Bangladesh Petroleum 
      Exploration Co. Ltd.

9.    'PSC' where referred to in this release means Production Sharing Contract.


                                    Appendix

Sangu Development Area, Block 16

Cairn's first well in Bangladesh, Sangu-1, resulted in the discovery of the
Sangu gas field in 1996. This was followed by the Sangu-2 appraisal well and a
fast-track offshore gas field development which delivered gas to shore in June
1998. Gas is produced from four wells via the Sangu-A platform and is
transported approximately 50 kilometres via a 20 inch pipeline to an onshore
processing plant, the Chillimpur terminal at Chittagong, from which point it is
delivered to the Bangladesh Gas System Ltd transmission system and sold to
Petrobangla.

Remaining gross proven plus probable reserves as at 30 June 2003 were
approximately 1,127 bcf. Gross production from Sangu during the first half of
2003 was 136 mmscfd.  Cairn's net share of field production on a working
interest and entitlement basis was 51 mmscfd (8.5 mboepd) and 47 mmscfd (7.8
mboepd) respectively.  Annual production since inception can be viewed on the
Company's website at http://www.cairn-energy.plc.uk/operations/bangladesh.

Exploration rights for Block 16 (outside the SDA) have expired and discussions
are ongoing with Petrobangla and the Government of Bangladesh with a view to
extending the exploration period for certain parts of this block. The SDA is
retained for 30 years from January 1997, the anniversary of the approval of the
development plan.


Blocks 5 and 10

PSCs for Blocks 5 and 10 were entered into in July 2001. It has been agreed with
the Government of Bangladesh that, during the first five years following
signature, commitment exploration wells will not have to be drilled on the
blocks until there is a demonstrable market for any gas that may be discovered.
It is intended that a seismic programme will be carried out over both blocks
commencing later in 2003.


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