Bangladesh Drilling Update

Cairn Energy PLC
04 January 2008



EMBARGOED FOR RELEASE AT 0700 4 January 2008



                           Cairn Energy PLC ('Cairn')


                      Bangladesh Drilling Programme Update



Cairn has completed the drilling of the Magnama-1 exploration well in Block
16 offshore Bangladesh.

Magnama-1 was drilled at a crestal location to a total depth of 4003m BRT with
the primary objective of evaluating the potential for gas in abnormally high p
ressured sands beneath those productive at Sangu and elsewhere in the basin. The
well encountered a series of well developed sands in the deepest section
drilled but these were not gas charged and the well is now in the process of
being plugged and abandoned. Magnama-1 also encountered a number of thin gas
bearing sands which may be subject to further evaluation at a later date.


The Block 16 Joint Venture will next drill the Hatia-1 exploration well, which
is located 12 km north-west of Sangu. It is currently expected that drilling on
Hatia-1 will commence shortly.


Enquiries to:


Analysts/Investors

Cairn Energy PLC

Dr Mike Watts, Exploration Director

Jann Brown, Finance Director Tel: [phone]


Media

Brunswick Group Limited:

Patrick Handley, Mark Antelme, Camilla Gore Tel: [phone]


Notes to Editors:


1.      On 26 October 2007, Cairn announced a part disposal of its Bangladesh
interests to Santos International Holdings Pty Limited (Santos). Following this
transaction, Cairn holds a 37.5% operated interest in Block 16 exploration
acreage. Santos holds a 37.5% interest in Block 16 exploration acreage.







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