Drilling Report

Cairn Energy PLC
26 June 2001


EMBARGOED FOR RELEASE AT 1200


                                                                  26 June 2001


                               CAIRN ENERGY PLC


           Prospect 'R' - Major Gas Discovery on Block KG-DWN-98/2


Cairn has made a second gas discovery on Block KG-DWN-98/2 offshore Andhra
Pradesh in Eastern India with its exploration well DWN-R-1. The well is
located 26.5 kilometres south-south-west of the N-1 gas discovery, which was
announced in March 2001. DWN-R-1 reached a total depth of 2,330 metres and
encountered several gas pay zones below 1,870 metres.


Two drill stem tests ('DSTs') were carried out and flowed gas at a combined
stabilised rate of 80 million standard cubic feet of gas per day ('mmscfd').
The flow rates were constrained by down hole tubing and surface test equipment
limitations.


Initial reserve estimates are in the range of 0.75 to 1 trillion cubic feet
('Tcf') of dry gas. The R-1 discovery will be appraised by a second well to be
drilled later this year.


The rig will now move to Prospect 'P', approximately 12.5 kilometres
north-west of DWN-R-1.


Bill Gammell, Chief Executive, commented:


'We are delighted to have this major discovery off the East Coast of India. We
are continuing with an active exploration programme and are currently
investigating the potential to commercialise this discovery.'




Enquiries:-


Cairn Energy PLC:


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


Brunswick Group Limited:

Victoria Sabin, 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. Two gas zones were tested in DWN-R-1 with the following results:-


    DST-1: Stabilised rate of 42 mmscfd on a 64/64' choke.

    DST-2: Stabilised rate of 38 mmscfd on a 64/64' choke.



 3. The gas tested in DWN-R-1 is dry methane and contains no carbon dioxide or
    hydrogen sulphide.


 4. Cairn holds a 100% equity interest in Block KG-DWN-98/2. In the event of a
    discovery ONGC has no back-in right as the Block falls under the terms of
    India's New Exploration Licensing Policy ('NELP').