Drilling Report

Cairn Energy PLC
26 September 2001

FOR IMMEDIATE RELEASE


                                                             26 September 2001



                               CAIRN ENERGY PLC
 
                          Indian Operational Update




Block KG-DWN-98/2 - Drilling Update


Cairn has completed the R-2 appraisal well on Block KG-DWN-98/2 offshore
Eastern India. R-2 is a four kilometre step-out appraisal drilled 100 metres
down-dip of the Annapurna gas discovery announced by Cairn on 26 June. The
well results indicate that the field is compartmentalised and reserve
potential is therefore likely to have been reduced to within a range of 400 -
800 billion cubic feet of gas. Further appraisal drilling will be required to
delineate reserves before establishing commerciality on a stand-alone basis.


The Marine 500 drilling rig is now on location to drill an exploration well on
prospect 'M' which lies approximately 10 kilometres north-west of Annapurna in
water depths of around 500 metres.


Block RJ-ON-90/1 - Exploration Well


Exploration drilling on prospect 'H' in Block RJ-ON-90/1 onshore Rajasthan,
Western India commenced on 23 September. Prospect 'H' is located approximately
40 kilometres north-east of the 1999 Guda-2 oil discovery.


Ravva - Development Drilling and Commencement of Satellite Gas sales


The Ravva development drilling programme, which comprises three new
development wells, two workovers and the tie-back and completion of a prior
discovery well, is now underway and is expected to be completed in Q1 2002.


The Ravva satellite gas field commenced first gas sales under long term gas
sales contracts with Gas Authority of India Limited on 19 September following
successful commissioning of the onshore treatment facilities. It is
anticipated that gas sales from Ravva will increase from current levels of
approximately 30 million standard cubic feet of gas per day ('mmscfd') to
around 70 mmscfd by the end of 2001.


Block CB/OS-2 - Lakshmi Gas Sales Contracts ('GSCs')


The two GSCs signed by the Block CB/OS-2 co-venturers for the sale of gas from
Lakshmi into the industrialised Gujarat market became unconditional on 21
September following the finalisation of agreements in respect of the
connection of Cairn's onshore processing facilities with the Gujarat pipeline
infrastructure. First gas sales are expected to commence during Q3 2002.






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, Catherine Bertwistle        Tel: [phone]




Notes to Editors:-





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


 2. The R-2 appraisal well was a four kilometre step-out drilled 100 metres
    down-dip from the R-1 discovery well. The well reached a total depth of
    2,575 metres. The upper and main reservoirs encountered in R-2 were water
    bearing and the lower reservoir encountered gas on water at a different
    pressure to that found in R-1.


 3. Cairn holds a 100% equity interest in Block KG-DWN-98/2. In the event of a
    commercial discovery Oil & Natural Gas Company Ltd. ('ONGC') has no
    back-in right as the block falls under the terms of India's New
    Exploration Licensing Policy.


 4. Cairn holds a 50% equity interest in Block RJ-ON-90/1. The remaining 50% is
    held by Shell India Production Development B.V. ('Shell'). ONGC has a
    right to 30% in the event of a commercial discovery on the block. If ONGC
    exercise this right, Cairn and Shell's equity interests in the block would
    reduce from 50% to 35%.


 5. Cairn's holds a 50% interest in the ring-fenced Lakshmi gas discovery in
    Block CB/OS-2. The remaining interests are held by ONGC (40%) and TATA
    Petrodyne Limited (10%).


 6. Cairn holds a 22.5% equity interest in Block PKGM-1 (Ravva). The remaining
    interests are held by ONGC (40%), Videocon Petroleum Limited (25%) and
    Ravva Oil (Singapore) Pte Limited (12.5%).