Drilling Report

Cairn Energy PLC
31 October 2001

EMBARGOED UNTIL 0700



                                                               31 October 2001



                               CAIRN ENERGY PLC

                   Block KG-DWN-98/2 Offshore Eastern India

                          Prospect 'M' Test Results

Cairn announces that it has completed a drill stem test on the Prospect 'M'
oil discovery on Block KG-DWN-98/2 first announced on 24 October 2001.

The DWN-M-1ST exploration well encountered two hydrocarbon bearing units. The
first comprised thin gas bearing sands and was not tested. The deeper second
unit consisted of 150 metres of continuous well developed reservoir quality
sandstones. This unit contained a 46 metre gross hydrocarbon bearing interval
including a 42 metre net oil column between a defined gas oil contact and an
oil water contact.

The oil bearing zone was perforated between 2,081 metres and 2,092 metres. On
test the zone flowed at a stabilised rate of 5,998 barrels of oil per day and
3.87 million cubic feet of gas per day at a flowing wellhead pressure of 1,130
pounds per square inch on a 48/64 inch choke and with a gas to oil ratio of
645 standard cubic feet per barrel of oil. The maximum stabilised flow rate
was constrained by surface test equipment limitations.

The oil produced during the test has qualities very similar to that produced
from the Cairn operated Ravva field located 30 kilometres to the north-west
and the 'P' oil discovery located 11 kilometres to the south-west. The oil has
an API gravity of 35 degrees.

Initial reserve estimates for the 'M' discovery in the tested sandstone unit
are in the range of 40 to 60 million barrels of oil recoverable. The combined
oil reserve estimate for the 'M' and 'P' discoveries is 80 to 120 million
barrels. There is also considered to be additional reserve potential in the
general vicinity of these discoveries as a number of similar undrilled
features have been identified within and around the 'M' and 'P' area which
require further evaluation.

The drilling rig will now move to Prospect 'Q', located approximately 15
kilometres to the south-west of the 'M' discovery.

Bill Gammell, Chief Executive, commented:

'We are delighted to have found more oil and significant reservoirs in the
Krishna-Godavari Basin. The test result at M means that we can be increasingly
confident in the potential for a commercial oil development on Block KG-DWN-98
/2. Since our deep water drilling campaign began earlier this year we have
established a net reserve potential on this block of at least 200 million
barrels of oil equivalent. This first and successful phase of exploration
drilling will conclude with the completion of an exploration well on Prospect
Q.'

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. Cairn holds a 100% equity interest in Block KG-DWN-98/2. In the event of a
    commercial discovery Oil & Natural Gas Corporation Ltd. has no back-in
    right, as the block was awarded pursuant to the terms of India's New
    Exploration Licensing Policy.

 3. 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%).

 4. 'API' means American Petroleum Institute units as a measure of oil specific
    gravity.