Drilling Report

Cairn Energy PLC
18 October 2004


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                                                                 18 October 2004

                                CAIRN ENERGY PLC

                   DECLARATION OF COMMERCIALITY IN RAJASTHAN

The latest step in bringing Cairn Energy's Rajasthan oil discoveries to
production by the end of 2007 has been reached.

Cairn Energy has received formal approval from the Government of India for a
Declaration of Commerciality in respect of the Mangala, N-A, Saraswati and
Raageshwari discoveries. The approval secures Cairn an extensive Development
Area, inclusive of all development, appraisal and exploration rights, across
1,858 square kilometres of the Thar desert in Rajasthan. This Development Area
also incorporates the unappraised GR-F, Kameshwari and N-R discoveries.

The Development Area, which is the equivalent size of approximately 12 North Sea
blocks, is now retained until 2020 with the contractual right for extension(s)
beyond that date subject to mutual agreement with the Government of India.

Work is underway on how best to develop the fields, through the Front End
Engineering Design (FEED). This work is also looking at the various ways of
delivering the crude to the buyers. Decisions on the preferred options are
likely to be made in the early part of 2005.

At the same time preliminary work on a Field Development Plan (FDP) for Mangala
and N-A has started. Cairn plans to submit the FDP to the Government in the
first half of 2005.

Bill Gammell, Chief Executive of Cairn said:

'We are delighted to have secured this extensive Development Area which includes
not only the Mangala and N-A fields but also other unappraised discoveries and
exploration prospects. We remain fully-focussed on progressing the Mangala and
N-A development whilst at the same time continuing our extensive exploration and
appraisal campaign. An operational update on the progress of the exploration and
appraisal drilling programme will be given in December.'

Notes to Editors:

1. The Declaration of Commerciality is part of the process from discovery of the
oil through to the formal process of developing the fields.

2. In order to conform to the terms of the Production Sharing Contract (PSC)
additional consents and permissions will require to be obtained before
production finally commences.

3. Under the PSC, ONGC now has 90 days within which to acquire a 30% interest in
the development.

4. The FDP is the plan which sets out in detail how the field will be developed
in the run up to production targetted at the end of 2007.

5. The Mangala discovery in the Thar desert of the North West Indian state has
an estimated one billion barrels of oil in place in the ground according to
Degolyer & MacNaughton, the world renowned independent oil reserve specialists.

6. The Mangala and N-A fields are planned to start production in the final
quarter of 2007 producing up to 100,000 barrels per day.

7. India's current domestic production is approximately 650,000 barrels a day of
which 50,000 bopd comes from the Cairn operated Ravva field. In addition, India
imports approximately 2 million bopd to meet its growing energy needs.

8. Five rigs are continuing the drilling programme and seismic operations are
ongoing in order to ascertain the scale and size of the overall oil and gas
fields on the Rajasthan acreage.

There are matters discussed in this media information that are forward looking
statements. Such statements are only predictions and actual events or results
may differ materially. For a discussion of important factors which could cause
actual results to differ from the forward looking statements, refer to the
Company's annual report and accounts for the year ended 2003.


Enquiries to:

Cairn Energy PLC:
Bill Gammell, Chief Executive                        Tel: [phone]
Mike Watts, Exploration Director                     Tel: [phone]
Kevin Hart, Finance Director                         Tel: [phone]
David Nisbet, Head of Group Communications           Tel: [phone]

Brunswick Group Limited:
Catherine Hicks, Mark Antelme                        Tel: [phone]




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