Final Results

Cairn Energy PLC
6 March 2001


EMBARGOED UNTIL 0700

                                                                  6 March 2001

CAIRN ENERGY PLC


PRELIMINARY RESULTS ANNOUNCEMENT

Exploration Success and Record Turnover, Profits and Cash Flow

HIGHLIGHTS

Financial


  * Turnover up 51% to £116.1m (1999: £76.8m)

  * Operating profit after exceptional charges up 236% to record £65.8m
    (1999: £19.6m)

  * Post-tax profit up 155% to £41.6m (1999: £16.3m)

  * Operating cash flow more than doubled to £75.8m (1999: £36.6m)

Operational


  * Four hydrocarbon discoveries on Block CB-OS/2 offshore Western India

  * Potentially high impact drilling programme commenced offshore Eastern
    India - gas discovered on Block KG-DWN-98/2

  * Additional drilling success in Bangladesh and The Netherlands



Bill Gammell, Chief Executive, commented:

'Cairn today reports record turnover, profits and cash flow for the second
consecutive year. Our continuing focus on exploration is materially increasing
the value of our assets in the Indian sub-continent.'



Enquiries to:

Cairn Energy PLC:
Bill Gammell Chief Executive                  Tel:     [phone]
Mike Watts   Exploration Director             Tel:     [phone]
Kevin Hart   Finance Director                 Tel:     [phone]


Brunswick Group Limited:
Melissa Miller, Mark Antelme, Victoria Sabin          Tel:   [phone]



CHAIRMAN'S STATEMENT

The Group's strong performance in 2000 is reflected in record financial
results and continued exploration success.

Results

Average daily production was 20,206 boepd (1999: 21,196 boepd). The Group
benefited from a significantly higher average price per boe of $23.49 (1999:
$15.60 per boe) while production costs were $5.28 per boe (1999: $5.23 per
boe).

Group turnover increased by 51% year on year to £116.1m (1999: £76.8m).
Operating profit and operating cash flow reached record levels of £65.8m and £
75.8m respectively (1999: £19.6m and £36.6m). Profit after tax increased by
155% year on year to £41.6m (1999: £16.3m).

Strategy - Focus on Exploration

In order to create shareholder value in a cyclical industry, exploration and
production companies must have the potential for substantial exploration
success augmented with a real competitive business edge. Cairn's core area of
focus since the mid 1990s has been the Indian sub-continent where it has
steadily built a portfolio of assets experiencing significant organic growth.
Demand for energy in India remains unfulfilled and Cairn's assets in India and
Bangladesh are strategically placed to supply this growing energy market.

During 2000 Cairn commenced a potentially high impact exploration drilling
programme. This programme is now well underway and has so far led to a total
of seven hydrocarbon discoveries. These include the Lakshmi, Ambe, Gauri and
Parvati discoveries on Block CB-OS/2 offshore Gujarat in Western India, a gas
discovery at prospect 'N' on Block KG-DWN-98/2 offshore Eastern India and
further discoveries offshore Bangladesh (South Sangu-1) and The Netherlands
(P6-9). The Group has booked reserve additions from South Sangu-1, P6-9 and
the Ravva dry gas field, resulting in a 17% increase in reserves during 2000.
This reserve increase represents a 193% reserve to production replacement. It
is anticipated that reserves from the Lakshmi discovery on Block CB-OS/2 will
be booked during 2001.

The Group's exploration portfolio is solidly underpinned by its interests in
two important producing assets, the Ravva oil and gas field in India and the
Sangu gas field in Bangladesh. These fields have the advantage of low
operating costs together with contractual protection against low oil and gas
prices.

India

Cairn's strategy in India has focused on accelerating its exploration drilling
programme, utilising cash flow from Ravva. This strategy has been rewarded
with the discoveries on Block CB-OS/2 offshore Western India. In addition, an
exploration well on prospect 'N' in the north east of Block KG-DWN-98/2 has
recently discovered gas on a structure which comprises a cluster of
potentially gas bearing reservoir units. Further appraisal and evaluation of
this discovery is required to determine whether it could be commercial.

Considerable upside potential remains on the acreage, with further exploration
wells scheduled on Blocks KG-OS/6 and KG-DWN-98/2 offshore Eastern India and
Block RJ-ON-90/1 onshore Rajasthan.

Bangladesh

Cairn's strategy in Bangladesh is one of measured exploration balancing the
desire to prove up additional reserves to support the case for gas export
against the generally modest predicted growth in demand for gas in Bangladesh
itself.

Offtake from Sangu averaged 123 mmscfd during 2000 (1999: 103 mmscfd) and
production has recently been raised significantly to meet a period of local
supply shortfall in the Chittagong market. During 2000 the Sangu Joint Venture
(Cairn, Shell and HBR) have experienced an increasing delay in the receipt of
payments from Petrobangla. While of concern, the Sangu GSPA has in place a
Government of Bangladesh Sovereign Guarantee which could be invoked if the
delay in receipt of payments becomes unacceptable to the Joint Venture.

The discovery at South Sangu-1 early in 2000 has added 158 Bcf to Sangu gross
reserves. South Sangu-2 is currently being drilled as a relief well following
the technical difficulties encountered in South Sangu-1 when operating in the
deeper high pressure reservoirs.

EEIV Drilling Rig

In October 2000 the Group concluded the sale of the EEIV drilling rig for a
sum of £15.3m in cash. The Sangu Joint Venture is continuing to use the EEIV,
which is currently drilling South Sangu-2.

Outlook

Cairn will continue to seek to add value through its high impact exploration
programme in the Indian sub-continent. The Group's material, strategically
focused exploration position in this core area provides an excellent
opportunity to access value-adding opportunities that result from exploration
success. This strategy continues to be supported by strong, long-life cashflow
from low operating cost producing properties.

Employees

Cairn's achievements have been made possible by the expertise and hard work of
its employees. I would therefore like to record the Board's appreciation of
each individual's contribution during 2000 and to date. In particular, the
level of operational activity undertaken by management and staff based in
India during the period deserves recognition and commendation.

Environmental and Social Review

I am pleased to report that Cairn will, for the first time, publish an
Environmental and Social Review for the year 2000. This document will be
posted to shareholders together with the Annual Report and Accounts for 2000
on 29 March 2001 and reflects the significant progress made by the Group
during the year in the areas of health, safety, environmental and social
responsibility.

Earthquake In Western India

Readers of this announcement will undoubtedly be aware of the devastating
consequences of the earthquake which struck Gujarat, Western India in January
2001. Donations amounting to $200,000 were made on behalf of the Group to
several Gujarat earthquake relief funds in February 2001. Cairn's operations
offshore Gujarat were unaffected by the earthquake.

Norman Lessels CBE

Chairman, 6 March 2001



OPERATIONAL REVIEW

BANGLADESH

Production


    Sangu (Shell operator, Cairn 37.5%)

    During 2000, offtake from the Sangu gas field averaged 123 mmscfd (1999:
    103 mmscfd). This compares with a minimum average daily take or pay
    requirement in the Sangu GSPA of 128 mmscfd. It is anticipated that daily
    offtake volumes from Sangu during the majority of 2001 will be
    significantly higher due to a local shortfall in supply to the Chittagong
    market. The highest offtake to date was 223 mmscf, taken on 13 February
    2001.

    In February 2001, Sangu cumulative production exceeded 100 Bcf. Production
    volumes continue to be published on a monthly basis on Cairn's website.

    The average realised gas price for Sangu during 2000 was $2.885/mcf. Cairn
    has received the contract ceiling price of approximately $2.90/mcf from Q2
    2000 to date and it is anticipated that this price will continue to be
    achieved during 2001.

Exploration


    Block 16 (Cairn 50.0%,)

    Following the technical difficulties encountered by the South Sangu-1 well
    when drilling into the highly pressured 'deep' reservoir section, the
    Joint Venture has commenced the drilling of a relief well (South Sangu-2)
    from a nearby surface location. This relief well has itself been
    side-tracked for technical reasons. It is anticipated that almost the
    entire cost of the remedial drilling operations will be covered by a claim
    under the Joint Venture's insurance policy.

    The Second Exploration Extension period of the Block 16 PSC expires in May
    2001. The Joint Venture is in discussions with Petrobangla regarding an
    extension of the PSC to facilitate additional exploration drilling.

    Block 15 (Cairn 50.0%,)

    The Sandwip East-1 exploration well located offshore in Block 15
    Bangladesh was plugged and abandoned in November 2000, following the
    discovery of sub-commercial gas volumes.

    During 2000, Midland Hydrocarbons (Bangladesh) Limited exercised their
    right to withdraw from Semutang and their equity interest reverted to
    Cairn.

    Blocks 5 and 10

    The Joint Venture initialled PSCs for Blocks 5 and 10 (Cairn 45%) with the
    Government of Bangladesh in June 2000. The PSCs are yet to be signed. It
    has been agreed with the Government that commitment exploration wells will
    not have to be drilled on the acreage until there is a demonstrable
    market. Under the terms of the original farm-in agreement between Cairn
    and Shell up to $25m of Cairn's net exploration and appraisal expenditure
    on these blocks would be carried by Shell.

INDIA

Eastern India - Krishna-Godavari Basin

Production


    Ravva (Cairn operator, 22.5%)

    Ravva production remains on plateau and averaged 48,800 bopd and 24.5
    mmscfd during 2000 (1999: 49,500 bopd and 25 mmscfd). In April 2000, the
    Government's share of profit petroleum pursuant to the PSC increased from
    0% to 15%. In February 2001, Ravva cumulative production exceeded 65
    mmbbls.

    During 2000 all necessary approvals were obtained to develop the
    non-associated (dry gas) satellite gas fields at Ravva. The development
    plan anticipates a plateau delivery of 31 mmscfd of additional gas
    production commencing early in 2002. The gas is to be sold to GAIL at a
    price linked to a premium over HSFO but between $2.30 and $3.30/mcf.

    A 277 km2 3D seismic survey was acquired over the Ravva block over two
    weather field seasons in Q1/Q2 2000 (80%) and Q1 2001 (20%). The data is
    currently being processed and interpreted. It is anticipated that the 3D
    seismic will provide a better understanding of both the main field and the
    significant remaining upside exploration potential of the Ravva Contract
    Area, and will aid the identification of additional drilling locations.

Exploration


    Block KG-OS/6 (Cairn operator, 50%)

    Cairn conducted two 3D seismic programmes totalling 760 km2 over KG-OS/6
    during H1 2000, supplementing the 1,500 km of 2D seismic acquired during
    H1 1999. It is anticipated that the first well in a possible two well
    exploration programme on KG-OS/6 will commence in March 2001.

    Block KG-DWN-98/2 (Cairn operator, 100%)

    Cairn signed a PSC with the Government of India for this block in April
    2000. A 1,500 km2 3D seismic survey was acquired in Q2 2000 over the
    northern portion of the block on which a number of prospects have been
    identified.

    An exploration well on prospect 'N' in the north east of the block
    commenced drilling in January 2001, using a deep water drill ship. The
    well successfully discovered gas in February 2001, intersecting a gross
    gas column of 50 metres with 24 metres of net gas pay. The reservoir sands
    are of excellent quality with porosities ranging from 26% to 32%. This
    discovery confirms the model for direct hydrocarbon indicators seen on the
    3D seismic across the area. Thick high quality clean sands, with
    individual beds of up to 50 metres in thickness, were intercepted at
    deeper levels in the well. From the seismic, these deeper reservoirs can
    be inferred to be gas bearing updip on the structure. It is too early to
    assess the potential for commerciality as further appraisal of the
    prospect is required.

    In the event of a commercial discovery or development ONGC has no rights
    to equity in the block, which falls under the terms of India's New
    Exploration Licensing Policy.

    Western India

    Block CB-OS/2, Cambay Basin (Cairn operator, 75%)

    Cairn has had a very active exploration drilling programme on this block
    resulting in a number of hydrocarbon discoveries in the last ten months.
    The exploration wells and their associated discoveries are CB-A-1
    (Lakshmi), CB-B-1 (Gauri), CB-C-1 (Ambe) and CB-G-1Z (Parvati). A 3D
    seismic survey is currently being acquired over the discoveries in order
    to optimise appraisal and development well locations. The Lakshmi field
    has been successfully appraised by the CB-A-2 well which encountered
    multiple hydrocarbon pay zones between 750 and 1,250 metres. Four of these
    zones were tested with a cumulative flow rate of 103.3 mmscfd.

    The fields aligned on an east-west trend (Lakshmi, Ambe and Gauri) all
    have oil bearing zones below the gas zones discovered in each. The
    structures drilled on a north-south trend (Parvati and prospect 'E') have
    at one time been gas charged but have subsequently leaked as they contain
    only sub-commercial volumes of gas. As a result of oil being tested in
    Ambe, Gauri and Parvati the logs of the CB-E-1 well on prospect 'E' were
    re-examined and indicate a possibly oil bearing section which was not
    tested in the well prior to abandonment in January 2001.

    The initial combined reserve estimates for the gas discoveries range
    between 550 and 750 Bcf. Core analysis indicates the presence of heavy
    minerals in some reservoir sands which means log-derived gas saturations,
    porosities and hence reserves may be underestimated. Oil volumes and any
    potential reserves are as yet more speculative but oil in place figures
    could range from 50 to 250 mmbbls.

    The plans for the development of Lakshmi are ongoing, with negotiations
    for a GSPA at an advanced stage and first production scheduled for 2002.
    Future development options for the Ambe and Gauri discoveries are also
    being considered. Conceptually, Ambe could be tied back as a satellite
    development to Lakshmi and Gauri could be developed as a stand alone field
    or tied back as a satellite development to Lakshmi or a neighbouring third
    party field.

    ONGC has a right to increase its stake by 30% in respect of each
    commercial discovery made on the block. If ONGC exercise this right,
    Cairn's equity interest in respect of each would reduce from 75% to 50%.

    Block RJ-ON-90/1, Rajasthan Basin (Cairn operator, 50%)

    Cairn has completed a seismic acquisition programme across the basin
    comprising 1,000 km of 2D infill seismic. In addition, a 450 km2 3D
    seismic survey over the structural trend of the Guda oil discovery was
    completed in February 2001. Interpretation of the 2D seismic is complete
    and an exploration prospect has been selected for drilling during H1 2001.
    Processing and interpretation of the 3D seismic will be ongoing throughout
    2001.

NORTH SEA

Cairn continues to hold small interests in several non-operated UK and Dutch
producing properties in the North Sea. Average net production for these two
areas during 2000 was 3,203 boepd (1999: 3,862 boepd). These assets provide
relatively stable cash flows to help fund Cairn's projects in the Indian
sub-continent and continue to add incremental value.

The Gryphon Joint Venture (Cairn 10%) drilled a central infill well, 9/
18b-A21, in Q3 2000. The well was brought on production via the 'Gryphon A'
FPSO and produced first oil in October 2000 at a rate of approximately 6,500
bopd. Gryphon's total daily production is currently approximately 20,000 bopd
(2,000 bopd net to Cairn).

In April 2000, the operator of block P6 (Cairn 9.75%) announced a gas
discovery with the P6-9 exploration well. Further appraisal of this discovery
was conducted with the P6-10 well in Q4 2000, the results of which are still
being evaluated. The P6 co-venturers approved a development plan for the P6-9
accumulation (the P6-D field) in November 2000 and first gas is targeted for
October 2001. Following agreement in late 1999 between the P6 and Q4
co-venturers regarding the processing and transportation of Q4 gas via the P6
platform and pipeline, the P6 Main field has commenced third party processing
and transportation of gas from the Q4 field in 2001.

A second equity re-determination at Markham was completed in January 2001
resulting in a modest decrease in Dutch sector reserves. Cairn's equity
interest in Markham reduced from 4.615% to 4.425%. In addition to the three
fields for which Markham currently conducts third party processing of gas it
will commence third party processing of gas from a fourth field, K1/a, in
2001.


SALE OF EEIV DRILLING RIG

The Group completed the sale of its offshore drilling rig, the EEIV, in
October 2000 for a price of £15.3m in cash.


RESERVES

Gross reserves attributed to South Sangu-1, P6-9 and the Ravva dry gas field
were 158 Bcf, 84 Bcf and 85.5 Bcf respectively.

The table below shows reserves information on an entitlement basis for the
Group.
                         Reserves as at                 Reserves as at
                        31 December 2000               31 December 1999
                             mmboe                          mmboe
North Sea                    6,114                          6,465
South Asia                   87,098                         79,816
Total                        93,212                         86,281


On a direct working interest basis, reserves as at 31 December 2000 totalled
127,644 mmboe (1999: 111,800 mmboe).



FINANCIAL REVIEW

During 2000 the Group achieved record levels of turnover, profit and operating
cash flow.
                                                                 % Increase/
Key Statistics                                 2000    1999       (Decrease)
Production (boepd)                            20,206    21,196       (5)
Average price per boe ($)                      23.49     15.60        51
Turnover (£m)                                  116.1      76.8        51
Average production costs per boe ($)            5.28      5.23        1
Operating profit after exceptionals (£m)        65.8      19.6       236
Profit after tax (£m)                           41.6      16.3       155
Operating cashflow (£m)                         75.8      36.6       107


PROFIT AND LOSS

Turnover/Gross Profit

Total production for the year was 7,395 mmboe (1999: 7,737 mmboe). The Group
realised an average price of $23.49 per boe during 2000 (1999: $15.60 per
boe). As a consequence of the significantly improved product price
environment, turnover increased by 51% year on year to £116.1m (1999: £76.8m).

Operating Profit

Operating profit before exceptional items was £66.6m (1999: £24.7m).

The Board has continued its conservative approach to asset values, maintaining
its flat long-term real oil price assumption of $12/bbl for the purposes of
Financial Reporting Standard ('FRS') 11. Despite retaining this prudent
assumption, a further write-back of £1.7m has been credited to the profit and
loss account in respect of the Group's 'North Sea' cost pool. This write-back
is mainly as a consequence of the P6-9 gas discovery in The Netherlands which
is to be developed in 2001.

The Board considered it appropriate to write-off the entire value of its '
Other International' cost pool, (£2.0m) based on a strategic decision to focus
on the Indian sub-continent. This write-off has been netted against the FRS11
write-back resulting in a net exceptional charge of £0.3m.

The results include an exceptional administration charge of £0.5m relating to
costs incurred in the restructuring of the Group.

After exceptionals, the Group generated an operating profit of £65.8m (1999: £
19.6m).

Profit for the Year

Administrative expenses for the year were £8.4m excluding exceptional costs
(1999: £7.1m). This includes a charge of £1.2m (1999: £0.2m) in respect of the
amortisation of Cairn's Long Term Incentive Plan.

During October 2000 the EEIV was sold for £15.3m generating an exceptional
loss on disposal of £0.7m.

Net interest received was £0.6m (1999: £1.3m), including a foreign currency
exchange gain of £0.2m (1999: £1.0m).

The majority of the £24.2m tax charge (1999: £6.7m) arises on profits in
India. This resulted in profit after tax and exceptional items of £41.6m
(1999: £16.3m).


BALANCE SHEET

Capital Expenditure

Capital expenditure during 2000 was £48.3m (1999: £29.9m). The majority of
this related to exploration activities.

Net Funds/Debt and Net Assets

Group net funds at 31 December 2000 were £13.7m (1999: net debt £9.6m) and
Cairn continues at present to have no gearing. Net assets at 31 December 2000
were £297.3m (1999: £249.0m), a 19% increase year on year.

Other

The timing of payments for Sangu gas during 2000 varied between one and four
months in arrears. At present Petrobangla is three months behind schedule with
payments. Cairn, together with its co-venturers Shell and HBR, continue to
pursue vigorously the various channels available to remedy this position.
After careful consideration the Cairn Board has decided that no provision
against this receivable is warranted for 2000, although this decision will be
revisited as and when appropriate.


CASH FLOW

Net Cash Inflow

Group net cash inflow from operations was £75.8m (1999: £36.6m).

Tax and Interest

Combined net tax and interest during 2000 was £10.5m (1999: £13.4m).

Capital Expenditure/Financial Investment

Cash outflow from capital expenditure during 2000 was £49.9m (£35.0m
exploration, £7.5m development and £7.4m other).

In October 2000 Cairn finalised the disposal of its drilling rig, the EEIV,
resulting in net proceeds of £14.8m.

Financing

During 2000 the Company repurchased 3,670,000 shares in the market at a cost
of £6.3m. Since November 1999 a total of 23,720,322 shares have been
repurchased (representing approximately 15% of the Company's issued share
capital) at an average price of £1.38 and a total cost of £33.0m.

The Group repaid all outstanding debt during 2000 (£18.1m).

As a consequence of the above, the Group had a net cash outflow of £6.5m
during 2000 (1999: net inflow £3.4m).

The Group's cash flow position continues to provide the financial strength and
flexibility to allow the Group to pursue further opportunities in its chosen
strategic areas.

Kevin Hart

Finance Director, 6 March 2001



GLOSSARY OF TERMS

The following are the main terms and abbreviations used in the Chairman's
Statement, Operational Review and Financial Review:-
Corporate
The Board   the Board of Directors of Cairn Energy PLC
The Company Cairn Energy PLC
The Group   the Company and its subsidiaries
Cairn       the Company and/or its subsidiaries as appropriate
EEIV        Energy Explorer IV drilling rig
GAIL        Gas Authority of India Limited
HBR         HBR Energy, Inc. (a subsidiary of Halliburton Company)
ONGC        Oil & Natural Gas Company Ltd. (Indian state oil and gas company)
Petrobangla Bangladesh Oil, Gas & Mineral Corporation (Bangladesh state oil and
            gas company)
Shell       Shell Bangladesh Exploration and Development B.V.
Technical
/bbl        per barrel of oil
Bcf         billion cubic feet of gas
boe         barrels of oil equivalent
boepd       barrels of oil equivalent per day
bopd        barrels of oil per day
DCQ         Daily Contract Quantity
FPSO        Floating Production, Storage and Offloading vessel
GSPA        Gas Sales and Purchase Agreement
HSFO        High Sulphur Fuel Oil
km          Kilometres
km2         square kilometres
mmbbls      million barrels of oil
mmboe       million barrels of oil equivalent
/mcf        per metric cubic foot of gas
mmscf       million standard cubic feet of gas
mmscfd      million standard cubic feet of gas per day
PSC(s)      Production Sharing Contract(s)
2D          two dimensional
3D          three dimensional
£m          million pounds sterling
$m          million American dollars

  Note:

This press release contains forward looking statements that reflect Cairn's
expectations regarding future events. Forward looking statements involve risks
and uncertainties. Actual events could differ materially from those projected
herein and depend on a number of factors including the uncertainties relating
to oil and gas exploration and production and sale of oil and gas.



Consolidated Profit and Loss Account
For the year ended 31 December 2000




                                             Continuingoperations
                                                 exceptionalitems
                                    Continuing            £'000   Total Total
                                    operations                     2000  1999
                                         £'000                    £'000 £'000


Producing                             114,574                -  114,574  74,611

Rig                                     1,529                -    1,529   2,210

                                      116,103                -  116,103  76,821

Cost of sales
Production costs                      (25,678)               - (25,678) (24,435)
Rig operating costs                    (1,092)               -  (1,092)  (2,861)
Depletion                             (12,074)               - (12,074) (14,317)
Decommissioning charge                   (337)               -    (337)    (304)
Depreciation of rig                    (1,966)               -  (1,966)  (3,139)
Gross profit                           74,956                -  74,956   31,765

Write-down of oil and gas                    -            (260)   (260)  (1,246)
assets
Write-down of rig                            -               -       -   (2,291)
Administrative expenses                (8,379)            (514) (8,893)  (8,675)
Operating profit/(loss)                66,577             (774) 65,803   19,553

Loss on disposal of rig                      -            (666)   (666)       -
Gain on disposal of listed                   -               -       -    2,128
investment

Profit/(loss) on ordinary              66,577           (1,440) 65,137   21,681
activities before interest
Interest receivable and                 1,690                -   1,690    1,932
similar income
Interest payable and similar           (1,064)               -  (1,064)    (669)
charges

Profit/(loss) on ordinary              67,203           (1,440) 65,763   22,944
activities before taxation
Taxation on profit on
ordinary activities
- current                            (21,268)               -  (21,268)  (2,532)

- deferred                            (2,912)               -   (2,912)  (4,160)

                                     (24,180)               -  (24,180)  (6,692)

Profit/(loss) for the year             43,023          (1,440)  41,583   16,252



Earnings per ordinary share                                         
- basic                                                         28.59p   9.66p
Earnings per ordinary share                                      
- diluted                                                       28.42p   9.63p



Group Statement of Total Recognised Gains and Losses
For the year ended 31 December 2000




                                                               2000       1999
                                                              £'000      £'000

Profit for the year                                          41,583     16,252

Unrealised foreign exchange differences                      12,765      1,779

Total recognised gains and losses for the year               54,348     18,031



Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2000


                                                               2000       1999
                                                              £'000      £'000

Total recognised gains and losses for the year               54,348     18,031

New shares issued in respect of employee share options          194         84

Repurchase of shares                                         (6,283)   (26,656)
Net additions/(deductions) to shareholders' funds            48,259     (8,541)
Opening shareholders' funds                                 249,018    257,559

Closing shareholders' funds                                 297,277    249,018



Balance Sheets
As at 31 December 2000


                                               Group   Group  Company Company
                                                2000    1999     2000    1999
                                               £'000   £'000    £'000   £'000

Fixed assets
Exploration assets                           171,681 130,041   67,936  59,028

Development/producing assets                 115,149 110,706   20,020  19,608

Other fixed assets                            2,273   17,813      900   1,343
Investments                                   5,521      685  183,653 126,857

                                             294,624 259,245  272,509 206,836


Current assets
Debtors                                      50,711   38,342   23,196  64,468
Cash at bank                                 13,653    8,517    5,444   7,337
                                             64,364   46,859   28,640  71,805
Creditors:                                   31,755   42,247   57,473  41,672

Amounts falling due within one year
Net current assets/(liabilities)             32,609    4,612  (28,833) 30,133
Total assets less current liabilities        327,233 263,857  243,676 236,969

Provisions for liabilities and charges        7,067    6,212      845     577   
   
Deferred taxation                            22,889    8,627    1,000       -
                                                       

Net assets                                   297,277 249,018  241,831 236,392


Capital and reserves-equity interests
Called-up share capital                       14,714  15,060   14,714  15,060
Share premium                                 72,612 182,439   72,612 182,439

Capital reserves - non distributable          50,487  50,120   27,025  26,658
Capital reserves - distributable              35,254  41,537   35,254  41,537
Profit and loss account                      124,210 (40,138)  92,226 (29,302)

Shareholders' funds                          297,277 249,018  241,831 236,392




N Lessels, Chairman
W B B Gammell, Chief Executive

6 March 2001



Group Statement of Cash Flows
For the year ended 31 December 2000


                                                                  2000     1999
                                                                 £'000    £'000

Net cash inflow from operating activities                      75,837   36,624

Returns on investments and servicing of finance
Interest received                                               1,460      925
Interest paid                                                    (894)    (250)
                                                                  566      675

Taxation                                                      (11,094) (14,053)

Capital expenditure and financial investment
Purchase of exploration assets                                (35,037) (25,282)
Purchase of development/producing assets                       (7,451)  (1,309)
Purchase of other fixed assets (including Energy Explorer IV)  (1,389)  (3,758)
Purchase of fixed asset investments                            (5,987)    (802)
Sale of other fixed assets (including Energy Explorer IV)      14,844      226
Sale of current asset investments                                    -   3,857
Cash receipts from Shell 1                                           -  52,763
                                                              (35,020)  25,695

Equity dividends paid                                                -        -

Net cash inflow before use of liquid resources and financing   30,289   48,941

Management of liquid resources*
Cash on short term deposit                                    (12,607)        -

Financing
Issue of shares                                                   194       84
Repurchase of shares                                           (6,283) (26,656)
Debt drawdowns                                                       -  18,070
Repayment of debt                                             (18,070) (36,995)
                                                              (24,159) (45,497)
(Decrease)/increase in cash in the year                        (6,477)   3,444

* Short term deposits of less than one year are disclosed as liquid resources.

1 During 1998, the Group sold part of its interests in Bangladesh to Shell for
consideration of $65m, plus recovery of back costs. The proceeds were included
within debtors at 31 December 1998.



Reconciliation of Operating Profit/(Loss) To Operating Cash Flows
For the year ended 31 December 2000


                                               2000                       1999
                                              £'000                      £'000

Operating profit/(loss)                     65,803                     19,553

Depletion and depreciation                  15,229                     18,558
Decommissioning charge                         337                        304
Amortisation of long term incentive plan     1,157                        178
Exceptional write-down of oil and gas          260                      1,246
assets
Exceptional write-down of rig                     -                     2,291
Exceptional administrative expenses            514                      1,594
Debtors movement                            (5,192)                    (3,180)
Creditors movement                          (2,032)                    (1,407)
Other provisions                              (536)                      (547)
Loss/(gain) on sale of other fixed assets      202                       (137)
Foreign exchange differences                 1,214                         30
                                            76,956                     38,483
Cash outflow on closure of Sydney office         -                       (870)
Cash outflow on transfer of operatorship    (1,119)                      (989)
and the Group restructuring

Net cash inflow from operating activities   75,837                     36,624


NOTES:


 1. No dividend has been declared (1999: nil)

 2. The earnings per ordinary share is calculated on a profit of £41,583,000
    (1999: profit of £16,252,000) and on a weighted average of 145,438,032
    ordinary shares (1999: 168,273,016). The weighted average of ordinary
    shares excludes shares held under the Long Term Incentive Plan - the
    shares are held by Cairn Energy PLC Employees' Share Trust as the Company
    cannot hold its own shares..

 3. The diluted earnings per ordinary share is calculated on a profit of £
    41,583,000 (1999: profit of £16,252,000) and on 146,306,523 ordinary
    shares (1999: 168,714,913 ordinary shares), being the basic weighted
    average of 145,438,032 ordinary shares (1999: 168,273,016 ordinary shares)
    and the dilutive potential ordinary shares of 868,491 ordinary shares
    (1999: 441,897 ordinary shares) relating to share options.

 4. Cairn follows the full cost method of accounting for oil and gas assets.
    Under this method, all expenditure incurred in connection with the
    acquisition, exploration, appraisal and development of oil and gas assets
    which is directly attributable to the asset, including interest payable
    and exchange differences incurred on borrowings directly attributable to
    development projects, is capitalised in three geographical cost pools:
    North Sea, South Asia and Other International. The Other International
    pool was fully written off in 2000.

 5. The Energy Explorer IV rig was sold in October 2000 for £15.3m in cash.
    Sales costs of £0.5m have been deducted in arriving at the net proceeds of
    £14.8m disclosed in the Group Statement of Cash Flows.

 6. The above financial information does not constitute statutory accounts as
    defined in Section 240 of the Companies Act 1985. The comparative
    financial information is based on the statutory accounts for the year
    ended 31 December 1999. Those accounts, upon which the auditors issued an
    unqualified opinion, have been delivered to the Registrar of Companies.
    The statutory accounts for the financial year ended 31 December 2000 will
    be delivered to the Registrar.

 7. The Group's external auditors, Ernst and Young, have confirmed that they
    have reviewed this Preliminary Announcement and that it is consistent with
    the audited accounts for the Group for the year ended 31 December 2000.
    The report of the auditors on those accounts was unqualified.

 8. Full accounts are due to be posted to shareholders on 29 March 2001 and
    will be available at the Company's registered office, 50 Lothian Road,
    Edinburgh, EH3 9BY, from that date.

 9. The Annual General Meeting is due to be held in the Atholl Suite at the
    Caledonian Hilton Hotel, Princes Street, Edinburgh, EH1 2AB on Tuesday 1
    May 2001 at 12 noon.



For more information please visit our website at http://
www.cairn-energy.plc.uk/