Final Results

Cairn Energy PLC
09 March 2004


EMBARGOED FOR RELEASE AT 0700

                                                                    9 March 2004
CAIRN ENERGY PLC

PRELIMINARY RESULTS ANNOUNCEMENT


HIGHLIGHTS

Financial

   • Average production up 37% to 30,214 boepd (2002: 22,057 boepd)
   • Average price received per boe $22.86 (2002: $21.05)
   • Profit before tax up 58% to £69.1m (2002: £43.8m)
   • Profit after tax up 75% to £46.3m (2002: £26.5m)
   • Earnings per share up 73% to 31.52p (2002: 18.25p)
   • Operating cash flow up 69% to £122.2m (2002: £72.1m)
   • No gearing and net funds of £17.8m at the year end (2002: net debt
     £34.8m)

Operational

   • Major discovery of Mangala oil field with N-B-1 well onshore Rajasthan
   • Significant additional oil discovery in Rajasthan with N-A-1 well
     announced today
   • Ongoing extensive drilling and seismic campaign in northern area of
     Rajasthan block
   • Full year of Lakshmi gas production and satellite Gauri gas development
     on schedule
   • Conditional acquisition of Shell's upstream interests in Bangladesh
   • Proposed transaction and strategic alliance with ONGC in India
   • NELP-IV and Nepal exploration awards; disposal of non-core North Sea
     interests


Bill Gammell, Chief Executive, commented:

'Production, revenues and profits for 2003 are all at record levels.

The start of 2004 has seen our core strategy of adding value through exploration
rewarded with two significant oil discoveries in Rajasthan. The Mangala
discovery was announced in January and the the N-A-1 discovery is the subject of
a separate announcement today.

We are accelarating exploration and appraisal activity with an extensive
multi-rig drilling programme which has the ability to further transform Cairn's
value.

Our ongoing investment focus on South Asia reinforces our belief and commitment
to the growth potential of the region.'

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:
Patrick Handley, Mark Antelme, Catherine Bertwistle Tel: [phone]

CHAIRMAN'S STATEMENT

The value of Cairn was transformed in January 2004 with the discovery of the
Mangala oil field in Rajasthan and this has been followed by a second
significant oil discovery with the N-A-1 exploration well.

The excellent financial and operational performance of the Group continue to be
driven by a clear strategy - to create value through exploration - and the Group
has the balance sheet strength to pursue that strategy aggressively.

Results

The record financial results for 2003 have been primarily driven by an increased
production base. Average daily production was 30,214 boepd, representing a 37%
increase year on year (2002: 22,057 boepd). The average product price realised
for 2003 also increased by 9% to $22.86 per boe (2002: $21.05 per boe). Group
turnover was up 42% to a record £155.8m (2002: £109.9m). Operating profit and
operating cash flow were £73.2m and £122.2m respectively (2002: £45.7m and
£72.1m). Profit after tax was £46.3m compared to £26.5m in 2002. Basic earnings
per ordinary share increased by 73% to 31.52p (2002: 18.25p).

Operations

In India, the majority of Cairn's operational activity during 2003 and to date
in 2004 has remained focused on Rajasthan and Gujarat. The ongoing multi-well
drilling campaign onshore Rajasthan has resulted in the discovery of two
significant oil fields (N-B-1, subsequently named Mangala, and N-A-1) both of
which are located in the northern part of Block RJ-ON-90/1.

In Gujarat, the Gauri gas development is ahead of schedule and below budget,
with first gas production expected to commence in early April 2004. In addition,
Cairn has recently made a small onshore gas discovery close to the existing
Lakshmi facilities with the CB-X-1 exploration well.

Our portfolio in India will also be enhanced by completion of the transaction
and strategic alliance with ONGC announced in October 2003. This transaction
achieves Cairn's primary objective of reducing its interest in deep water
acreage offshore eastern India, while at the same time monetising part of its
interest in Gujarat and gaining an interest in two new onshore exploration
blocks. In addition, Cairn has recently signed contracts for a further two
onshore exploration blocks pursuant to the NELP-IV bid round.

Another key transaction announced during 2003 was the acquisition of Shell's
upstream interests in Bangladesh. Cairn's increased interest in the Sangu gas
field will contribute significant additional reserves, low cost production and
long term cash flow.

In Nepal we await Government approval for the signature of contracts for five
new exploration blocks covering a combined area of approximately 25,000 square
kilometres.

Having disposed of its Dutch North Sea interests during 2003, Cairn today
announces that it has also agreed, subject to contract, to dispose of its
remaining non-core interest in the Gryphon field in the UK North Sea.

Directors and Employees

The appointment of Todd Hunt and Mark Tyndall as non-executive directors during
2003 and the recent appointment of Phil Tracy as Engineering & Operations
Director have added considerably to the collective experience and expertise of
the Board.

I would also like to recognise and emphasise the contribution made by all
employees during the year. The continued success of Cairn is a team effort built
on the energy, expertise, enterprise, enthusiasm and commitment of everyone
involved.

Outlook
Our operational success continues to be underpinned by a robust financial base,
which gives us maximum flexibility to pursue the many opportunities in our
growing asset portfolio.

Cairn will focus on the early appraisal and commercialisation of the Rajasthan
discoveries in parallel with an ongoing aggressive exploration drilling
programme which has the potential for further value enhancement.

Norman Murray
Chairman, 9 March 2004

OPERATIONAL REVIEW

Cairn concentrates its activities in the south Asian energy markets, where it
seeks both to increase the value of its existing businesses and to create new
organic growth opportunities. Cairn's growth strategy is driven by a focus on
exploration combined with selective acquisitions and disposals.

In its exploration ventures Cairn takes high equity positions in prospective
acreage, where it backs its technical and commercial judgement of the potential
risk versus reward balance prior to drilling in order to maximise materiality
for the Group in the event of success.

BANGLADESH

Cairn discovered and developed the producing Sangu gas field offshore Chittagong
during the 1990s. The Group has gone on to build a significant and prospective
acreage position across southern Bangladesh which, in the event of substantial
gas market growth and exploration success, would have further potential
strategic value.

As part of the transaction to acquire Shell's upstream interests in Bangladesh,
Cairn will increase its interest in Sangu to 75% and in Blocks 5 and 10 to 90%.
Cairn will also assume operatorship of these assets. Completion of the
transaction remains subject to approval of the Government of Bangladesh.
Consequently, the percentage interests stated below reflect Cairn's interests
prior to completion of the transaction.

Production

Sangu Development Area, Block 16 (Shell Bangladesh 37.5% Operator, Cairn 37.5%)

During 2003, gross daily offtake from the Sangu gas field averaged 141 mmscfd
(2002: 142 mmscfd). The average realised gas price for Sangu during 2003 was
$2.921/mcf (2002: $2.917/mcf).

Following the acquisition of Shell's interests in Bangladesh and against a
backdrop of increasing domestic demand for gas, a successful workover programme
was completed at Sangu in early 2004. This has demonstrated the field's capacity
to deliver up to 240 mmscfd from the existing wells if required. Additional
infill wells are expected to be drilled in 2005 depending on offtake and market
demand.

On transfer of operatorship Cairn intends to initiate a review of capital
requirements, reserves and potential additional pay and their impact on the
remaining life of field development plan.

Exploration

Blocks 5 and 10 (Shell Bangladesh 45% Operator, Cairn 45%)

PSCs for Blocks 5 and 10 in southern Bangladesh were signed in 2001 at which
time it was agreed with the Government of Bangladesh that, in the absence of a
demonstrable market for any gas that may be discovered, commitment exploration
wells would not have to be drilled on the blocks during the first five years
following signature.

A seismic acquisition programme over both blocks is planned to commence shortly.

INDIA

Cairn developed the Ravva oil and gas field in the Krishna-Godavari Basin
offshore eastern India during the 1990s. Producing interests in Ravva and Sangu
provided Cairn with a strong cash flow and competitive edge in its subsequent
exploration activities across India. The Group went on to build a substantial
acreage position in shallow and deep water around Ravva, and also acquired new
exploration acreage in western India, both offshore in Gujarat and onshore in
Rajasthan.

Exploration efforts in deep water acreage in the Krishna-Godavari Basin resulted
in a succession of oil and gas discoveries in 2000 and 2001. In view of the
large capital required for deep water appraisal and development, a strategic
decision was taken to sell the bulk of these assets, retaining a more
appropriate residual interest going forward and to seek to redeploy the proceeds
in exploration investment opportunities elsewhere in South Asia but particularly
in Rajasthan.

Cairn's exploration success in Gujarat has resulted in the discovery and
development of the Lakshmi gas field and the more recent development of the
satellite Gauri gas field. There is also potential to tie back additional gas
discoveries and to produce oil from the existing facilities.

Exploration by Cairn in Rajasthan has met with a series of discoveries,
including Guda, Saraswati and Raageshwari. However, the discovery of the hugely
significant Mangala oil field in January 2004 has transformed the value
potential of the acreage and of Cairn itself. A subsequent significant discovery
with the neighbouring N-A-1 exploration well in March 2004 confirms the further
organic growth potential.

The Group is also adding to its exploration portfolio by acquiring frontier
acreage in northern India and Nepal.

Eastern India - Krishna-Godavari Basin

Production

Ravva (Cairn 22.5% and Operator)

The Ravva oil and gas field remains on plateau and average gross daily
production for 2003 was 53,463 bopd and 74 mmscfd (2002: 51,514 bopd and 69
mmscfd). Average production for 2003 was 10,562 boepd net to Cairn (2002:
10,777). In April 2004, the Indian Government's share of profit petroleum
pursuant to the PSC will increase from 35% to 60%.

In February 2004 the offshore single point mooring (SPM) buoy used for the
export of Ravva crude was replaced. Four infill development wells are planned on
Ravva during 2004 and 2005.

Exploration

Ravva (Cairn 22.5% and Operator)

Further exploration drilling on the Ravva block is anticipated in 2005.

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

Following the recent unsuccessful attempt to re-drill prospect 6, no further
exploration drilling is currently planned on this block.
Block KG-DWN-98/2 (Cairn 100% and operator)

As part of the proposed transaction and strategic alliance with ONGC Cairn
agreed to farm out a 90% exploration interest in Block KG-DWN-98/2 to ONGC with
an economic effective date of 30 September 2003. Completion of this transaction
remains subject to finalisation of mutually acceptable sale and purchase
agreements and Indian Government approval. Consequently, the percentage interest
stated above reflects Cairn's interest prior to completion of the transaction.

Following completion of the transaction, ONGC plans to commence an extensive
exploration and appraisal drilling programme on the block.

Western India - Gujarat

Block CB/OS-2, Cambay Basin

As part of the proposed transaction and strategic alliance with ONGC Cairn
agreed to farm out a 15% exploration interest in Block CB/OS-2 and a 10%
development interest in the Lakshmi and Gauri Development Areas to ONGC with an
effective economic date of 1 January 2003. Completion of this transaction
remains subject to finalisation of mutually acceptable sale and purchase
agreements and Indian Government approval. Consequently, the percentage
interests stated below reflect Cairn's interests prior to completion of the
transaction.

Production

Lakshmi and Gauri (Cairn 50% and operator)
The Lakshmi gas field commenced production in November 2002 and average sales
for 2003, its first full of year of production, were 10,802 boepd net to Cairn.
Average gross daily production for 2003 was 109 mmscfd.

Development of the neighbouring satellite Gauri gas field is progressing ahead
of schedule with gas production expected to commence in April 2004 via the
Lakshmi gas gathering system to the Suvali processing plant. Following a plateau
period extension, Gauri gas will be sold under the existing five year gas sales
contracts for Lakshmi. In addition, a development feasibility study is underway
to determine whether to proceed with development of the Ambe gas field.

A potential phased oil development programme for Gauri and Lakshmi is also
planned to commence in 2004 with initial test production from the Gauri GA-3
well due to commence in September 2004. The produced oil from Gauri will be
co-mingled with gas and flowed through a planned 12 inch gas pipeline from Gauri
to Lakshmi. The oil will then flow through the 24 inch gas pipeline to Suvali.
The maximum oil flow using this two phase evacuation is 3,000 bopd.

Subsequent Gauri oil wells and a re-drill of the Lakshmi LA-2 well may follow
dependent on the success of the GA-3 oil production test. In the event of
continued success from these initial oil wells, the development programme will
be expanded to incorporate further phases and ultimately, if warranted, a
dedicated oil pipeline to shore will be constructed.

Exploration (Cairn 75% and operator)

The CB-K-1 exploration well on the western margin of the block was plugged and
abandoned in April 2003 after encountering thick reservoir sands with residual
oil saturations. An overlying small gas cap could potentially be tied back to a
future Ambe gas development.

The CB-X-1 onshore exploration well, located 6.5 kilometres from the Suvali
processing plant, spudded at the end of January 2004. The well discovered and
tested modest quantities of dry gas in the lower Babagaru reservoir and is to be
completed as a potential future producer. Subject to obtaining the necessary
regulatory approvals, the well is expected to be connected via a direct pipeline
to Suvali and to commence production in 2005.

Western India - Rajasthan

Block RJ-ON-90/1, Rajasthan Basin (Cairn 100% and Operator)

Cairn initially acquired a 10% equity interest in this block in 1997 as part of
a wider transaction with Shell involving Bangladesh. By carrying Shell through
the early drilling phases Cairn gradually earned a 50% interest in the block. In
May 2002, at the end of the seven year exploration period, Cairn acquired the
remaining 50% interest from Shell and simultaneously agreed a three year
extension of the exploration period with the Indian Government. The block
presently covers an area of 4,981 square kilometres.

Exploration

Cairn commenced a multi-well drilling programme on the Block RJ-ON-90/1 in 2002.
Operations started with one drilling rig and two further rigs were added during
2003. A fourth rig is being mobilised and is expected to commence operations in
the second quarter of 2004.

Initial drilling activity focused on an exploration and appraisal campaign in
the central and southern parts of the block. The Thumbli and Dharvi Dungar
formations were targeted in the central areas and the Barmer Hill and Fatehgarh
formations were targeted in the basin margin.

Recent exploration activity has moved to prospects in the northern third of the
block targeting the Barmer Hill and Fatehgarh formations and has been very
successful.

N-B-1 (Mangala)
N-B-1, the first exploration well in the northern programme, resulted in a major
oil discovery in January 2004. The oil is trapped in a large simple structure at
relatively shallow depths. The discovery has been named the Mangala oil field.

An open hole drill stem test programme in the N-B-1 well flowed at a cumulative
rate of 6,000 bopd from three selected Fategarh sand units. The middle zone,
which flowed 1,925 bopd in the open hole test, was subsequently re-tested
through casing and flowed 2,650 bopd. Cairn considers that N-B-1 could flow at
intitial rates in excess of 10,000 bopd on production.

The initial estimates of oil in place for the Mangala discovery range from 450
to 1,100 million barrels, with preliminary recoverable reserve estimates in the
50 to 200 million barrel range.

Further evaluation and appraisal of Mangala is required before declaring a
commercial discovery and preparing a field development plan. Cairn plans to
drill four appraisal wells and acquire a 3D seismic survey over Mangala during
2004. The first appraisal well on the field was spudded on 5 March 2004.

N-A-1
Cairn today announces a second significant oil discovery in Rajasthan with the
N-A-1 exploration well. N-A-1 reached a total depth of 1,634 metres and is
located 8 kilometres south-east of N-B-1 and 52 kilometres north-north-west of
Saraswati.

The well encountered a gross oil column of 120 metres and 15 metres of net pay
in excellent quality sands of the Fatehgarh formation. The number of Fatehgarh
sands encountered is significantly less than in the N-B-1 (Mangala) discovery.

An open hole test programme in the Fatehgarh section has commenced. The first of
two zones to be tested has flowed 1,225 barrels of oil per day on 64/64 inch
choke. The tested oil has a specific gravity of approximately 31 degrees API.

The preliminary estimates of oil in place for the N-A-1 discovery range from 130
to 470 million barrels, with preliminary recoverable reserves estimated to be in
the 20 to 80 million barrels range.

The N-A-1 well also encountered a log evaluated oil bearing column of 60 to 150
metres in an apparently tight, silty Barmer Hill formation. The Barmer Hill
section is a possible future candidate for further evaluation and fracture
stimulation.

Cairn plans to drill two or three appraisal wells and aqcuire a 3D seismic
survey over the N-A-1 discovery during 2004.

A number of exploration prospects have been identified in the vicinity of the
Mangala and N-A-1 discoveries and several of these prospects are planned to be
drilled in the first half of 2004. In addition, an infill 2D seismic programme
is currently underway in the northern part of the block aimed at maturing
additional prospects in this area.

The N-J-1 exploration well, located 36 kilometres south-west of Mangala, was
plugged and abandoned as a dry hole.

Exploration drilling and appraisal activity on the southern and central part of
the block during 2003 and 2004 to date is detailed below:

RJ-Q-1
The RJ-Q-1 exploration well, located 11 kilometres west of the previously
discovered Saraswati field, encountered hydrocarbons in both the shallow
(Thumbli) and deep (Barmer Hill/Fategarh sections). A short drill stem test
conducted on the Fategarh section flowed gas and condensate to surface prior to
mechanical failure. A subsequent dedicated shallow appraisal well confirmed that
hydrocarbons at the Thumbli level were residual only.

GR-F-1
The GR-F-1 exploration well, located 23 kilometres south of the previously
discovered Raageshwari field, discovered oil in the Dharvi Dungar and Thumbli
formations. The Dharvi Dungar section was tested using the drilling rig and
flowed 100 bopd of 40 degree API oil. The Thumbli section was tested with a
separate workover rig and flowed 200 bopd. GR-F-1 is considered a good candidate
for stimulation and a fraccing programme is due commence on the well at the end
of March 2004.

The GR-S-1 and GR-A-1 exploration wells in the southern part of the block were
plugged and abandoned as dry holes.

Appraisal

Saraswati
Two appraisal wells (S-2 and S-3) were drilled on the Saraswati field during
2003, one down-dip in the same compartment as the discovery well and one in a
small fault block to the north. These wells extended the known oil column in the
field to more than 300 metres, although they did encounter poorer or tighter
reservoirs than in the original discovery well.

Extended well tests were carried out on the S-1 well at various times between
August and December 2003. The Barmer Hill reservoir produced 62,260 bbls
(average 817 bopd) and the Fatehgarh reservoir 5,985 bbls (average 468 bopd).

A 3D seismic survey was acquired over Saraswati during 2003. Following
interpretation of the 3D further appraisal/development wells are planned on
Saraswati during 2004. The first of these, an up-dip appraisal well (S-4), was
spudded in February 2004 and is currently operating.

Raageshwari
In February 2003, the RJ-E-1 exploration well discovered the Raageshwari oil and
gas field. A drill stem test on the discovery well at the shallow Thumbli level
flowed 200 bopd and 7.3 mmscfd.

Cairn has subsequently drilled two appraisal wells on the discovery. The first
(GR-2) was located 2.5 kilometres south of the E-1 discovery well and increased
the known oil column to between 90 and 120 metres. The second (GR-3) was located
2.5 kilometres to the north of E-1 and tested 780 bopd from the Thumbli.

An extended well test using artificial lift is underway and further appraisal
wells are required to delineate the size of Thumbli accumulation.

The E-1 discovery well also encountered a gross gas column of 300 to 600 metres
in a deep volcanic section. This interval was tested and flowed gas at a rate of
2.2 mmscfd - a further appraisal well is required to assess the volumetric
potential of the volcanic pay.

NEW ACREAGE

NELP-IV

During February 2004, Cairn signed PSCs for two new exploration blocks awarded
pursuant to the NELP-IV bid round. The first - Block GV-ONN-2002/1 - is located
in Bihar onshore northern India adjacent to the border with Nepal and covers an
area of 15,550 square kilometres. Block GV-ONN-2002/1 has been awarded to Cairn
on a 100% basis.

The second - Block CB-ONN-2002/1- is located in the Cambay Basin onshore Western
India and has been jointly awarded to ONGC (70% and operator) and Cairn (30%).

ONGC Transaction

On completion of the proposed transaction and strategic alliance with ONGC,
Cairn will also gain a 30% interest in each of Blocks GV-ONN-97/1 and
CB-ONN-2001/1.
Block GV-ONN-97/1 currently occupies an area of 27,562 square kilometres in the
Ganga Basin adjacent to the large Delhi markets. The block was awarded to ONGC
in the NELP-I bid round. ONGC currently holds a 70% operated interest in the
block and Indian Oil Corporation holds a 30% interest.

Block CB-ONN-2001/1 occupies an area of 210 square kilometres in the heart of
the productive Cambay onshore basin and was awarded to ONGC in the NELP-III bid
round. Cairn also bid for this block in NELP-III. ONGC currently holds a 100%
operated interest in the block.

Nepal

In July 2003 Cairn submitted bids on a 100% basis for five new exploration
blocks in Nepal. Following detailed negotiation, a Government approval process
is underway with signature of contracts expected in the near future. The blocks
cover a combined area of 24,521 square kilometres and are located within the
Terai plains of the Ganga Basin adjacent to Nepal's border with India. To date,
only limited seismic acquisition has been carried out on the acreage and no
wells have been drilled.

NORTH SEA

Cairn announced in August 2003 that it had disposed of its interests in the
Dutch North Sea. The Group has also recently agreed to dispose of its 10%
interest in the Gryphon field in the UK North Sea.

Average net production from Cairn's interests in the North Sea during 2003 was
1,564 boepd (2002: 2,819 boepd).



RESERVES

The table below shows reserves information on an entitlement basis for the
Group.

            Reserves at  Produced in  Disposals in  Revisions in   Reserves at
               31.12.02         2003          2003          2003      31.12.03
                  mmboe        mmboe         mmboe         mmboe         mmboe
North               3.8        (0.6)         (2.4)          0.7            1.5
Sea                                  
South              83.2       (10.4)          0.0           2.3           75.1
Asia              
Total              87.0       (11.0)         (2.4)          3.0           76.6

On a direct working interest basis, reserves as at 31 December 2003 totalled
113.4 mmboe (2002: 126.3 mmboe).



FINANCIAL REVIEW

Cairn's financial outlook has never been stronger.

Key Statistics                             2003        2002        % Increase/
                                                                    (Decrease)
Production (boepd)                       30,214      22,057                 37
Average price per boe ($)                 22.86       21.05                  9
Turnover (£m)                             155.8       109.9                 42
Average production costs per boe ($)       3.90        5.27                (26)
Operating profit (£m)                      73.2        45.7                 60
Profit before tax (£m)                     69.1        43.8                 58
Profit after tax (£m)                      46.3        26.5                 75
Earnings per share (p)                    31.52       18.25                 73
Operating cashflow (£m)                   122.2        72.1                 69

A significantly increased production base, continuing strong product prices and
new financing mean that Cairn is extremely well placed financially to move
forward quickly with the exciting growth opportunities in its asset portfolio.

PROFIT AND LOSS


Turnover

Total production for the year increased to 11.0 mmboe (2002: 8.1 mmboe)
following the first full year of production from the Lakshmi gas field. The
average price realised by the Group for the year was $22.86 per boe (2002:
$21.05 per boe). Despite the weakening of the US$ against Sterling in the year,
turnover increased by 42% to a record £155.8m (2002: £109.9m).

Operating Profit

The Group generated an operating profit of £73.2m (2002: £45.7m). Total cost of
sales for the year was £70.5m (2002: £53.4m). Cost of sales per barrel remain
relatively unchanged year on year in overall US$ terms at $10.49 (£6.39) (2002:
$9.98 (£6.63)). However, this comprises a 26% reduction in production costs per
barrel to $3.90 (2002: $5.27) offset by an increased depletion charge. The
improvement in production costs arises due to the change in production mix as a
result of a full years contribution of lower cost Lakshmi production. Depletion
per barrel has increased by 29% to £3.87 per boe following the transfer of
certain historic exploration costs to the depletable cost pool.

Profit for the Year
Administrative expenses for the year were £12.2m (2002: £11.9m). This includes a
charge of £0.8m (2002: £1.6m) in respect of the amortisation of Cairn's LTIP.
Net interest payable was £4.1m (2002: £1.9m), including a foreign currency
exchange loss of £2.7m (2002: gain £0.4m).

The majority of the £22.8m tax charge (2002: £17.3m) arises on profits in India.
Profit after tax was a record £46.3m (2002: £26.5m).


BALANCE SHEET

Capital Expenditure
Capital expenditure during 2003 was £82.8m (2002: £58.4m), comprising £25.0m on
development activities, £56.6m on exploration activities and £1.2m on other
fixed assets.

Development of the Gauri gas field accounts for the majority of the development
expenditure. Exploration expenditure during the year was incurred largely on the
exploration and appraisal drilling campaign in Rajasthan and Gujarat.

The Group also disposed of its Dutch North Sea interests during the year through
the disposal of its subsidiary Holland Sea Search B.V.. In accordance with the
Group's full cost accounting policy, the gain arising on the disposal was
credited to the North Sea cost pool.


Net Funds/Debt and Net Assets

At 31 December 2003, the Group had no gearing with net funds of £17.8m (2002:
net debt £34.8m). Net assets at 31 December 2003 were £342.1m (2002: £326.8m), a
5% increase year on year. Net assets were affected by the weakening of the US$
against Sterling from $1.604 to $1.79 during 2003.

Payments for Sangu Gas
Payments for Sangu gas continued to improve during 2003. As at 31 December 2003,
payments were three months in arrears (2002: four months in arrears).
Accounting Policies
The scheme of arrangement ('the scheme') to introduce a new holding company to
the Group became effective on 19 February 2003. The scheme has been accounted
for in accordance with the principles of merger accounting and the consolidated
results are therefore presented as if the scheme had been effected on 1 January
2002. The comparative figures have also been adjusted to reflect this change.

Reporting under International Financial Reporting Standards (IFRS) is mandatory
for the Group for periods ending after 1 January 2005, although consideration
will need to be given to the 2004 Group results due to the requirement for
comparative figures on implementation of IFRS. A project team has been set up to
manage Cairn's transition from UK GAAP to IFRS and ensure successful
implementation within the required timeframe.


CASH FLOW


Net Cash Inflow, Tax and Interest

Group net cash inflow from operations was £122.2m (2002: £72.1m). Tax payments
during 2003 were £4.4m (2002: £4.5m). Net interest paid was £0.6m (2002: £1.4m).

Capital Expenditure/Financial Investment

Cash outflow from capital expenditure and financial investment during 2003 was
£65.3m comprising £55.9m exploration expenditure, £18.7m development expenditure
and £1.1m other expenditure (2002: £73.4m - £28.8m exploration, £40.0m
development and £4.6m other). This was offset by £10.4m received in respect of
the disposal of the Group's Dutch North Sea interests reflecting the $26m
consideration adjusted for working capital movements from the economic effective
date of 1 January 2003 to completion.

Financing

The Group had a net cash inflow before use of liquid resources and financing of
£51.9m during 2003 (2002: outflow £7.2m).


On 20 January 2004, the Group entered into new bilateral financing agreements
for the provision of $240m unsecured committed multi-currency revolving credit
facilities comprising $200m three year and $40m seven year facilities. The $200m
was funded by four commercial banks and the $40m by International Finance
Corporation (IFC), a member of the World Bank Group. This financing brings
increased longer term facilities to the Group and replaces debt facilities
previously in place. It also provides additional financial flexibility to fund
future activities.

Transactions
The transactions with Shell and ONGC announced during 2003 have not yet
completed and as such are not recognised in the 2003 accounts. However, the
disposal of the Group's Dutch North Sea assets completed in August 2003 and this
transaction has therefore been recognised.


Kevin Hart

Finance Director, 9 March 2004

GLOSSARY OF TERMS


The following are the main terms and abbreviations used in this announcement:-

Corporate
Cairn       the Company and/or its subsidiaries as appropriate
ONGC        Oil & Natural Gas Corporation Ltd and/or its subsidiaries as
            appropriate
Shell       Shell Bangladesh Exploration and Development B.V. and/or its
            subsidiaries as appropriate
The Board   the Board of Directors of Cairn Energy PLC
The         Cairn Energy PLC
Company
The Group   the Company and/or its subsidiaries as appropriate
Technical
API         American Petroleum Institute units as a measure of oil specific
            gravity
bcf         billion cubic feet of gas
/boe        per barrel of oil equivalent
boepd       barrels of oil equivalent per day
bopd        barrels of oil per day
LTIP        long term incentive plan
mmbbls      million barrels of oil
mmboe       million barrels of oil equivalent
/mcf        per thousand cubic feet of gas
mmscfd      million standard cubic feet of gas per day
PSC         Production Sharing Contract
UK GAAP     Generally Accepted Accounting Practice in the United Kingdom
2D / 3D     two dimensional / three dimensional

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.



Group Profit and Loss Account
For the year ended 31 December 2003

--------------------------------------------------------------------------------                                        
                                                          Total         Total
                                                           2003          2002
                                                          £'000         £'000
--------------------------------------------------------------------------------

Turnover                                                155,814       109,878

Cost of sales
Production costs                                        (26,498)      (28,285)
Depletion                                               (42,731)      (24,215)
Decommissioning charge                                   (1,231)         (917)
--------------------------------------------------------------------------------
Gross profit                                             85,354        56,461
Exceptional write-back of oil and gas
assets                                                        -         1,146
Administrative expenses                                 (12,194)      (11,930)
--------------------------------------------------------------------------------
Operating profit                                         73,160        45,677

Interest receivable and similar income                      475         1,110
Interest payable and similar charges                     (4,548)       (2,983)
--------------------------------------------------------------------------------

Profit on ordinary activities before
taxation                                                 69,087        43,804
--------------------------------------------------------------------------------
Taxation on profit on ordinary activities                
- current
- deferred                                              (17,201)      (12,861)
--------------------------------------------------------------------------------
                                                        (22,784)      (17,320)

Profit for the year                                      46,303        26,484
--------------------------------------------------------------------------------

Earnings per ordinary share - basic                       31.52p        18.25p
Earnings per ordinary share - diluted                     31.43p        18.16p
--------------------------------------------------------------------------------

Group Statement of Total Recognised Gains and Losses
For the year ended 31 December 2003

                                                             2003         2002
                                                            £'000        £'000

Profit for the year                                        46,303       26,484

Unrealised foreign exchange differences                   (32,854)     (26,994)
--------------------------------------------------------------------------------
Total recognised gains and losses for the year             13,449         (510)
--------------------------------------------------------------------------------



Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2003

                                                               2003       2002
                                                              £'000      £'000

Total recognised gains and losses for the year               13,449       (510)
Redeemable non equity shares issued                               -         50
Redemption of non equity shares                                 (50)         -
New shares issued in respect of employee share options        1,840          -
- Cairn Energy PLC                                                -        902
New shares issued in respect of employee share options
- Cairn Energy Bangladesh Limited
--------------------------------------------------------------------------------
Net additions to shareholders' funds                         15,239        442
Opening shareholders' funds                                 326,832    326,390
--------------------------------------------------------------------------------
Closing shareholders' funds                                 342,071    326,832
--------------------------------------------------------------------------------

Balance Sheet

As at 31 December 2003

                                                             Group      Group
                                                              2003       2002
                                                             £'000      £'000

Fixed assets
Exploration assets                                         155,046    207,106
Development/producing assets                               236,749    193,554
Other fixed assets                                           1,546      1,915
Investments                                                  4,347      5,229
--------------------------------------------------------------------------------
                                                           397,688    407,804

Current assets
Debtors                                                     56,866     60,540
Cash at bank                                                17,766     13,507
--------------------------------------------------------------------------------
                                                            74,632     74,047
Creditors: amounts falling due within one year              42,396     43,199
--------------------------------------------------------------------------------
Net current assets                                          32,236     30,848
--------------------------------------------------------------------------------
Total assets less current liabilities                      429,924    438,652
Creditors: amounts falling due after more than one year          -     35,848
Provisions for liabilities and charges                      16,082     17,481
Deferred taxation                                           71,771     58,491
--------------------------------------------------------------------------------
Net assets                                                 342,071    326,832
--------------------------------------------------------------------------------

Capital and reserves
Called-up share capital - equity                            15,010     14,891
- non equity                                                     -         50
Share premium                                                1,721          -
Other reserves                                              24,256     98,637
Capital reserves - non distributable                        26,281     26,231
Capital reserves - distributable                           109,635     35,254
Profit and loss account                                    165,168    151,769
--------------------------------------------------------------------------------
Shareholders' funds                                        342,071    326,832
--------------------------------------------------------------------------------


N L Murray, Chairman
W B B Gammell, Chief Executive
9 March 2004


Group Statement of Cash Flows
For the year ended 31 December 2003

                                                                2003      2002
                                                               £'000     £'000

Net cash inflow from operating activities                    122,177    72,097
--------------------------------------------------------------------------------

Returns on investments and servicing of finance
Interest received                                                475       745
Interest paid                                                 (1,027)   (2,163)
--------------------------------------------------------------------------------
                                                                (552)   (1,418)

Taxation                                                      (4,425)   (4,488)

Capital expenditure and financial investment
Expenditure on exploration assets                            (55,902)  (28,814)
Expenditure on development/producing assets                  (18,670)  (40,016)
Purchase of other fixed assets                                (1,192)   (1,127)
Purchase of fixed asset investments                                -    (3,439)
Sale of development/producing assets                          10,368         -
Sale of other fixed assets                                        73        36
--------------------------------------------------------------------------------
                                                             (65,323)  (73,360)
Equity dividends paid                                              -         -
--------------------------------------------------------------------------------

Net cash inflow/(outflow) before use of liquid resources and
financing                                                     51,877    (7,169)

Management of liquid resources*
Cash on short term deposit                                    (9,755)   (1,806)

Financing
Issue of shares - equity                                       1,840       902
Issue of shares - non equity                                      37        13
Redemption of non equity shares                                  (50)        -
Debt drawdowns                                                     -    67,172
Repayment of debt                                            (47,918)  (52,724)
--------------------------------------------------------------------------------
                                                             (46,091)   15,363
--------------------------------------------------------------------------------
(Decrease)/increase in cash in the year                       (3,969)    6,388
--------------------------------------------------------------------------------

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

Reconciliation of Operating Profit to Operating Cash Flows
For the year ended 31 December 2003

                                                               2003       2002
                                                              £'000      £'000

Operating profit                                             73,160     45,677

Depletion and depreciation                                   44,151     25,368
Decommissioning charge                                        1,231        917
Amortisation/provision against investments (including
LTIP)                                                           874      1,678
Exceptional write-back of oil and gas assets                      -     (1,146)
Debtors movement                                              2,871     (4,527)
Creditors movement                                            2,665      1,939
Other provisions                                              1,339      4,693
Gain on sale of other fixed assets                               (4)       (12)
Foreign exchange differences                                 (4,110)    (2,490)
--------------------------------------------------------------------------------
Net cash inflow from operating activities                   122,177     72,097
--------------------------------------------------------------------------------

NOTES:
          
1.   No dividend has been declared (2002: nil).

2.   The earnings per ordinary share is calculated on a profit of £46,303,000 
     (2002: £26,484,000) and on a weighted average of 146,888,766 ordinary 
     shares (2002: 145,105,444). The weighted average of ordinary shares
     excludes shares held under the LTIP - the shares are held by the Cairn 
     Energy PLC Employees' Share Trust as the Company cannot hold its own 
     shares.

     The diluted earnings per ordinary share is calculated on a profit of 
     £46,303,000 (2002: £26,484,000) and on 147,335,237 ordinary shares (2002: 
     145,869,939) being the basic weighted average of 146,888,766 ordinary 
     shares (2002: 145,105,444) and the dilutive potential ordinary shares of 
     446,471 ordinary shares (2002: 764,495) relating to share options.
     
3.   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 two geographical cost pools: North 
     Sea and South Asia.
     
4.   The financial information contained in this announcement does not 
     constitute statutory accounts as defined in Section 240 of the Companies 
     Act 1985. However, the financial statements contained in this announcement 
     are extracted from the audited statutory accounts for the financial year 
     ended 31 December 2003, which will be delivered to the Registrar. The 
     comparative financial year has been restated in accordance with the 
     principles of merger accounting, due to the impact of the scheme of 
     arrangement. Statutory accounts for the year ended 31 December 2002, on 
     which the auditors issued an unqualified opinion, have been delivered to 
     the Registrar of Companies.

     The scheme of arrangement to introduce a new holding company to the Group 
     became effective on 19 February 2003 ('the scheme date'). Accordingly, 
     Cairn Energy PLC formerly New Cairn Energy PLC) became the ultimate parent 
     company in the Group, having acquired 100% of the issued share capital of 
     Cairn Energy Bangladesh Limited (formerly Cairn Energy PLC and Cairn Energy 
     Bangladesh PLC). During 2002 Cairn Energy PLC also issued 49,999 £1 
     redeemable shares to Cairn Energy Bangladesh Limited. These were one 
     quarter paid up at 31 December 2002. During 2003 these shares were fully 
     paid up and subsequently redeemed.

     The scheme of arrangement has been accounted for in accordance with the
     principles of merger accounting. The consolidated accounts are presented as 
     if the scheme of arrangement had been effected on 1 January 2002, and
     correspondingly the comparatives have been adjusted to reflect this change. 
     In the Balance Sheet comparatives, share capital has been restated to show 
     share capital of the new holding company and the former Cairn Energy 
     Bangladesh Ltd consolidated group combined (equity shares: £14,891,261.90; 
     non-equity shares: £49,999.00) and the share premium and capital redemption 
     reserve of Cairn Energy Bangladesh Limited have been reclassified as 
     'Other reserves' in accordance with the principles of merger accounting. 
     The consolidated cashflow comparatives have also been restated to show the 
     cashflows of the new holding company and the former group combined.
     
5.   Full accounts are due to be posted to shareholders on 31 March 2004 and 
     will be available at the Company's registered office, 50 Lothian Road,
     Edinburgh, EH3 9BY, from that date.
     
6.   The Annual General Meeting is due to held in the Glamis Room at the 
     Caledonian Hilton Hotel, Princes Street, Edinburgh, EH1 2AB on Tuesday 4 
     May 2004 at 1200.


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            The company news service from the London Stock Exchange