Interim Results

Cairn Energy PLC
28 August 2001

EMBARGOED UNTIL 0700

                                                                28 August 2001

CAIRN ENERGY PLC

INTERIM RESULTS ANNOUNCEMENT

HIGHLIGHTS

Financial


  * Turnover £56.8m (H1 2000: £55.9m)

  * Operating profit up to record £31.4m (H1 2000: £30.0m)

  * Profit after tax up 25% year on year to £22.8m (H1 2000: £18.3m)

  * Operating cash flow of £40.2m (H1 2000: £33.9m)

  * Net cash of £4.3m at 30 June 2001 (H1 2000: £7.2m)

Operational


  * Three hydrocarbon discoveries on Block CB/OS-2 offshore Western India
    (Ambe, Gauri and Parvati)

  * Two gas sales contracts signed for Lakshmi gas field on Block CB/OS-2

  * One oil and two gas discoveries on Block KG-DWN-98/2 offshore Eastern
    India ('N', 'R' and 'P')

  * Production Sharing Contracts signed for Blocks 5 and 10 in Bangladesh



Bill Gammell, Chief Executive, commented:

'Cairn's strong financial results and exploration success have added
significant value for shareholders this year. The outlook for the second half
is positive both financially and operationally.'



Enquiries to:
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, Catherine Bertwistle, Mark Antelme        Tel: [phone]

CHAIRMAN'S STATEMENT

OVERVIEW

Cairn has consistently sought to add value for shareholders by focusing on its
core strength of front-end exploration. This strategic focus on exploration
has been further defined in recent years by concentrating on a single
geographic region - the Indian subcontinent.

Through its exploration drilling programme, the Group has started to realise
the substantial organic growth potential inherent in its portfolio in the
Indian subcontinent. Cairn has completed a total of eight exploration wells in
India since the beginning of 2001, six of which have proved successful in
discovering hydrocarbons. Three of these discoveries are offshore Western
India, close to the Lakshmi gas field which is currently under development.
The other three discoveries are located in the Krishna-Godavari Basin offshore
Eastern India, which has the potential to be a significant hydrocarbon
province.

Subject to successful appraisal, the prospect 'R' gas discovery on Block
KG-DWN-98/2 offshore Eastern India (the Annapurna gas field) has the potential
to satisfy current demand shortfall in the local market and substitute more
expensive existing and contemplated fuel sources for this region. The recently
announced prospect 'P' oil and gas discovery, also on Block KG-DWN-98/2,
provides increased confidence in the potential for oil in other prospects on
this block. Further appraisal is also required to establish the commerciality
of the 'P' discovery.

The fast-track development of the Lakshmi gas field in Block CB/OS-2 offshore
Western India is underway, with first production expected in Q3 2002. Two
conditional gas sales contracts have been signed by the CB/OS-2 co-venturers
for the sale of gas from Lakshmi into the industrialised Gujarat market.

The Sangu Deep exploration well, drilled into the highly overpressured
reservoirs beneath the producing Sangu field, proved unsuccessful with no
significant quantities of gas being found.

RESULTS AND FINANCIAL PERFORMANCE

Financial Highlights
                                                               % Increase/
                                           H1 2001 H1 2000     (Decrease)
Production (boepd)                         19,962  21,180      (6)
Average price per boe ($)                  22.54   22.45       0.4
Turnover (£m)                              56.8    55.9        2
Average production costs per boe ($)       5.49    5.05        9
Pre-tax profit (£m)                        32.7    29.9        9
Profit after tax (£m)                      22.8    18.3        25
Operating cash flow (£m)                   40.2    33.9        19



The first half of 2001 has seen a continuation of the high oil price
environment experienced during the last 18 months. These conditions, together
with the Group's low cost production base, have ensured that Cairn's financial
position has remained robust throughout a period of significantly increased
capital expenditure.



The average oil price realised for the first half of 2001 was $22.54 per boe
compared with $22.45 per boe for the equivalent period in 2001. Average daily
production was 19,962 boepd representing a 6% decrease year on year, mainly as
a consequence of the planned partial shutdown of production from Ravva in
March 2001 to facilitate satellite gas development operations. In addition,
the Government's share of profit petroleum from Ravva increased with effect
from April 2001. Despite this decrease in production, profit after tax has
increased significantly year on year.

Turnover from continuing operations increased as a consequence of foreign
exchange movements by 2% year on year to £56.8m (H1 2000: £55.9m). Average
production costs for the period were $5.49 per boe (H1 2000: $5.05 per boe).
Operating profit was a record £31.4m (H1 2000: £30.0m).

Administrative expenses excluding exceptionals for the period were £5.3m (H1
2000: £3.6m). Net interest received was £0.9m (H1 2000: net payable £0.3m) and
the Group realised a foreign currency exchange gain of £0.4m (H1 2000: £0.2m).
A £9.9m tax charge (H1 2000: £11.6m) arises on profits in India and the UK,
resulting in profit after tax of £22.8m (H1 2000: £18.3m). This represents a
25% increase year on year.

The Group's operating cash flow remained strong during the period with net
cash inflow from operations after administrative expenses, interest and
taxation totalling £46.3m (H1 2000: £31.1m). Cash outflow from capital
expenditure for the period was £56.3m (H1 2000: £14.1m), the majority of which
was exploration spend.

At 30 June 2001 the Group had net cash of £4.3m (H1 2000: £7.2m).

OPERATIONS

INDIA

Eastern India - Krishna-Godavari Basin

Production

Ravva (Cairn 22.5% and operator)

Ravva remains on plateau production and averaged 46,600 bopd and 25 mmscfd for
the first half of 2001. In order to remain on plateau, two additional oil
producers require to be drilled in 2001/2 and two to three existing wells
require to be worked over. In April 2001, the Government's share of profit
petroleum pursuant to the PSC increased from 15% to 25%.

The development of the non-associated (dry gas) satellite gas fields at Ravva
is now underway. The development plan envisages approximately 86 bcf of sales
gas with production commencing in September 2001, reaching a plateau delivery
of 32 mmscfd early in 2002. Two of the required satellite gas development
wells have been completed and a further two wells will be drilled and
completed in 2001/2.

Exploration

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

The Group drilled exploration wells on two prospects on this block during
2001. The first, prospect 'A' was plugged and abandoned as a dry hole.
Drilling operations on the second, prospect '6', were terminated following
several failed attempts to continue drilling after encountering a shallow gas
reservoir at 600 metres. However, exploration drilling will recommence on
prospect '6' and one other exploration well will be drilled on the block
during 2002.

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

The PSC for this deep water block was signed in April 2000. A 1,500 km2 3D
seismic survey was acquired in the northern area in Q2 2000, on which a number
of prospects with associated direct hydrocarbon indicators were initially
identified. Earlier this year, a further 2,386 line km of reconnaissance 2D
seismic data were also acquired.

Exploration drilling by the Group during the year to date has resulted in
three hydrocarbon discoveries, on prospects 'N', 'R' and 'P' respectively.

An exploration well on prospect 'N', which comprises a cluster of eight or
nine potential reservoir bodies located in the extreme north-east of the
block, commenced drilling in January 2001. The well intersected one of these
bodies and discovered gas in excellent quality reservoir sandstones in
February 2001. Further appraisal drilling will be required to confirm that
other reservoir bodies within the cluster are gas bearing before commerciality
of the 'N' cluster can be established.

In June 2001, Cairn announced a major gas discovery called Annapurna following
the successful testing of gas from prospect 'R'. During testing, the well
flowed at a cumulative rate of 80 mmscfd from two zones. An appraisal well is
currently being drilled on Annapurna to enable further assessment of the
reserve potential of the field and the feasibility of a commercial deep water
development. Third party gas market studies commissioned by Cairn confirm the
potential demand for supply of gas to and substitution of other energy sources
in the local Kakinada and regional Indian markets.

In early August 2001, Cairn announced an oil and gas discovery with its third
exploration well on the block on prospect 'P', located approximately 12.5 km
north-west of Annapurna. A drill stem test completed on the discovery flowed
3,648 bopd from a single zone. Testing of a second zone could not be
conclusively carried out due to technical difficulties but indications are
that this zone is also oil bearing.

Whilst further appraisal is required to establish the commerciality of the
'N', 'R' and 'P' discoveries, they have increased confidence to a high level
in the potential for commercial oil and gas on the block.

It is expected that a further three exploration wells will be drilled on the
block as part of the current drilling programme for 2001/2.

Western India

Block CB/OS-2, Cambay Basin

Cairn holds a 75% interest in Block CB/OS-2 and is operator for the joint
venture, which includes TATA (15%) and ONGC (10%). ONGC has a right to
increase its stake by 30% in the event of a commercial discovery on the block
and has exercised this right in respect the Lakshmi discovery. The equity
holdings for the ring-fenced Lakshmi gas field are therefore Cairn 50%, TATA
10% and ONGC 40%.

Exploration (Cairn 75% and operator)

Exploration drilling by the Group on Block CB/OS-2 to date has resulted in
four hyrocarbon discoveries - Lakshmi, Ambe, Gauri and Parvati. Lakshmi was
discovered in May 2000 and Ambe, Gauri and Parvati were discovered early in
2001.



A 2,500 km 2D seismic survey was acquired across the entire block in 2000 and
formed the basis for the exploration well locations. From March to May 2001, a
100 km2 3D seismic survey was acquired over the Ambe discovery and a 210 km2
3D seismic survey was acquired over the Lakshmi and Gauri discoveries. These
surveys will allow optimisation of appraisal and development well locations.
In May 2001, a further 627 km of 2D seismic data was acquired over additional
undrilled leads and prospects in the western part of the block.

Lakshmi Development (Cairn 50% and operator)

The Lakshmi gas field was successfully appraised by the CB-A-2 well in
December 2000, which encountered multiple hydrocarbon pay zones between 750
and 1,250 metres. Four zones were tested with a cumulative flow rate of 103
mmscfd. It is expected that five or six development wells will be drilled on
Lakshmi between October 2001 and early 2002.

All relevant consents have been obtained for the Lakshmi field development
project and an EPIC contract awarded to a consortium of Clough Offshore and
Hyundai Heavy Industries. Offshore jackets have already been installed on
location by McDermott. The acquisition of land for the onshore plant is at the
final stage and is expected to be allocated shortly.

Lakshmi is scheduled to commence deliveries in Q3 2002.

Lakshmi Gas Sales Contracts ('GSCs')

Two GSCs have been signed by the CB/OS-2 co-venturers for the sale of gas from
Lakshmi into the industrialised Gujarat market. The signing of these
agreements means that Cairn now has four formal gas sales contracts in India.

The two Lakshmi GSCs are with Gujarat Powergen Energy Corporation Limited
('GPEC') and Gujarat Gas Company Limited ('GGCL'). GPEC, which is 88% owned by
Powergen, operates the 655 MW Paguthan power plant in Gujarat. GGCL, which is
65% owned by BG Group plc, is India's largest privately owned gas distribution
company. The two GSCs are conditional on the finalisation of agreements
between GGCL and Gujarat State Petronet Limited. These agreements relate to
the five kilometre connection of Cairn's onshore processing facilities at
Suvali with GGCL's Gujarat pipeline infrastructure which is currently being
extended to GPEC's power plant at Paguthan.

The DCQ under the GPEC GSC is 70 mmscfd for three years. The DCQ under the
GGCL GSC is 45 mmscfd for five years, with an option in favour of GGCL to
increase to 50 mmscfd, to be exercised prior to 3 November 2001. The CB/OS-2
co-venturers have an exclusive option to extend the plateau under each GSC.
The Lakshmi facilities will initially have a maximum capacity of 150 mmscfd.

Gas from the field is contracted to be sold under a combination of oil-indexed
(with a contractual floor and ceiling) and fixed pricing. The provisions in
the GSCs in respect of pricing are confidential. However, the composite floor
price is above the Ravva dry gas ceiling price of $3.30/mmbtu.

The two GSCs are specific to Lakshmi and exclude other discoveries on the
block such as Ambe and Gauri. Cairn anticipates additional gas sales
arrangements being entered into in due course in respect of these other
discoveries.



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

Between June 2000 and March 2001 a 2D seismic survey comprising 1,266 line km
was completed across the block and a 647 km2 3D seismic survey acquired over
the structural trend of the 1999 Guda-2 oil discovery.

An exploration well is planned to commence in Q3 2001 on prospect 'H', located
approximately 40 km north-east of Guda-2. Civil engineering works for the
drill site are currently underway.

A further exploration well is planned for 2002 on prospect 'E', which is
located approximately 12 km north-north-west of Guda-2.

BANGLADESH

Production

Sangu (Shell operator, Cairn 37.5%)

During the first half of 2000, offtake from the Sangu gas field averaged 144
mmscfd, an increase of 12% on the 128 mmscfd achieved for the corresponding
period last year. The highest offtake to date was 223 mmscfd, taken on 13
February 2001. The realised gas price for the period was $2.91/mcf (H1 2000:
$2.87/mcf). Production volumes continue to be published on a monthly basis on
Cairn's website.

Exploration

Block 16 (Shell operator, Cairn 50.0%)

The Sangu Deep exploration well has completed testing operations in the deep,
over-pressured section below the gas-bearing reservoir discovered by the South
Sangu-1 well in January 2000. Three production tests were carried out. All
three tests flowed water and gas at low rates. Certain aspects of the third
test remain inconclusive and the results are currently being evaluated by the
operator. The well has now been plugged and abandoned and the operator has no
plans at the current time to further appraise the deep potential at Sangu.

The final exploration period of the Block 16 PSC expired in May 2001. The
operator has sought an extension of the exploration term and is awaiting the
consent of Petrobangla and the Bangladesh Government.

Block 15 (Shell operator, Cairn 50.0%)

The first extension of the exploration period of the Block 15 PSC expired in
December 2000 and the parties did not enter into the second extension of the
exploration period at that time. The operator is currently in discussions with
Petrobangla and the Bangladesh Government regarding entering the final
extension of the exploration period without undertaking the minimum work
commitment required under the existing terms of the PSC.

Blocks 5 and 10 (Shell operator, Cairn 45.0%)

Cairn and Shell signed PSCs for Blocks 5 and 10 with the Government of
Bangladesh in July 2001 and each holds a 45% interest in these blocks, the
remaining 10% being held by Bapex. It has been agreed with the Government that
commitment exploration wells will not have to be drilled on the blocks until
there is a demonstrable market for any gas that may be discovered.

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 Blocks 5 and
10 would be carried by Shell.

NORTH SEA

Cairn continues to hold a 10% interest in the Gryphon field in the UK North
Sea and several small interests in producing properties in the Dutch North
Sea. Average net production for these two areas in the first half of 2001 was
2,987 boepd (H1 2000: 3,507 boepd). The Group's North Sea production interests
support its Indian exploration activities by providing cash flows from
production and third party tariff income.

In the UK North Sea, Cairn participated in the drilling of a horizontal
development well in the central part of the South Gryphon field (Cairn 7.5%),
which completed in early July 2001 and commenced production in August 2001.

In the Dutch North Sea, the P6-D gas field (Cairn 9.75%) is expected to
commence production at a rate of 45 mmscfd in Q3 2001, with gas being
evacuated to the P6 main platform.

RESERVES

Booked 2P reserves at 30 June 2001 were 89 mmboe on a net entitlement basis
(equivalent to 124 mmboe on a working interest basis), with 93% of these
reserves in the Indian subcontinent. Reserves attributed to the Lakshmi gas
development had not been booked at 30 June 2001 as the associated GSCs remain
subject to a condition precedent. Similarly, potential reserves associated
with the new discoveries on the west and east coasts of India have not as yet
been booked.

OUTLOOK

The outlook for the second half of 2001 is positive from both an operational
and financial perspective. Cairn will continue to focus on its strategy of
seeking to add value through high-impact exploration drilling. In addition to
the considerable success already achieved in the 2000/1 exploration drilling
programme, it is anticipated that the Group will drill a further four
exploration wells on its Indian acreage during the remainder of 2001.

In addition, Cairn is progressing with the development of Lakshmi and the
appraisal of Annapurna with a view to monetising these fields at the earliest
opportunity.

BOARD OF DIRECTORS

Peter Fowler CMG was 65 on 26 August 2001 and has consequently retired as a
Non-Executive Director of the Company. I would like to take this opportunity
to thank him for his contribution to the Board which in particular has
benefited from his extensive experience and knowledge in relation to Cairn's
investments in the Indian subcontinent.





Norman Lessels CBE

Chairman

28 August 2001







GLOSSARY OF TERMS

The following are the main terms and abbreviations used in the Chairman's
Statement:-
Corporate
Bapex         Bangladesh Exploration Petroleum Co. Ltd.
Cairn         the Company and/or its subsidiaries as appropriate
GAIL          Gas Authority of India Limited
GGCL          Gujarat Gas Company Limited
GPEC          Gujarat Powergen Energy Corporation Limited
McDermott     J. Ray McDermott Middle East (Indian Ocean) Ltd.
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.
TATA          TATA Petrodyne Limited
The Board     the Board of Directors of Cairn Energy PLC
The Company   Cairn Energy PLC
The Group     the Company and its subsidiaries
Technical
2D            two dimensional
3D            three dimensional
2P            proved and probable
bcf           billion cubic feet
boe           barrel of oil equivalent
boepd         barrels of oil equivalent per day
bopd          barrels of oil per day
DCQ           Daily Contract Quantity
EPIC          engineering, procurement, installation and construction
GSC           Gas Sales Contract
km            kilometres
km2           square kilometres
/mcf          per thousand cubic feet of gas
/mmbtu        per million British thermal units
mmscf         million standard cubic feet of gas
mmscfd        million standard cubic feet of gas per day
PSC           Production Sharing Contract





Note:

This announcement 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.

Cairn Energy PLC

Consolidated Profit and Loss Account (unaudited)

For the six months to 30 June 2001
                                                       Six       Six Year ended
                                                    months    months         31
                                           Notes     to 30     to 30   December
                                                      June      June       2000
                                                      2001      2000      £'000
                                                     £'000     £'000

Turnover
Producing                                           56,788    55,112    114,574
Rig                                                      -       816      1,529

                                                    56,788    55,928    116,103
Cost of sales
Production costs                                  (13,616)  (12,458)   (25,678)
Rig operating costs                                      -     (579)    (1,092)
Depletion                                          (6,317)   (6,952)   (12,074)
Decommissioning charge                               (201)     (179)      (337)
Depreciation of rig                                      -   (1,243)    (1,966)

Gross profit                                        36,654    34,517     74,956
Write-down of oil and gas assets                         -         -      (260)
Administrative expenses                            (5,290)   (4,545)    (8,893)

Operating profit                                    31,364    29,972     65,803

Loss on disposal of rig                                  -         -      (666)

Profit on ordinary activities before                31,364    29,972     65,137
interest

Interest receivable and similar income               1,786       504      1,690
Interest payable and similar charges                 (465)     (569)    (1,064)

Profit on ordinary activities before                32,685    29,907     65,763
taxation

Taxation on profit on ordinary activities
- current                                            1,874   (5,767)   (21,268)
- deferred                                        (11,766)   (5,812)    (2,912)

                                                   (9,892)  (11,579)   (24,180)

Profit for the period                               22,793    18,328     41,583

Earnings per ordinary share - basic            1    15.82p    12.17p     28.59p

Earnings per ordinary share - diluted          2    15.68p    12.13p     28.42p

Notes:


 1. The basic earnings per ordinary share is calculated on a profit of £
    22,793,000 (H1 2000: £18,328,000) on a weighted average of 144,066,040 (H1
    2000: 150,607,060) ordinary shares.

 2. The diluted earnings per ordinary share is calculated on a profit of £
    22,793,000 (H1 2000: £18,328,000) on 145,360,613 (H1 2000: 151,142,454)
    ordinary shares, being the basic weighted average of 144,066,040 (H1 2000:
    150,607,060) ordinary shares and the dilutive potential ordinary shares of
    1,294,573 (H1 2000: 535,394) ordinary shares relating to share options.

 3. No dividend has been declared.

Cairn Energy PLC

Consolidated Balance Sheet (unaudited)

As at 30 June 2001
                                                   As at     As at       As at
                                                 30 June   30 June 31 December
                                                    2001      2000        2000
                                                   £'000     £'000       £'000
Fixed assets
Exploration assets                               227,809   154,384     171,681
Development/producing assets                     125,683   112,898     115,149
Other fixed assets                                 2,322    17,571       2,273
Investments                                        4,061       555       5,521

                                                 359,875   285,408     294,624
Current assets
Debtors                                           55,462    47,331      50,711
Cash at bank                                      11,375    10,535      13,653

                                                  66,837    57,866      64,364

Creditors: amounts falling due within one year    51,871    44,651      31,755

Net current assets                                14,966    13,215      32,609

Total assets less current liabilities            374,841   298,623     327,233

Provision for liabilities and charges              8,224     5,240       7,067
Deferred taxation                                 35,545    15,340      22,889

Net assets                                       331,072   278,043     297,277


Capital and reserves - equity interests
Called-up share capital                           14,780    15,067      14,714
Share premium                                     73,142    72,489      72,612
Special reserve                                        -    36,435           -
Capital reserves - non distributable              50,487    50,120      50,487
Capital reserves - distributable                  35,254    41,537      35,254
Profit & loss account                            157,409    62,395     124,210

Shareholders' funds                              331,072   278,043     297,277



Notes:


 1. In accordance with a Special Resolution passed at the Annual General
    Meeting on 2 May 2000, and after receiving clearance from the Court of
    Session on 30 June 2000, the Group's share premium account has been
    reduced by £110,000,000. £73,565,000 has been transferred to the Group's
    Profit and Loss account with the remaining £36,435,000 being transferred
    initially to a Special Reserve and subsequently to the Group's Profit and
    Loss account on consent being attained from any remaining creditors at 30
    June 2000 to allow the reserve to become distributable.

 2. The disclosed figures are not statutory accounts in terms of Section 240 of
    the Companies Act 1985. Statutory accounts for the year ended 31 December
    2000, on which the auditors gave an unqualified report, have been filed
    with the Registrar of Companies.





Cairn Energy PLC

Group Statement of Total Recognised Gains and Losses (unaudited)

For the six months to 30 June 2001
                                               Six months Six months Year ended
                                               to 30 June to 30 June         31
                                                     2001       2000   December
                                                    £'000      £'000       2000
                                                                          £'000

Profit for the period                              22,793     18,328     41,583

Unrealised foreign exchange differences            10,406     10,640     12,765

Total recognised gains and losses for the          33,199     28,968     54,348
period





Reconciliation of Movements in Shareholders' Funds (unaudited)

For the six months to 30 June 2001
                                                       Six       Six Year ended
                                                    months    months         31
                                                     to 30     to 30   December
                                                      June      June       2000
                                                      2001      2000      £'000
                                                     £'000     £'000

Total recognised gains and losses for the period    33,199    28,968     54,348

New shares issued in respect of employee share         596        57        194
options
Repurchase of shares                                     -         -    (6,283)

Net additions to shareholders' funds                33,795    29,025     48,259

Opening shareholders' funds                        297,277   249,018    249,018

Closing shareholders' funds                        331,072   278,043    297,277





Cairn Energy PLC

Group Statement of Cash Flows (unaudited)

For the six months to 30 June 2001
                                                          Six     Six     Year
                                                       months  months    ended
                                                        to 30   to 30       31
                                                         June    June December
                                                         2001    2000     2000
                                                        £'000   £'000    £'000

Net cash inflow from operating activities              40,172  33,902   75,837

Returns on investment and servicing of finance          1,115   (224)      566

Taxation                                                5,012 (2,539) (11,094)

Capital expenditure and financial investment
Purchase of exploration assets                       (41,704)(11,199) (35,037)
Purchase of development/producing assets             (14,121) (2,352)  (7,451)
Purchase of other fixed assets (including Energy        (489)   (500)  (1,389)
Explorer IV)
Purchase of own shares                                      -       -  (5,987)
Sale of other fixed assets (including Energy Explorer      29       -   14,844
IV)

                                                      (56,285) (14,051) (35,020)

Equity dividends paid                                       -       -        -

Net cash (outflow)/inflow before use of liquid        (9,986)  17,088   30,289
resources and financing

Management of liquid resources(1)
Cash on short term deposit                              4,631 (6,812) (12,607)

Financing
Issue of shares                                           596      57      194
Repurchase of shares                                        -       -  (6,283)
Debt drawdowns                                          7,112       -        -
Repayment of debt                                           - (15,127)(18,070)

                                                        7,708 (15,070)(24,159)

Increase/(decrease) in cash in the period               2,353 (4,794)  (6,477)







Reconciliation of operating profit to operating cash flows (unaudited)

Operating profit                                       31,364  29,972   65,803
Depletion, depreciation and decommissioning             7,112   8,817   15,566
Amortisation of long term incentive plan                1,309     134    1,157
Exceptional write-down of oil and gas assets                -       -      260
Exceptional administrative expenses                         -     911      514
Working capital movement                              (2,076) (6,051)  (7,224)
Other provisions                                          791 (1,310)    (536)
(Gain)/loss on sale of other fixed assets                 (6)       -      202
Foreign exchange differences                            1,678   1,940    1,214

                                                       40,172  34,413   76,956

Cash outflow on transfer of operatorship and Group          -   (511)  (1,119)
restructuring

Net cash inflow from operating activities              40,172  33,902   75,837

Notes:


   (1)     Short term deposits of less than one year are disclosed as liquid
    resources.



INDEPENDENT REVIEW REPORT TO CAIRN ENERGY PLC

Introduction

We have been instructed by the company to review the financial information for
the six months ended 30 June 2001 set out on pages 9 to 12. We have read the
other information contained in the Interim Report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.

Directors' responsibilities

The Interim Report, including the financial information contained therein is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2001.





Ernst & Young LLP
Edinburgh

28 August 2001