Part Disposal of Bangladesh

Cairn Energy PLC
26 October 2007


EMBARGOED FOR RELEASE AT 0700

                                                                 26 October 2007


                                CAIRN ENERGY PLC

                 Part Disposal of Bangladesh Interest to Santos

Cairn announces that its subsidiary Capricorn Energy Limited ('Capricorn')
yesterday entered into a Sale and Purchase Agreement ('SPA') with Santos
International Holdings Pty Limited ('Santos') for the sale of the whole of the
issued share capital of Cairn Energy Bangladesh Limited ('CEBL'), a wholly owned
subsidiary of Capricorn.

Pursuant to the SPA, Santos is acquiring the following assets in Bangladesh:

   • a 37.5% interest in the Sangu Development Area ('SDA');
   • a 37.5% interest in Block 16 exploration acreage; and
   • a 45% interest in exploration Blocks 5 and 10*.

The consideration for the acquisition is US$50 million payable in cash at
completion (the 'Cash Consideration'), and also contingent payments of, in
aggregate, US$20 million, payable in tranches dependent upon future development
resulting from the current exploration drilling programme. Santos will also pay
its working interest in the current drilling programme. The proceeds of the
transaction will be used to fund Capricorn's ongoing exploration activities.

For the six month period ended 30 June 2007 CEBL generated revenue of $15.3
million and made a loss after tax of $12.8 million. As at 30 June 2007, CEBL's
gross assets were approximately $150 million.

Capricorn's interests in Bangladesh following this transaction are as follows:-

   • a 37.5% operated interest in the SDA;
   • a 37.5% operated interest in Block 16 exploration acreage;
   • a 45% operated interest in exploration Blocks 5 and 10*; and
   • a 45% non-operated interest in exploration Block 7.


Capricorn spudded an exploration well on the Magnama prospect offshore Block 16
on 3 October and the well is currently operating.


*see note 3 of Notes to Editors.



Enquiries to:

Analysts/Investors
Capricorn Energy Limited:
Mike Watts, Chief Executive
Jann Brown, Finance Director
Simon Thomson, Legal & Commercial Director                    Tel: [phone]

Media
Brunswick Group Limited:
Patrick Handley, Mark Antelme, Phoebe Buckland                Tel: [phone]



Notes to Editors:

1.       Capricorn is a subsidiary of Cairn Energy PLC based in Edinburgh.
Capricorn's current assets are located in Bangladesh, Nepal and Northern India.

2.       Capricorn is focused on exploration and is currently assessing a number
of opportunities to grow its existing asset base. These include the recent
takeover offers for Plectrum Petroleum plc ('Plectrum') and medOil plc
('medOil'), which were declared unconditional in all respects on 10 October 
2007. As a result of these offers Capricorn is acquiring additional interests in
Tunisia, Peru, UK (West of Shetlands), Albania, Spain and Sicily.

3.       The commencement of the exploration phases of the Production Sharing
Contracts for Blocks 5 and 10 remains subject to final agreement with the
Government of Bangladesh.

4.       Santos is a major Australian oil and gas exploration and production
company with interests and operations in every Australian petroleum province and
in Indonesia, Papua New Guinea, Vietnam, India, Kyrgyzstan and Egypt. Santos has
the largest Australian exploration portfolio by area of any company and is
pursuing new venture opportunities with a focus on Asia.


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