Re Agreement

Cairn Energy PLC
07 September 2007



EMBARGOED FOR RELEASE AT 0700

                                                                7 September 2007

                           Cairn Energy PLC ('Cairn')

                Dyas BV ('Dyas') Acquires 10% Stake in Capricorn
                          Energy Limited ('Capricorn')

Cairn announces today that Dyas, an active investor in oil and gas joint
ventures, has agreed to acquire a 10% holding in Cairn's exploration focused
subsidiary Capricorn, for a total consideration of approximately US$90m.

Capricorn is currently reviewing a number of new exploration opportunities,
which could be partly funded with the proceeds of the Dyas investment. Capricorn
is also planning a high impact exploration drilling programme offshore
Bangladesh, which is scheduled to commence in October 2007.

On completion of the transaction, Dyas has the right to appoint a Capricorn
director.

Attached to this announcement is a summary of the equity structure of the Cairn
Group post the Dyas transaction.

Dr Mike Watts, Exploration and New Business Director of Cairn, and Chief
Executive of Capricorn, commented:

'We are delighted to welcome Dyas as a strategic partner in Capricorn. We
already have an excellent long term relationship with the Dyas management team
and look forward to working together with them as we grow the Capricorn
business.'

Alexander Berger, General Manager of Dyas, commented:

'Having worked with Cairn on previous occasions we are very pleased to become
part of Capricorn right from the start, as this opportunity is fully in line
with our strategy to grow our business outside the North Sea. Capricorn gives
Dyas exposure to strategic and high quality worldwide exploration opportunities.
Given the outstanding track record of the Capricorn management team and our
intent to play a committed investor role we are confident that this partnership
will deliver excellent results.'

Enquiries to:

Analysts/Investors
Capricorn Management Team:

Mike Watts, Exploration & New Business Director of Cairn and    Tel: [phone]
Chief Executive of Capricorn                                      

Jann Brown, Finance Director of Cairn and Capricorn

Simon Thomson, Legal and Commercial Director of 
Cairn and Capricorn

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



Notes to Editors:

Capricorn

Capricorn is a subsidiary of Cairn Energy PLC based in Edinburgh. Its current
assets are located in Bangladesh, Nepal and Northern India. The Capricorn group
is focused on exploration and is currently assessing a number of opportunities
to grow its existing asset base.

Dyas

Dyas is a wholly owned subsidiary of the largest privately owned conglomerate in
The Netherlands, SHV Holdings N.V. and an active partner, as non operator, in
oil and gas exploration, development and production joint ventures. Net UK & NL
developed reserves are some 43 million boe and daily production is 24 thousand
boe/d. Dyas is aiming to grow these production levels, by participating in
auctions, focused strategic alliances and diversifying its reserves base outside
the North Sea arena.




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