Drilling Report

Cairn Energy PLC
18 January 2001


                               CAIRN ENERGY PLC                        
                                                                           
                                                                             
    'Gauri' Gas and Oil Discovery (formerly prospect 'B') on Block CB-OS/2    
       Update on Drilling Operations on Blocks CB-OS/2 and KG-DWN-98/2        
                                                                              
Third hydrocarbon discovery offshore Western India and commencement of   
exploration drilling offshore Eastern India:-                                 

Gauri Gas and Oil Discovery 

Cairn  has  made  a  third  hydrocarbon  discovery  on  Block CB-OS/2 offshore
Gujarat  in Western India with its exploration  well CB-B-1, located
approximately 6 kilometres south east of the Lakshmi gas discovery. The well
reached a total depth of 1,286 metres and encountered several hydrocarbon pay
zones below 753 metres.

Two zones (DST-2 and DST-3) tested and flowed gas at a cumulative rate of 39.2
million standard cubic feet of gas per day ('mmscfd').  A third zone (DST-1)
flowed oil at a stabilised rate of 1,039 barrels of oil per day on a 32/64'
choke. The oil test was constrained by surface test equipment limitations. 

A 3D seismic survey over the Lakshmi and Ambe discoveries is expected to
commence on 19 January 2001 and will be extended to cover the Gauri discovery.
An appraisal programme on the discovery is planned in the first half of 2001.
Initial gross reserve estimates for the discovery are between 100 and 300
billion cubic feet of gas equivalent.

The Gauri discovery lies on trend with and to the south west of the producing
Hazira Field.

Future development options for the discovery are being considered, however
conceptually, the field could be developed as a stand alone field or tied back
as a satellite development to either Lakshmi or Hazira.
 
Prospect 'G' - Block CB-OS/2

The CB-G-1 exploration well is currently operating at a depth of 400 metres.

A further update on operations and well results on Block CB-OS/2 will be
provided in due course.

Prospect 'N' -  Block KG-DWN-98/2

The deep water drill ship 'The Energy Explorer' is currently running anchors
on location on exploration prospect 'N' in the north east of Block KG-DWN-98/2
in the Krishna-Godavari Basin offshore Eastern India. An exploration well on
prospect 'N' is expected to spud in the next few days following an initial
pilot hole. 

Bill Gammell, Cairn's Chief Executive commented:-

'This third discovery on Block CB-OS/2 offshore Gujarat significantly
strengthens our gas marketing position in an area of high and as yet
unsatisfied energy demand. We are continuing our extensive drilling programme
in India with further exploration and appraisal drilling on this Block and the
commencement of exploration drilling on Block KG-DWN-98/2.'


Notes to Editors:-

1. 'Cairn' where referred to in this release means Cairn Energy PLC and/or its
subsidiaries, as appropriate.

2. Cairn holds a 75% equity interest in Block CB-OS/2 and is Operator for the
Joint Venture which includes TATA Petrodyne Limited (15%) and the Indian state
oil and gas company Oil & Natural Gas Company Ltd. ('ONGC') (10%). 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 any such discovery would reduce from 75% to 50%.
 
3. Two gas zones were tested in CB-B-1 with the following results:-

DST-2: Stabilised rate of 18.55 mmscfd on a 64/64' choke.
DST-3: Stabilised rate of 20.7 mmscfd on a 96/64' choke.
       
4. The gas tested in CB-B-1 is dry methane and contains no carbon dioxide or
hydrogen sulphide. The crude oil tested in CB-B-1 has an API gravity of 43
degrees.

5. The Hazira Field is a producing gas field operated by Niko Resources Ltd.
in a Joint Venture with Gujarat State Petroleum Corporation Ltd. and is
located in a ring-fenced area within Block CB-OS/2.

6. Cairn holds a 100% equity interest in Block KG-DWN-98/2. In the event of a
discovery ONGC has no back-in right as the Block falls under the terms of
India's New Exploration Licensing Policy ('NELP').
 
Enquiries:-

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                                    Tel:       [phone]
Melissa Miller                                    Tel:       [phone]