Drilling Report

Cairn Energy PLC
1 August 2001

FOR IMMEDIATE RELEASE


                                                                 1 August 2001



                               CAIRN ENERGY PLC


             Update on Drilling Operations Offshore Eastern India

          Prospect 'P' - Oil and Gas Discovery on Block KG-DWN-98/2



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


Cairn has made a third hydrocarbon discovery on Block KG-DWN-98/2 offshore
Andhra Pradesh in Eastern India with its exploration well DWN-P-1. The well is
located in 493 metres of water approximately 12.5 kilometres north-west of the
'R' gas discovery. DWN-P-1 reached a total depth of 2,585 metres and
encountered two hydrocarbon bearing units. The first unit comprised a gas cap
with a thin oil leg and the deeper second unit comprised a thin gas column
with an estimated oil column of 75 metres. The reservoirs are predominantly
thinly laminated sands and further appraisal will be required.


Preparations for a testing programme have commenced on the discovery, the
results of which will be announced in due course.


Block KG-OS/6 - Prospect '6'


Drilling operations on prospect '6' have been terminated following several
failed attempts to continue drilling after encountering a shallow gas
reservoir at 600 metres and water flows from sands just below the seabed. The
Energy Searcher drill ship is currently being de-mobilised and it is
anticipated that exploration drilling will recommence on prospect '6' in 2002
with a special top hole casing design and a more specialised drilling rig.


Ravva


The Aban II rig is jacked up in the outer anchorage of Kakinada port
undergoing final inspections before commencing the Ravva development drilling
programme which is scheduled to commence in August 2001. The drilling
programme, which comprises three new development wells, two workovers and the
tie-back and completion of a prior discovery well, is expected to be completed
in Q1 2002.


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, Mark Antelme                         Tel: [phone]




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 100% equity interest in Block KG-DWN-98/2. In the event of a
    commercial discovery Oil & Natural Gas Company Ltd ('ONGC') has no back-in
    right as the block falls under the terms of India's New Exploration
    Licensing Policy.


 3. Cairn holds a 50% equity interest in Block KG-OS/6. The remaining 50% is
    held by Videocon Petroleum Limited ('Videocon').


 4. Cairn holds a 22.5% equity interest in Block PKGM-1 (Ravva). The remaining
    interests are held by ONGC, Videocon and Ravva Oil (Singapore) Pte
    Limited.