Drilling Report

Cairn Energy PLC
20 August 2001


Block KG-DWN-98/2 Offshore Eastern India
Prospect 'P' Test Results


Cairn announces that it has completed a drill stem test ('DST') programme on
the prospect 'P' oil and gas discovery on Block KG-DWN-98/2 first announced on
1 August 2001. 

An upper zone, a 17 metre gross interval of thinly laminated sandstone and
shale was perforated, and flowed 3,648 bpd of oil at a flowing wellhead
pressure of 1,020 psi on a 40/64 inch choke and with a gas oil ratio (GOR) of
751 scf/bbl. 

Following testing of the upper zone, a deeper 7 metre interval of good quality
sandstone was perforated with the intention of testing both zones together.
However, because of technical difficulties testing of this zone could not be
conclusively carried out. Despite this, other data recorded over the deeper
interval indicates that it should test at rates higher than the upper zone.

Initial reserve estimates for the discovery, subject to further appraisal, are
in the range of 40 to 80 mmb oil and 100 to 200 Bcf gas recoverable.

The Marine 500 drilling rig will now move to drill R-2, an appraisal well on
the Annapurna ('R') gas discovery, located approximately 12.5 kilometres to
the south-east of the 'P' discovery. 


Bill Gammell, Chief Executive, commented:

'We are extremely encouraged by the significance of this oil discovery. Whilst
further appraisal is required to establish commerciality, the results from
this, our first oil and third hydrocarbon discovery on the block, provide us
with increased confidence in the potential for commercial oil on the block in
addition to the proven large gas accumulations. Further exploration wells will
be drilled on the block in the current programme after the R-2 appraisal.'


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 Corporation Ltd. has no back-in right,
as the block was awarded pursuant to the terms of India's New Exploration
Licensing Policy.
 
3. 'Bcf' means billion cubic feet of gas.

4. 'bopd' means barrels of oil per day.

5. mmbo means million barrels of oil.

6. 'psi' means pounds per square inch.