Drilling Report

Cairn Energy PLC 07 January 2004 EMBARGOED FOR RELEASE AT 0700 CAIRN ENERGY PLC 7 January 2004 South Asia - Operational Update WESTERN INDIA 1. Rajasthan Block RJ-ON-90/1 Cairn is currently involved in an extensive exploration and appraisal programme across its 5,000 square kilometre exploration block in the Rajasthan Basin. Three drilling rigs are currently operating across the block, a workover rig is conducting testing operations, artificial lift trial operations are ongoing and well stimulations are planned. Exploration activity is now focusing on the deeper stratigraphic horizons (Barmer Hill and Fatehgarh) in the northern third of the block with the current N-B-1 well being 120 kilometres north of the recently drilled GR-A-1 well. Ten of the fourteen wells drilled on the block to date have encountered hydrocarbons. Details of wells drilled, currently operating and to be drilled are shown in the table in the attached appendix. Recent Exploration Drilling in the Southern Rajasthan Basin Exploration drilling on the Central Basin High located in the southern part of the block has met with mixed results. Wells targeting the shallow Thumbli and Dharvi Dungar plays have encountered variable reservoir quality and sand thickness. The GR-F-1 well discovered oil in the Dharvi Dungar and flowed 100 bopd of 40 degree API oil on test. The Thumbli section was log evaluated as hydrocarbon bearing and will be tested in the near future with a separate workover rig. The GR-A-1 and GR-S-1 wells each encountered residual hydrocarbons only. Saraswati The Saraswati-1 discovery well was placed on an EWT in August 2003. To date the Barmer Hill reservoir has produced 62,260 bbls (average 817 bopd) and the Fatehgarh reservoir 5,985 bbls (average 468 bopd). A 3D seismic survey was acquired over Saraswati during 2003. Following interpretation of the 3D two appraisal/development wells are now planned to be drilled updip of Saraswati-1, the first of which is expected to spud by end February 2004. Raageshwari The drill-stem test on the Raageshwari E-1 discovery well at the shallow Thumbli level flowed 200 bopd and 7.3 mmscfd. A follow-up EWT using artificial lift has just begun. The GR-2 appraisal well 2.5 kilometres south of the E-1 discovery well increased the oil column thickness to between 90 and 120 metres. The GR-3 appraisal well 2.5 kilometres to the north of E-1 began drilling in January 2004. Further Raageshwari delineation wells are planned. Q Shallow Appraisal Well Log evaluation of the top hole section of the original Q-1 Barmer Hill discovery well suggested hydrocarbons in the shallow Thumbli section. A subsequent dedicated shallow appraisal well has however confirmed that the hydrocarbons were residual and consequently there is as yet no firm case for stratigraphic trapping at the Thumbli level. Exploration in the Northern Rajasthan Basin The medium depth drilling programme in the northern third of the block is aimed at the Barmer Hill and Fatehgarh sections which are expected to be encountered at shallower depths than in the central and southern areas of the basin. The N-B-1 exploration well, which is targeting a prospect in the extreme north of the block approximately 60 kilometres from the RJ-Q-1 discovery, was spudded on 31 December 2003. This well is currently expected to be followed by an exploration well on prospect N-A, located 10 kilometres to the south of N-B-1. The N-J-1 exploration well, located on a prospect 30 kilometres to the north west of Saraswati, was spudded on 5 January 2004. 2. Gujarat Block CB/OS-2, Cambay Basin An exploration well is expected to spud in the first quarter 2004 6.5 kilometres from the Suvali processing plant, on the onshore eastern edge of the block. The well is to test a prospect which has the potential for shallow gas and deep oil, similar to that encountered in the nearby Lakshmi and Gauri fields. EASTERN INDIA 1. Block KG-OS/6 An exploration well located in 110 metres of water depth and designed to test prospect 6 in the 'pan-handle' part of the block reached 800 metres before the well encountered shallow overpressures and had to be been abandoned for operational reasons without it reaching the planned objectives at around 2500 metres. It is not known at this stage as to whether any further drilling will be attempted on Block KG-OS/6 pending future discussions with partners and the Ministry. 2. Block KG-DWN-98/2 - ONGC Transaction Negotiations with ONGC in respect of the transaction announced in October 2003 are progressing and it is anticipated that definitive agreements will be executed during the first quarter of 2004. NELP-IV Cairn has received an invitation from the Indian Government to commence PSC negotiations for Block GV-ONN-2002/1 in the Ganga Basin which Cairn applied for on a 100% basis in the NELP-IV exploration bid round. Cairn has also been awarded one of the three blocks onshore Gujarat for which it bid jointly with ONGC in NELP-IV. Cairn will have a 30% interest in this block and ONGC will be the operator. BANGLADESH The planned Sangu perforation and re-perforation campaign was successfully completed in early January 2004. Following this work the tested deliverability of the producing Sangu wells is approximately 250 mmscfd, although offtake for 2004 will remain dependent on market demand. Bill Gammell, Chief Executive, commented: 'Cairn is progressing its intensive operational campaign in Rajasthan. Although ten out of fourteen wells drilled to date have encountered hydrocarbons, a significant amount of additional drilling and evaluation work still needs to be undertaken to properly evaluate this 5,000 square kilometre area. A further update on the progress of this campaign will be given at the time of the annual results in March. Following the acquisition of Shell's interests in Bangladesh and against a backdrop of increasing domestic demand for gas, a successful workover programme has been completed at Sangu. This has demonstrated the field's capacity to deliver 250 mmscfd from the existing wells. I am delighted with the continuing strong performance from our producing assets in South Asia and we will benefit from the increased interest in Sangu.' Enquiries to: Cairn Energy PLC Bill Gammell, Chief Executive Tel: 0131 475 3000 Mike Watts, Exploration Director Tel: 0131 475 3000 Kevin Hart, Finance Director Tel: 0131 475 3000 Brunswick Group Limited: Patrick Handley, Catherine Bertwistle, Mark Antelme Tel: 0207 404 5959 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% interest in Block RJ-ON-90/1. Oil & Natural Gas Corporation Ltd ('ONGC') has a right to 30% of any development area resulting from a commercial discovery on the block. 3. The main exploration play objectives encountered in the Rajasthan Basin, commencing with the stratigraphically youngest formation, are: Thumbli, Dharvi Dungar, Barmer Hill and Fatehgarh. 4. 'bopd' where referred to in this release means barrels of oil or condensate per day. 5. 'API' where referred to in this release means American Petroleum Institute units as a measure of oil specific gravity. 6. 'EWT' or extended well test where referred to in this release means the periodic testing and production of wells for evaluation purposes. 7. 'bbls' where referred to in this release means barrels of oil or condensate. 8. 'mmscfd' where referred to in this release means million standard cubic feet of gas per day. 9. Cairn holds a 75% exploration interest in Block CB/OS-2, with the remaining exploration interests being held by ONGC with 10% and TATA Petrodyne Limited ('TATA') with 15%. ONGC has a right to increase its interest by 30% in the event of a commercial discovery on the block and has exercised this right in respect of the Lakshmi and Gauri development areas (Cairn 50%, ONGC 40% and TATA 10%). 10. Cairn holds a 50% interest in Block KG-OS/6. The remaining 50% is held by Petrocon India Ltd. 11. Cairn is farming out 90% of its 100% interest in Block KG-DWN-98/2 to ONGC as part of the transaction and strategic alliance announced on 1 October 2003. 12. Cairn holds a 75% interest in the Sangu development area. The remaining 25% is held by HBR Energy, Inc. (a subsidiary of Halliburton Company). APPENDIX --------- --------- -------- ---------- ---------- ---------------- WELL AREA DATE RESERVOIR DST COMMENT DRILLED OBJECTIVE RESULT ------ --------- --------- -------- ---------- ---------- ---------------- 120 NORTH N-B-1 Northern Ongoing Barmer Exploration KILOMETRES Terrace Hill/ Fatehgarh ------ --------- --------- -------- ---------- ---------- ---------------- N-A-1 Northern Planned Barmer Exploration Terrace Hill/ Fatehgarh --------- --------- -------- ---------- ---------- ---------------- N-F-1 Northern Planned Barmer Exploration Intra Hill/ Basin Fatehgarh High --------- --------- -------- ---------- ---------- ---------------- N-J-1 Northern Ongoing Barmer Exploration Intra Hill Basin / High Fatehgarh --------- --------- -------- ---------- ---------- ---------------- RJ-Q-1 Intra Sep-03 Barmer Hill Volatile Appraisal of RJ-Q-2 Basin / oil Barmer Hill High Fatehgarh encountered required. North of in BH / Thumbli residual Central FT oil only in Basin Q-2 High ------- --------- --------- -------- ---------- ---------- ---------------- CENTRAL Saraswati-1 Saraswati Nov-01 Barmer Oil in BH/ EWT ongoing (H-1) Terrace Hill FT @ 2,000 / bopd Fatehgarh ------- --------- -------- --------- ---------- ---------- ---------------- Saraswati Saraswati Apr/May Barmer Hill S-2 established 2 & 3 Terrace -03 / a > 300m oil Fatehgarh column. S-3 tight reservoir appraisal well --------- --------- -------- ---------- ---------- ---------------- Saraswati Saraswati Planned Barmer Hill Appraisal/ 4 & 5 Terrace Feb / development 2004 Fatehgarh wells 4 & 5 planned: wells 6-10 contingent --------- --------- -------- ---------- ---------- ---------------- Raageshwari Central Feb-03 Thumbli and Oil & gas E-1 EWT ongoing E-1 & Basin deep in Thumbli E-1 Sidetrack sidetrack High Volcanics @ 200 bopd established (CBH) & 7.3 Thumbli oil mmscfd; across fault Gas in block fractured volcanics Gas associated @ 2 mmscfd with volcanics requires further appraisal --------- --------- -------- ---------- ---------- ---------------- Raageshwari CBH GR-2 Thumbli GR-2 appraisal GR-2 & Dec-03 well established GR-3 GR-3 approx 100m oil current column in poor quality Thumbli reservoir. GR-3 currently operating --------- --------- -------- ---------- ---------- ---------------- Raageshwari CBH Planned Thumbli Appraisal/ GR-4 & development GR-5 wells 4 & 5 planned: wells 6-10 contingent ------ --------- --------- -------- ---------- ---------- ---------------- SOUTH Guda-1 CBH 1998 Dharvi Dry Oil shows in Dungar Thumbli and Dharvi Dungar ------ --------- --------- -------- ---------- ---------- ---------------- Guda-2 CBH 1998 Dharvi Oil in Small fault Dungar Dharvi bounded Dungar @ accumulation 2,000 bopd --------- --------- -------- ---------- ---------- ---------------- RJ-D-1 Eastern Jul-03 Barmer Hill Dry Virtually no Basin / shows or Margin Fatehgarh reservoir --------- --------- -------- ---------- ---------- ---------------- GR-F-1 South end Nov-03 Dharvi Oil in Thumbli to be of CBH Dungar Dharvi tested & Thumbli Dungar @ 100 bopd; possible oil in Thumbli --------- --------- -------- ---------- ---------- ---------------- GR-S-1 Flank of Dec-03 Dharvi Dry in DD; Dharvi Dungar CBH near Dungar possible sands poor and GR-F & Thumbli oil in wet; Thumbli Thumbli pay? --------- --------- -------- ---------- ---------- ---------------- GR-A-1 Southern Nov-03 Dharvi Dry No Thumbli sand. Terrace Dungar Excellent Dharvi & Thumbli Dungar sands but wet --------- --------- -------- ---------- ---------- ---------------- This information is provided by RNS The company news service from the London Stock Exchange

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