Cairn Energy Updates Indian Operations

Cairn has completed the R-2 appraisal well on Block KG-DWN-98/2 offshore Eastern India. R-2 is a four kilometer step-out appraisal drilled 100 meters down-dip of the Annapurna gas discovery announced by Cairn on June 26. The well results indicate that the field is compartmentalized and reserve potential is therefore likely to have been reduced to within a range of 400 - 800 billion cubic feet of gas. Further appraisal drilling will be required to delineate reserves before establishing commerciality on a stand-alone basis. The Marine 500 drilling rig is now on location to drill an exploration well on prospect 'M' which lies approximately 10 kilometers north-west of Annapurna in water depths of around 500 meters.

Exploration drilling on prospect 'H' in Block RJ-ON-90/1 onshore Rajasthan, Western India commenced on September 23. Prospect 'H' is located approximately 40 kilometers north-east of the 1999 Guda-2 oil discovery.

The Ravva development drilling program, which comprises three new development wells, two workovers and the tie-back and completion of a prior discovery well, is now underway and is expected to be completed in Q1 2002. The Ravva satellite gas field commenced first gas sales under long term gas sales contracts with Gas Authority of India Limited on September 19 following successful commissioning of the onshore treatment facilities. It is anticipated that gas sales from Ravva will increase from current levels of approximately 30 million standard cubic feet of gas per day ('mmscfd') to around 70 mmscfd by the end of 2001.

The two GSCs signed by the Block CB/OS-2 co-venturers for the sale of gas from Lakshmi into the industrialized Gujarat market became unconditional on September 21 following the finalization of agreements in respect of the connection of Cairn's onshore processing facilities with the Gujarat pipeline infrastructure. First gas sales are expected to commence during Q3 2002.