Cairn Energy Update Offshore India

Cairn has made a second hydrocarbon discovery on Block CB-OS/2 with its exploration well CB-C-1, located approximately 25 kilometers west of the Lakshmi gas discovery. The well reached a total depth of 1,600 meters and encountered several hydrocarbon pay zones below 798 meters.

Two zones tested and flowed gas at a cumulative rate of 41 million standard cubic feet of gas per day on a 96/64' choke. A third zone flowed oil at varying rates between 150 and 500 barrels of oil per day. Two other tested zones had inconclusive results. A 3D seismic program to further delineate Lakshmi and Ambe is scheduled to commence in January 2001. Further appraisal drilling is required on Ambe and a planned appraisal well is expected to spud in Q1 2001. Current gross reserve estimates for the discovery are between 50 and 200 billion cubic feet of gas equivalent.

Future development options for the Ambe discovery are being considered, however conceptually, the field could be tied back as a satellite development to Lakshmi.

Following cessation of operations on CB-C-1, the next well in the drilling sequence targets exploration prospect 'G', which is located approximately 10 kilometers north of Lakshmi.

The CB-E-1 exploration well drilled to a total depth of 1,491 metres on prospect 'E' has been plugged and abandoned as a dry hole after encountering sub-commercial gas volumes.

Cairn is currently operating a well on exploration prospect 'B,' which is located approximately 5 kilometers southeast of Lakshmi. The well has reached a total depth of 1,315 meters and logs indicate multiple potential pay zones. Preparations for a testing program are underway.