Cairn Announces Significant Gas Discovery in India

16 May, 2000

Cairn Energy PLC announces that its wholly-owned subsidiary, Cairn Energy India Pty Limited, has made a significant gas discovery with its first exploration well CB-A-1 in Block CB-OS/2, offshore Gujarat in Western India. The well tested a structure located between the existing Hazira and North Tapti Fields. Due to time constraints as a consequence of the onset of the monsoon season, the well was TD'd at 1,350 metres and a limited test programme was carried out.

The well encountered multiple pay zones between 760 metres and 1,270 metres. Gas samples were recovered by RFT from 4 zones and oil samples recovered from 2 zones. On test a total of 30 metres gross interval was perforated between 805 and 860 metres. The well flowed at a stabilised rate of 28.1 million cubic feet of gas per day on a 56/64" choke at a flowing well head pressure of 734 psi. The gas is dry methane with no CO2 or H2S.

Cairn intends to evaluate the untested oil and gas zones at the earliest opportunity.

Whilst further appraisal is required, the current estimated mean reserve for this structure is 400 Bcf.

Cairn is currently evaluating all options to start the appraisal programme at the earliest opportunity with the objective of bringing significant volumes of gas into the Gujarat market before the end of 2001. Initial marketing studies by Cairn within the state of Gujarat have already been carried out and discussions with numerous potential purchasers are underway.

In addition to appraising the existing discovery, Cairn intends to drill exploration wells on a number of further prospects which have been identified on the Block. Including the existing discovery, these prospects have a combined unrisked mean reserve expectation of 2 Tcf.

Following the acquisition of an additional 30% equity interest during 1999, Cairn holds a 75% equity interest in the Block and is Operator for the Joint Venture, which includes TATA Petrodyne Limited (15%) and the Indian national oil company ONGC (10%). ONGC has a right to increase its stake by 30% in the event of a commercial discovery on the Block. If ONGC exercise this right, Cairn's equity interest in the Block would reduce from 75% to 50%.

Bill Gammell, Cairn's Chief Executive commented:

"The excellent results from this well confirm our belief in the value of Cairn's Indian exploration portfolio. We look forward to a quick appraisal and development programme especially given that the discovery is located so close to one of the world's fastest growing quality gas markets. We are also delighted with the co-operation we have received from the Gujarat authorities and ONGC, which has enabled us to drill this well in such a short timeframe, having only completed the seismic acquisition in February this year."

For further information, contact:

Cairn Energy PLC

Bill Gammell, Chief Executive 0131 475 3000
Mike Watts, Exploration Director 0131 475 3000
Kevin Hart, Finance Director 07771 934974

 Notes to Editors:

  1. "Cairn" where referred to in this release means Cairn Energy PLC and/or its subsidiaries, as appropriate.
  2. The Hazira Field is on production and is contained within a separate ring-fenced area within the boundary of Block CB-OS/2. The Joint Venture comprises the Gujarat State Petroleum Company (66.6%) and the Operator Niko Resources Ltd. (33.3%).
  3.  The North Tapti Field is 100% owned and operated by ONGC. The field is under appraisal and is contained within a separate ring-fenced area within the boundary of Block CB-OS/2