News

Operational Update

28 January, 2010

Cairn intends to announce its preliminary results for the year to 31 December 2009 on Tuesday 23 March 2010.  In advance of these results, Cairn is providing information on recent operations and guidance in respect of the Group’s trading performance in 2009.  This information is unaudited and is subject to further review.

India

  • Mangala average gross production 15,430 barrels of oil per day (bopd) Q4 2009; currently producing ~20,000 bopd and more than 1.5 million barrels (mmbbls) produced since field start-up in August 2009 through Train One
  • Construction of processing Trains Two and Three at the Mangala Processing Terminal (MPT) is targeted to attain capacity of 125,000 bopd by end of H1 2010
  • The entire pipeline section from MPT to Salaya has been laid and commissioning is in progress
  • Work ongoing to align near term sales volumes with production capacity; discussions continue with the Government of India (GoI) and buyers to optimise offtake during production ramp-up
  • Mangala development drilling on schedule with 45 development wells drilled to date of which 33 have been completed as producers to support ramp-up; well results confirm the excellent quality, extent and high deliverability potential of the Fatehgarh oil reservoirs
  • Eight Raageshwari Deep gas wells successfully drilled to ensure gas supply to fuel MPT steam turbine generators and heat the crude pipeline; one well successfully hydro-fracced and tested to a gas rate of 15.7 mmscfd (million standard cubic feet of gas per day), the highest ever recorded in the field
  • Initial crude oil sales to Public Sector Undertakings (MRPL, IOC) now supplemented by sales to Reliance Industries Limited (RIL) at Jamnagar following the decision of the GoI to allow private refiners to qualify as additional offtakers of the Rajasthan crude

Greenland

  • Well site surveys in West Disko and geophysical surveys in West Disko, Southern and Eastern Greenland acquired
  • Two ultra modern offshore drilling rigs secured for a summer 2010 multi-well exploration programme around West Disko
  • Final processed results of 2009 2D seismic surveys expected March 2010
  • Preparations for summer 2010 2D seismic and well site surveys underway
  • Pre-qualified as an Operator for the 2010 exploration Bid Round in Baffin Bay; bids to be submitted by 1 May 2010
  • Petronas transaction brings an internationally focused National Oil Company (NOC) into all of Cairn's existing operated blocks as a 10% partner; in the event of success Petronas can elect to increase its stake in any discovery to 20% on a market value basis
  • Dyas's Capricorn interest exchanged for Cairn shares and direct licence interests in Tunisia and Albania; Capricorn is now a 100% subsidiary of Cairn

Mediterranean

  • Exploration well on the Louza permit Tunisia planned for H1 2010
  • Results of 2009 3D seismic survey on Joni permit in Albania are encouraging; an exploration well is planned for early 2011

Finance

  • Group cash balances of approximately $1.2bn
  • PLC/Capricorn net cash of $594m with a further $64m to be received in 2010 following the Petronas farm-in to Greenland
  • CIL net debt of $94m and following the $1.6bn refinancing during the year, CIL has committed undrawn loan facilities of $923m

Sir Bill Gammell, Chief Executive said:

”The delivery of the Rajasthan project with its significant long term production potential underpins the growth strategy of Cairn.

I am delighted that we plan to commence our multi-well exploration campaign in West Greenland during the summer of 2010.  I also look forward to continuing our exploration drilling activities across other highly prospective parts of Greenland in subsequent years.”

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