Cairn India reported its second quarter operational and financial results for the financial year 2010-11. Please note that the financial year 2010-11 (FY 2010-11) refers to the period April 2010 - March 2011.

The holding company of Cairn India Limited, Cairn UK Holdings Limited, along with its holding company, Cairn Energy PLC (Company's ultimate holding company) has agreed to sell a substantial part of its investment in the Company to Vedanta Resources Plc. This transaction has been approved by shareholders of Cairn Energy PLC. The transaction continues to progress in a consensual way to secure the necessary consents and approvals from the various government authorities and stakeholders.

Development - Upstream The MPT is designed to process crude from the Rajasthan fields and has a capacity to handle 205,000 bopd of crude with scope for further expansion. Trains One, Two and Three are currently producing and the contracts for construction of Train Four have been awarded with work expected to commence soon.

Cairn India and its JV partner ONGC, continue to develop the hydrocarbon resources within the state of Rajasthan with a sustained focus on cost and the application of innovative technology. The use of high density 3D seismic surveys has enhanced the understanding of the reservoir and helped to precisely identify well locations leading to reduced finding costs.

The use of pad-based drilling coupled with mobile drilling rigs has allowed a large number of wells to be drilled in a short time with a reduced environmental footprint and lower infrastructure and drilling costs.

The focused effort on drilling of high capacity horizontal wells in Mangala and the reservoir performance from the field supports higher plateau levels. Surface facilities and midstream infrastructure are ready to support production of 150,000 bopd from Mangala, subject to JV and GoI approval.

Development drilling and the well completion activities are progressing with three drilling rigs and one completion rig operating in the Mangala development area. 107 Mangala development wells have been drilled of which 74 wells have been completed and made ready for production.

The application of new fracture stimulation and completion technology proven in the Raageshwari wells will not only aid greater production from fewer wells but also allow the opportunity to replicate the same in the lower permeability Barmer Hill formation.

Cairn has successfully drilled and completed 11 horizontal wells in Mangala of which nine have been put on production. A total of 48 Mangala wells are currently producing and the other wells will be brought on stream in a staged manner. Work on the development of the Bhagyam field, the second largest field in Rajasthan, has commenced.

Resource base including enhanced oil recovery (EOR) The Mangala, Bhagyam and Aishwariya (MBA) fields have gross recoverable oil reserves and resources of over 1 billion barrels, which includes proven plus probable (2P) gross reserves and resources of 694 million barrels of oil equivalent (mmboe) with a further 300 mmboe or more of EOR resource potential. The MBA fields will contribute more than 20% of domestic crude production when they reach the currently approved peak plateau rate of 175,000 bopd in 2011.

Start-up injection tests have commenced in the EOR pilot project that started earlier this year. The first phase of EOR pilot consisting of four injectors, one producer and three observation wells has been drilled, completed and hooked up to the facilities.

A pilot hydraulic fracturing program to test the potential of the Barmer Hill Formation is planned in FY 2010-11, subject to GoI approval. The pilot program will allow evaluation of the appropriate cost effective technology for a fully optimized development of this resource base. A declaration of commerciality for the Barmer Hill was submitted to the GoI in March, 2010 and a Field Development Plan is under preparation.

Exploration - Cairn India - Producing Assets RJ-ON-90/1 (Cairn India - 70% holding in the Mangala, Bhagyam and Kaameshwari West Development Areas, Operator) Technical evaluation work continues to assess existing and new plays in the basin to generate further prospects in Rajasthan.

Krishna-Godavari Basin - Eastern India - Block PKGM-1 - Ravva field (Cairn India - 22.5%, Operator) Average gross production from the Ravva field for Q2 FY 2010-11 was 38,102 boepd (comprising an average oil production of 29,413 bopd and average gas production of 52 million standard cubic feet per day (mmscfd)). The production was higher in comparison to last quarter due to better well performance resulting from workover programs.

Cairn India and its joint venture partners have completed a 4D seismic campaign to identify bypassed oil zones and locate infill well locations. Drilling is expected to commence in Q3 FY 2010-11.

Cambay Basin - Western India - Block CB/OS-2: (Cairn India - 40%, Operator) Average gross production from the CB/OS-2 block for Q2 FY 2010-11 was 11,227 boepd (comprising an average oil / condensate production of 6,601 bopd and average gas production of 28 mmscfd).

To enhance oil production from the field, an infill drilling campaign is planned in the Lakshmi fields. The Term Sheet agreement executed in December, 2009 to produce Gauri's share of GBA (Gas Balancing Agreement - for sharing gas from the shared reservoir) gas through the Hazira facilities has now been extended to March, 2012.

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