Cairn India announces Q2 FY2013 results

22 October 2012

Vedanta Resources plcCairn India Announces Results for the Second Quarter ended 30 September 2012

For Immediate Release 22 October, 2012

Cairn India Limited

Second Quarter Financial Results for the period ended 30 September, 2012

The following commentary is provided in respect of the unaudited financial results and operational highlights of Cairn India Limited and its subsidiary companies (referred to as "Cairn India" or the "Company", NSE: CAIRN, BSE: 532792, Bloomberg: CAIR) for the second quarter (from July - September 2012) for FY 2012-13, in accordance with Indian GAAP.

Please note: `denotes Indian Rupee and US$ denotes US Dollar.

Elango P, Interim Chief Executive Officer, Cairn India said:

"The quarter saw consistent production from our flagship Rajasthan asset. The block continues to produce ~175,000 bopd, which is more than 20% of India's domestic oil production. Work to enhance production from the block continues to remain our focus. 

Production from all assets resulted in reducing India's import bill by ~US$ 1.8 billion and contributing ~US$ 0.8 billion to the national exchequer during the quarter.

Following support from the GoI, we have received all approvals for our corporate re-organisation. Implementation of this will help simplify and consolidate the multi-layered structure of CIL comprising foreign subsidiaries.

We have made good progress with GoI in respect of further exploration in the Barmer Basin. With our internal preparation to implement exploration programmes at an advanced stage, I am confident that the Joint Venture can move quickly to harness the Block's full potential post approvals.

Our farm-in agreement in the Orange Basin, South Africa and partnership with PetroSA, is a step in the right direction towards our strategic goal of growing our resource base by building a balanced portfolio with a long term vision."

·; Revenue at ` 44,431 million (US$ 806 million), up 68% yoy

·; EBITDA at ` 34,253 million (US$ 621 million), up 66% yoy

·; PAT (excluding forex loss) at ` 31,080 million (US$ 564 million)

·; Cash flow from operations at ` 28,111 million (US$ 510 million), up 43% yoy

·; Net cash of ` 124,427 million (US$ 2,360 million) as on 30 September, 2012

·; Average daily gross operated production at 207,245 barrels of oil equivalent (boe) (working Interest production at 129,431 boe)

o Helped reduce nation's crude oil import dependence by ~US$ 1.8 billion gross

o Contribution to the national exchequer (excluding direct taxes) was ~US$ 800 million gross

·; Gross Rajasthan development capex till date US$ 3,570 million

Onshore

·; 'Drill Ready' preparation for exploration in the Barmer Basin at an advanced stage; Cairn-ONGC JV continues to work with Government of India (GoI) to obtain necessary approvals

·; Mangala field continues to produce at ~150,000 bopd; sustained production at its peak rates over the last two years

·; Cumulative production from the Bhagyam field crossed five million barrels; currently producing ~25,000 bopd; focus on drilling residual wells and de-bottlenecking of pipeline

·; Aishwariya field development in progress; expect to commence production by end FY 2012-13

·; Mangala EOR polymer pilot success led to the booking of 70 mmboe as 2P reserves; FDP submitted to JV; full field implementation expected to commence in FY 2014-15

·; Technical/pilot trials completed for the application of Drag Reducing Agents (DRA) to de-bottleneck MPT to Salaya section of the pipeline; report submitted to JV

·; In KG-ONN-2003/1 block, preparatory work is in progress for appraisal drilling in Q1 FY 2013-14; this will help evaluate the size and commerciality of the second discovery i.e. Nagayalanka-SE-1

Offshore

·; In Ravva, a 'high value high risk' deeper prospect has been identified; exploratory well drilling planned in H1 FY 2013-14

·; In CB/OS-2 an infill drilling campaign is expected to commence in H2 FY 2012-13; potential of deeper horizons is also being evaluated

Sri Lanka

·; Completed acquisition of 600 sq km of 3D seismic data under Phase 2 exploration programme; preparatory work on-going to drill an exploration well in mid CY 2013

South Africa

·; Farm-in agreement in 'Block 1' signed in August 2012, with PetroSA for 60% stake along with operatorship; subject to regulatory approvals; tendering for acquisition of 3D seismic data initiated

·; Ravva asset won the Platinum Award under the FICCI Safety Excellence Awards for Manufacturing 2012

·; Cairn India won the Golden Peacock Award for Excellence in Corporate Governance for 2012

·; Ravva asset won the OISD award for offshore Platform Category for 2011

Note:

Cash flow from Operations (CFFO) - refers to PAT (excluding other income and exceptional item) prior to non-cash expenses and exploration costs

*One time retrospective impact of Rajasthan royalty estimate was considered

Gross cash available to the company as on 30 September, 2012 was ` 130,677 million (US$ 2,479 million). The non-convertible debentures (NCD) outstanding as on 30 September, 2012 were ` 6,250 million (US$ 119 million). The net cash available as on 30 September, 2012 was ` 124,427 million (US$ 2,360 million). The outstanding NCD were redeemed in October 2012.

Revenue reported for the quarter post profit sharing with the GoI and the Rajasthan block royalty expense was `44,431 million (US$ 806 million).

The cumulative costs associated with the Development Area 2 (DA 2) have been recovered during the quarter resulting in commencement of profit sharing with the GoI. The profit petroleum of the Rajasthan block (net to the company) was ` 6,981 million (US$ 127 million).

Earnings before Interest Tax Depreciation and Amortisation (EBITDA) for the quarter was `34,253 million (US$ 621 million), resulting to an EBITDA margin of 77%.

The company generated quarterly profit after tax (PAT) excluding forex loss at `31,080 million (US$ 564 million) and quarterly earnings per share (EPS) excluding forex loss at ` 16 per share.

The gross cumulative Rajasthan development capital expenditure as on 30 September, 2012 was US$ 3,570 million, of which US$ 78 million was spent during the quarter including US$ 16 million in DA 2.

The average US$-`exchange rate for the quarter was `55.15 vs. ` 54.1 for corresponding quarter of previous year. The closing exchange rate as on 30 September, 2012 was `52.72.

The shareholders of the Company had approved a Scheme of Arrangement (Scheme) between the Company and some of its wholly owned foreign subsidiaries (Cairn Energy India Pty Ltd, Cairn Energy India West B.V., Cairn Energy Cambay B.V., and Cairn Energy Gujarat B.V.), to be effective from 1 January, 2010. This was approved by the Honorable High Courts of Bombay and Madras in 2010, subject to the receipt of other regulatory approvals which have been received in October, 2012. Considering the fact that the necessary approvals were not in place as at 30 September, 2012, no adjustments are made to the unaudited financial results. Implementation of the Scheme will ultimately help in the consolidation of Indian businesses held by these foreign subsidiaries, directly under Cairn India.

The Board has decided to meet on 31 October, 2012 to consider the payment of interim dividend. A notice is being sent to the Indian Stock Exchanges today.

Cairn India Group and PetroSA signed a farm-in agreement for exploration in the offshore Block 1 in the Orange Basin on the west coast of South Africa. The closure of the transaction is subject to South African regulatory approvals.

The search for the Cairn India CEO is ongoing and progressing well. In the meantime, the Board has appointed Mr. P. Elango, Director - Strategy and Business Services and a member of Cairn India's Executive Committee, as the Interim CEO. Further, Mr. Sudhir Mathur has joined the company as the Chief Financial Officer and member of the Cairn India Executive Committee.

1. Rajasthan (Block RJ-ON-90/1)

Operations & Projects

The Rajasthan Operation and Projects including drilling and pipeline had 7.5 million Lost time Injury (LTI) free hours during the quarter. As a commitment towards maintaining the highest Health, Safety, Environment and Assurance standards, the company would be reporting quarterly LTI performance.

Rajasthan block continues to produce from four fields, i.e. Mangala, Bhagyam, Saraswati and Raageshwari with current production at ~ 175,000 bopd. The facility and well uptime stood at 98.1% during Q2 FY 2012-13 and figured in the top decile amongst global peers.

 In line with standard industry practice, we envisage staggered shutdowns to tie-in new fields, routine maintenance periods for safe operations, etc. Accordingly, we expect routine downtime of 3%-5% for the facilities and processing infrastructure. However, our endeavour remains to minimise downtime.

Mangala field continues to sustain production at ~150,000 bopd following GoI approval in April 2012. The field produced at a rate of ~125,000 bopd for more than one and a half years and has now ramped up to its current level since April 2012. A total of 152 development wells are drilled and completed in the Mangala field. The remaining well count as per the FDP will be drilled in due course.

Bhagyam field is producing at ~25,000 bopd; cumulative production from Bhagyam crossed 5 million barrels. A total of 64 wells have been drilled to date with the drilling activity for the residual wells (~20% of the FDP approved count) and the pipeline de-bottlenecking in progress. The technical/pilot trials for first stage of the de-bottlenecking process to enhance capacity have been completed by the application of DRA technology. The report has been submitted to the JV. Once these activities are completed, field production is expected to ramp up to the FDP approved rate of 40,000 bopd. Crude oil is transported via the Bhagyam trunk line to MPT for processing and then exported through the heated pipeline.

The Raageshwari and Saraswati fields continue to cumulatively produce at ~500 bopd. The availability of the integrated processing and evacuation facility has reduced operating costs and accordingly has made these marginal fields economically viable.

The MPT is currently handling ~175,000 bopd. Work continues on the associated facilities expansion project which will ensure the availability of the facilities for life of the field. Development drilling and well completion activities in line with the approved FDP continue to progress in Bhagyam and Mangala.

Development work on the Aishwariya field is currently underway with EPC contracts awarded. All long lead equipment items are purchased and are now being delivered. The crude oil production is expected to commence by end FY 2012-13.

The MPT to Salaya (~590 km) section of the pipeline continues to safely deliver crude oil to Indian refiners. We continue to witness higher crude demand from this section of the pipeline. The section provides us with access to over 1.6 million barrels per day of refining capacity. The pipeline is currently operating at ~175,000 bopd. As mentioned previously, technical/pilot trials for the de-bottlenecking of the pipeline to enhance capacity is in progress. The application of the DRA technology has resulted in satisfactory results and a report has been submitted to the JV. The enhanced capacity of the pipeline is expected to come alongside increased field production. Overall, the pipeline can handle much higher volumes in line with the basin potential through incremental investments and augmentation of facilities, subject to regulatory approvals.

Work on the remaining ~80 km Salaya to Bhogat section has been initiated following the resolution of execution challenges. This section, including the Bhogat Terminal, is expected to be completed in H1 CY 2013. The Marine facilities off the coast of Bhogat are installed.

The Rajasthan upstream project has achieved a significant milestone of 10 million LTI free hours. Raageshwari Oil field received a runner up award from DGMS for "Low Injury Frequency Rate - Cat 7".

Sales

Crude oil sales arrangements are in place with PSU and private refiners for volumes in excess of 175,000 bopd. The crude is currently being supplied to four refineries.

The Rajasthan crude is well established in the market, generating higher demand and thereby increased value for its stakeholders. We have enough demand for the crude in the current pipeline route. In accordance with the RJ-ON-90/1 PSC, the crude is benchmarked to Bonny Light, West African low sulphur crude that is frequently traded in the region, with appropriate adjustments for crude quality. The implied crude price realisation for this quarter (average of three months up to September 2012) lies within the stated guidance of 10%-15% discount to Brent.

Resource Base

A comprehensive review of the resource potential in the block was carried out by Cairn India through detailed studies involving the usage of innovative technologies and advanced geoscience. Based on Cairn India's assessment, Rajasthan potential resource for the block is now estimated to be 7.3 billion boe in place. This is primarily due to an increase in the exploration upside with the prospective resource base now estimated at 3.1 billion boe in place from an earlier estimate of 2.5 billion boe in place. Rajasthan recoverable prospective resource increased from 250 mmboe to 530 mmboe on a risked basis, primarily due to generation of additional leads and prospects.

Cairn India and ONGC are working with GoI to obtain the necessary approvals required to conduct exploration and appraisal activity in the block.

In anticipation of this, focused 'Drill Ready' preparation is on-going and is at an advanced stage. The JV continues to work towards the technical approval of some of the prospects which could include both oil and gas. The rationale behind the exploration of gas prospects is to augment the already rich gas finds in the southern part of the block and explore possibilities of commercialisation beyond captive usage. This is a step towards the equitable usage of resources in the Rajasthan block in an environmentally friendly way to add value for all stakeholders.

The Mangala, Bhagyam and Aishwariya (MBA) fields (including EOR potential) have gross ultimate recoverable oil reserves and resources of approximately one billion barrels. The 20 other fields in the RJ block hold around 2 billion barrels of oil in place of which around 165 mm boe is estimated to be recoverable. A draft FDP for the Barmer Hill discovery has been prepared and is currently under discussions with the JV. The FDPs for the other discoveries are under preparation.

EOR pilot continues to progress well with positive results being observed from the polymer injection phase. Based on these results, an FDP for a full field application of polymer flood in the Mangala field has been submitted to the JV. The full field implementation of the polymer flood is expected to start in FY 2014-15 subject to GoI approvals. Pursuant to the submission of the FDP, Cairn has booked 70 mmboe as 2P reserves. Preparation for the commencement of the Alkali Surfactant Polymer (ASP) phase is currently underway.

The currently envisaged basin potential stands at 300,000 bopd (equivalent to a contribution of approximately 35% of India's total domestic current crude production).

2. Eastern India (Block PKGM-I - Ravva Field) - Krishna Godavari Basin

The Ravva field celebrated its 17th year of successful operations, has produced more than 249 mm bbls of crude and sold 310 billion cubic feet of gas, more than double its initial estimates. During the quarter, the plant uptime was 99%.

A 'high value high risk' deeper prospect has been identified in the block and the drilling of an exploration well is planned for H1 FY 2013-14.

Asset integrity measures in line with statutory compliances are in progress. A total plant shutdown was carried out to complete all hydrotests as per statutory requirements.

The asset had an LTI incident during the quarter.

Ravva asset won the Platinum Award (FICCI Safety Excellence Awards) for Manufacturing 2012 and also the prestigious OISD Award for offshore Platform Category for 2011.

3. Western India (Block CB/OS-2) - Cambay Basin

The asset recorded 0.28 million LTI free hours during the quarter. The CB/OS-2 facilities had an uptime of over 99.9% in Q2 FY 2012-13.

This block provides an example of optimal asset utilisation. The infrastructure utilisation in the block was optimised by making a tolling and processing arrangement with ONGC to process the gas from its North Tapti field (adjacent to the Lakshmi field). The tolling of gas commenced in June, 2012. The block shall undertake an infill drilling campaign which includes two new wells and one work over, which is expected to commence in H2 FY 2012-13. This is expected to help arrest the rate of production decline in the block.

The potential of deeper horizons is also being evaluated and is under discussions with the JV.

The block recorded more than 10 million safe work hours over the last eight years, which demonstrates Cairn's continued commitment to operate safely.

*Divestment approved by GoI, **Subject to South African regulatory approvals

Note-all the blocks except KG-DWN-98/2 are operated by Cairn India

Cairn India has a portfolio of ten blocks, located in four strategically focused areas: one in Rajasthan; two on the west coast of India; six on the east coast of India (including one in Sri Lanka) and one in South Africa. Out of these, nine blocks, including the three that are in production, are operated by Cairn India.

The blocks are located in the Barmer Basin, Krishna-Godavari Basin, the Palar-Pennar Basin, the Cambay Basin, the Mumbai Offshore Basin in India, the frontier Mannar Basin in Sri Lanka and the Orange Basin in South Africa.

India Block Updates

In the KG-DWN-98/2 block, Cairn India has decided to farm-out its stake to its JV partner, ONGC. GoI approvals have now been obtained. This divestment of insignificant equity is part of Cairn India's process of continuous portfolio optimisation.

In KG-ONN-2003/1, following the discovery of oil and gas in the well Nagayalanka-SE-1, an appraisal plan has been prepared. The two well appraisal programme has been approved by the JV partner. It is planned to spud the first well in Q1 FY 2013-14. The estimate of the gross in place resource for both the discoveries is ~550 mm boe.

In the KG-OSN-2009/3 block, force majeure has been declared due to the denial of permission to carry out exploration activity in the restricted area by the Ministry of Defence. GoI has granted conditional approval for carrying out exploration activity; however discussions are in progress for unrestricted access.

In the MB-DWN-2009/1 block, awarded in the NELP VIII licensing round, force majeure was declared by Cairn India due to denial of defence clearances for further exploration activity. This has been accepted by the Directorate General of Hydrocarbons (DGH). Cairn India is in discussions with the GoI to resolve the matter.

In the PR-OSN-2004/1 block, force majeure has been declared due to the denial of permission to drill in the restricted area by the Department of Space. GoI has granted conditional approval for carrying out exploration drilling; however discussions are in progress with the GoI for unrestricted access.

Sri Lanka Block Update

600 sq km 3D seismic acquisition program under Phase 2 exploration period was completed in Block SL 2007-01-001 in order to evaluate certain leads and to finalise future drilling locations. The 3D seismic acquisition programme has been carried out on time, within budget and without any HSE incidents. Data processing of the acquired survey is in progress. The Phase 2 exploration well is planned to be drilled in mid CY 2013.

South Africa block Update

A farm-in agreement has been signed with PetroSA on 16 August, 2012 for a 60% stake along with operatorship in the 'Block-I' located in Orange basin, South Africa. The area of the block is 19,922 sq km. The approval process from Govt of South Africa is in progress. The tendering for acquisition of 3D seismic data has been initiated.

Cairn India Limited

Registered Office: 101, West View, Veer Savarkar Marg, Prabhadevi, Mumbai - 400025

Corporate Office: 3rd & 4th Floors, Vipul Plaza, Sun City, Sector-54, Gurgaon - 122002

(All amounts are in ` lakhs, unless otherwise stated)

 * includes cash and cash equivalents of ` 602,190 lakhs (31 March 2012 : ` 444,639 lakhs)

Notes:-

1. The above unaudited financial results for the current quarter ended 30 September 2012 were subjected to a limited review by the auditors of the Company and reviewed and recommended by the Audit Committee and approved by the Board of Directors at their meeting held on 22 October 2012.

2. The individual items in the above financial results are net of amounts cross charged to oil and gas blocks where the Group is the operator. The Group's share of such net expenses in oil and gas blocks is treated as exploration, development or production costs, as the case may be.

3. Employee costs for the current quarter and six months include stock option charge of ` 697 lakhs and ` 1,417 lakhs respectively, computed under the Intrinsic Value Method. The said charge for the current quarter and six months would have been ` 2,051 lakhs and ` 3,920 lakhs respectively, if computed under the Fair Value (Black Scholes) Method.

4. 859,522 additional equity shares were issued during the current quarter on exercise of stock options by the employees of the Cairn India Group.

5. The shareholders of the Company had approved a Scheme of Arrangement between the Company and some of its wholly owned subsidiaries, to be effective from 1 January 2010 ("the Scheme") which was approved by the Honorable High Courts of Bombay and Madras in 2010, subject to the receipt of other regulatory approvals which have been received in October 2012. Considering the fact that the necessary approvals were not in place as at 30 September 2012, no adjustments are required to be made to the above unaudited financial results.

6. Vedanta Resources Plc. along with its subsidiaries (Vedanta group) became the promoter of the Company w.e.f. 8 December 2011. Consequently, royalty paid by Oil and Natural Gas Corporation Limited with respect to the RJ-ON-90/1 block was treated as cost recoverable, as it was one of the pre-conditions imposed by the Government of India for approving the transaction of sale of shares by Cairn Plc. group to Vedanta group resulting in reduction in revenues and profit after tax of the Cairn India Group. The reduction on this account for the period upto 31 March 2011 and 30 June 2011 was disclosed as an exceptional item in the previous year ended 31 March 2012 and half year ended 30 September 2011 respectively.

7. The Group operates in only one segment i.e. "Oil and Gas".

8. Previous quarter / six month / year's figures have been regrouped / rearranged wherever necessary to confirm to the current quarter's presentation.

Cairn India Limited

Registered Office: 101, West View, Veer Savarkar Marg, Prabhadevi, Mumbai - 400025

Corporate Office: 3rd & 4th Floors, Vipul Plaza, Sun City, Sector-54, Gurgaon - 122002

(All amounts are in `lakhs, unless otherwise stated)

* includes cash and cash equivalents of ` 622 lakhs (31 Mar 2012: ` 8,355 lakhs)

Notes:-

1. The above unaudited financial results for the current quarter ended 30 September 2012 were subjected to a limited review by the auditors of the Company and reviewed and recommended by the Audit Committee and approved by the Board of Directors at their meeting held on 22 October 2012.

2. Employee costs for the current quarter and six months include stock option charge of ` Nil and ` 65 lakhs respectively, computed under the Intrinsic Value Method. The said charge for the current quarter and six months would have been ` 1,374 lakhs and ` 2,579 lakhs respectively, if computed under the Fair Value (Black Scholes) Method.

3. 859,522 additional equity shares were issued during the current quarter on exercise of stock options by the employees of the Cairn India Group.

4. The shareholders of the Company had approved a Scheme of Arrangement between the Company and some of its wholly owned subsidiaries, to be effective from 1 January 2010 ("the Scheme") which was approved by the Honorable High Courts of Bombay and Madras in 2010, subject to the receipt of other regulatory approvals which have been received in October 2012. Considering the fact that the necessary approvals were not in place as at 30 September 2012, no adjustments are required to be made to the above unaudited financial results.

5. Paid up debt capital comprises of non-convertible debentures.

6. Ratios have been computed as follows:

Debt = Long term borrowings (including their current maturities)

Shareholders' fund = Share capital + Reserves and surplus

EBIDTA = Earnings before finance costs, depreciation, depletion & amortization and tax

DSCR and ISCR for the half year ended 30 September 2012 have not been furnished as EBITDA is negative.

7. The Company operates in only one segment i.e. "Oil and Gas".

8. Previous quarter / six month / year's figures have been regrouped / rearranged wherever necessary to confirm to the current quarter's presentation.

 Contact Details

On 9 January, 2007, Cairn India Limited was listed on the Bombay Stock Exchange and the National Stock Exchange of India. Cairn India is now part of the Vedanta Group, a globally diversified natural resources group with wide ranging interests in aluminium, copper, zinc, lead, silver, iron ore, etc.

Cairn India is headquartered in Gurgaon in the National Capital Region, with operational offices in Tamil Nadu, Gujarat, Andhra Pradesh, Rajasthan and Sri Lanka.

Cairn India is primarily engaged in the business of oil and gas exploration, production and transportation. Average daily gross operated production was 207,245 boe in Q2 FY2012-13. The Company sells its oil to major refineries in India and its gas to both PSU and private buyers.

The Company has a world-class resource base, with interest in eight blocks in India, one in Sri Lanka and one in South Africa. Cairn India's resource base is located in four strategically focused areas namely one block in Rajasthan, two on the west coast of India, six on the east coast of India (including one in Sri Lanka) and one in South Africa.

The blocks are located in the Barmer Basin, Krishna-Godavari Basin, the Palar-Pennar Basin, the Cambay Basin, the Mumbai Offshore Basin, Mannar Basin and Orange Basin.

Cairn India's focus on India has resulted in a significant number of oil and gas discoveries. Cairn made a major oil discovery (Mangala) in Rajasthan in the north west of India at the beginning of 2004. To date, twenty five discoveries have been made in the Rajasthan block RJ-ON-90/1.

In Rajasthan, Cairn India operates Block RJ-ON-90/1 under a PSC signed on 15 May, 1995. The main Development Area (1,859 km2), which

 includes Mangala, Aishwariya, Raageshwari and Saraswati is shared between Cairn India and ONGC, with Cairn India holding 70% and ONGC having exercised their back in right for 30%. The Operating Committee for Block RJ-ON-90/1 consists of Cairn India and ONGC.

Further Development Areas (430 km2), including the Bhagyam and Shakti fields and (822 km2) comprising of the Kaameshwari West

 Development Area, is also shared between Cairn India and ONGC in the same proportion. The Mangala, Bhagyam and Aishwariya (MBA) fields have gross recoverable oil reserves and resources of approximately 1 billion barrels, which includes proved plus probable (2P) gross reserves and resources of 636 mmboe with a further 300 mmboe or more of EOR resource potential. The Rajasthan block is contributing more than one fifth of current domestic crude production. The total resource base supports a vision to produce 300,000 bopd, (equivalent to a contribution of more than 35% of India's current domestic crude production), subject to further investments and regulatory approvals.

In Andhra Pradesh and Gujarat, Cairn India on behalf of its JV partners operates two processing plants, 11 platforms and more than 200 km of sub-sea pipelines with a production of approximately 30,000 boepd.

Block SL 2007-01-001 was awarded to Cairn Lanka in the bid round held in 2008. This offshore block is located in the Gulf of Mannar. The water depths range from 400 to 1,900 meter. Cairn Lanka (Private) Limited is a wholly owned subsidiary of Cairn India and holds a 100% participating interest in the block. The signing of the Petroleum Resources Agreement (PRA) to explore oil and natural gas in the Mannar Basin was held in July 2008 in Colombo.

The farm-in agreement has been signed with Petro SA on 16 August 2012, for 60% stake along with operatorship in the Block-I located in Orange basin, South Africa. The area of the Block is 19,922 sq km. The approval process of this agreement from Govt of South Africa is in progress.

India currently imports 3.4* million bopd of crude oil. The current domestic crude oil production is approximately 0.76** million bopd of which Cairn India operated assets (Ravva, CB/OS-2 and the RJ-ON-90/1) contribute around one-fourth.

For further information on Cairn India Limited & Cairn Lanka (Pvt) Limited see www.cairnindia.com& www.cairnlanka.com

*BP Statistical Review for CY 2011

**MoPNG August 2012 data

Disclaimer

This material contains forward-looking statements regarding Cairn India and its affiliates, our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward- looking statements are based on our management's assumptions and beliefs in the light of information available to them at this time. These forward-looking statements are by their nature subject to significant risks and uncertainties; and actual results, performance and achievements may be materially different from those expressed in such statements. Factors that may cause actual results, performance or achievements to differ from expectations include, but are not limited to, regulatory changes, future levels of industry product supply, demand and pricing, weather and weather related impacts, wars and acts of terrorism, development and use of technology, acts of competitors and other changes to business conditions. Cairn India undertakes no obligation to revise any such forward-looking statements to reflect any changes in Cairn India's expectations with regard thereto or any change in circumstances or events after the date hereof. Unless otherwise stated the reserves and resource numbers within this document represent the views of Cairn India and do not represent the views of any other party, including the Government of India, the Directorate General of Hydrocarbons or any of Cairn India's joint venture partner.

For further information, please contact:

About Vedanta Resources plc

Vedanta Resources plc ("Vedanta") is a London listed FTSE-100 diversified global resources major. The group produces Aluminium, Copper, Zinc, Lead, Silver, Iron ore, Power, and Oil and Gas. Vedanta has world-class assets in India, Zambia, South Africa, Namibia, Ireland Liberia, Australia and Sri Lanka and a strong organic growth pipeline of projects. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness and growth. For more information, please visit:

www.vedantaresources.com.

Disclaimer

This press release contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should" or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.