Cairn Energy is placing its hopes in its Indian oil fields

The firm, which focuses on South Asia, said it made a pre-tax profit of �22.4m ($40.8m) in the six months to June, down from �38.3m a year earlier.

But the firm said it was focusing on the potential of newly-discovered reserves at its Mangala oil field in India, estimated at a billion barrels.

Strong share gains this year mean the firm could join the FTSE 100 this week.

Its share price fell 1.22% to 1,456 pence by 0930 GMT and a continued slide could put paid to Cairn's hopes of joining oil majors such as Shell and BP at the top table.

Focus on Rajasthan

The reduced profit, attributed to a 19% fall in output from the previous year, was in line with expectations.

We have no plans to dispose of Rajasthan Bill Gammell, Cairn Energy Track Cairn Energy's share price

Ahead of the results, analysts were focusing on the potential of both the Mangala field and other exploration opportunities in India.

Cairn bought the rights to drill in Rajasthan from oil giant Shell for just �2m in 2002 - a deal which has so far produced four other discoveries as well as Mangala.

Between them, Mangala and the most significant of the four - dubbed N-A - could produce 60,000-100,000 barrels of oil a year from late 2007 onwards, Cairn said.

The process of understanding the Rajasthani field's true potential was still at an "embryonic stage", said Cairn chief executive Bill Gammell.

But he said the firm was "ideally placed" to meet the region's challenges.

"An extremely active exploration, appraisal and development campaign is continuing with the potential to add further significant value," he said.

He dismissed suggestions that Cairn might decide to cash in on its Indian fields.

"We have no plans to dispose of Rajasthan," he said in a conference call.