Cairn's potentially company-making oil discovery - its shares have jumped by 40% on the FTSE - is in India's Rajasthan state, around 60 km north of the town of Saraswati.

Cairn has confirmed that it has yet to drill the well to its final depth but its experts believe that the well has around 450 million to 1.1 billion barrels of oil and has early estimated recoverable reserves of around 50 million to 200 million barrels of oil. Some independent analysts have put the value of the discovery at around US$400 million.

Cairn's discovery - according to Mark Redway, an analyst with Canaccord Capital - has the potential of turning around Cairn's fortunes. "The find has the potential to double the size of the company, which last registered reserves of 87.1 million barrels of oil equivalent," said Redway who has been advising people to put Cairn shares on their "to buy" list.

The discovery has not helped the position of Shell chairman Sir Philip Watts. Coming on the back of his shock announcement that the Shell group of companies had to downgrade its proven oil and gas reserves by 20% (or around 3.9 billion barrels), the fact that Shell sold off the Rajasthan land for a mere US$7 million has Shell's shareholders and investors clamouring for Watt's head.

There are potential problem with the Rajasthan yield, though. An unnamed London-based analyst said, "The field's geology and the thickness of the oil mean recovery rates could be as low as 20%-30%, compared to an industry standard closer to 60%" and Canaccord's Redway also admits that, "the relative shallowness of the reservoir also means there is less pressure to make the oil flow than found in other wells."

Cairn has a 100% stake in Block RJ-ON-90/1 but India's Oil & Natural Gas Corp has the option of picking up a 30% stake in the block in the event of a discovery.