Net profit in April-June quarter fell 65 per cent to Rs 1,093 crore, or Rs 5.76 a share, from Rs 3,127 crore, or Rs 16.36 a share, in the same period a year ago, the company said in a statement.
This is the lowest profit for Cairn, the operator of India's biggest oil field on land, in 11 quarters.
The drop in net profit is "primarily due to change in method of depreciation from Straight line method (SLM) to Unit of production (UOP)," it said. Cairn booked a charge of Rs 1,627.39 crore for change in the way depreciation of oil and gas assets is calculated.
Sales rose 10 per cent to Rs 4,483 crore.
Cairn, which is investing USD 3 billion in raising oil production from the Rajasthan block, plans to invest another USD 200 million in developing a gas find in the predominantly oil-rich block.
Rajasthan block oil production was up 5 per cent at 181,894 barrels per day while gas output doubled to 8 million standard cubic feet per day.
Gas production is planned to reach 22 mmscfd by end of the fiscal and the new investment in the field development would take it to 90 mmscfd by end of FY16.
The field development plan (FDP) for the Raageshwari deep gas field has been submitted to partner Oil and Natural Gas Corp (ONGC) for approval.
ONGC holds 30 per cent interest in the Rajasthan block where Cairn is the operator with 70 per cent stake.
Cairn got USD 97 per barrel oil price in Q1, compared to USD 93.3 a year ago.
Sudhir Mathur, Interim CEO, said: "In line with our vision to contribute to the nations energy security, we are confident of not only achieving the stated exploration target of 3 billion barrels of hydrocarbons in-place, ahead of schedule, but also of adding another 3 billion barrel to our un-risked prospect inventory."
Stating that gas will be a significant contributor to its product mix, he said, "Before end of financial year 2015, we anticipate doubling of gas production from Rajasthan."
The firm had cash of Rs 13,561 crore in rupee funds and USD 922 million in dollar funds at the end of first quarter.
Cairn India shares rose 0.7 per cent to end at Rs 345.55 apiece on the BSE.