The company, a unit of Cairn India, which is part of Britain's Cairn Energy, said it plans to start drilling test wells by January 2011 to May 2011.
Under its exploration agreement with Sri Lanka, the company has to drill three firm wells and two optional wells.
The company has advertised in Sri Lankan and Indian media seeking global expressions of interest from services contractors to provide drilling rigs for exploratory drilling in its offshore block.
The government of Sri Lanka has awarded Cairn India an exploration licence to explore for oil and natural gas in the Mannar Basin off the north-west coast.
The block covers about 3,000 square kilometres in water depths of 200 metres to 1,800 metres.
Cairn Lanka said it is seeking a drill ship or semi-submersible rig capable of operating in water depths of between 800 metres to 1,700 metres with the expected maximum well depth being 5,500 metres.
Expressions of interest must be submitted by mid-October.
Kanthi Wijethunga, additional secretary in Sri Lanka's Petroleum Ministry, said Cairn was preparing to do further seismic surveys of its exploration block to determine sites for test wells.The company has undertaken a programme of exploration work divided into three phases under its agreement with the ministry.
Muditha Karunaratne, director legal affairs in Sri Lanka's petroleum resources development secretariat (PRDS), set up under the petroleum ministry to run the search for oil, said no decision has yet been taken on other oil exploration blocks.
"So far we have signed an agreement only with Cairn India. The Cabinet must decide on offering other blocks."