Cairn India- Management meet highlights :Anand Rathi

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Cairn India
Management meet highlights
Cairn India’s management expressed confidence about getting
approval for ramp-up of Mangala production and re-iterated its
guidance of exiting CY11 with production of 175kbpd. Going
forward, the company will increase focus on the exploration
program at its Rajasthan, KG onshore and Sri Lankan blocks.
 Production guidance maintained. Management expressed
confidence about getting approval for ramp-up of Mangala
production to 150kbpd and re-iterated its guidance to exit CY11
with production of 175kbpd.
 EOR and Barmer project underway. The company’s pilot
program for Barmer field will be undertaken in CY11, while the
phase-1 pilot program of its EOR project is ongoing.
 Focus on exploration from CY12. Management targets focusing
on Rajasthan exploratory drilling from CY12 as production from
the MBA field attains a steady state. The company plans to drill
three exploratory wells in its Sri Lanka block, with the first well
expected to be drilled in Aug ’11. In KG onshore, the company
will drill the first well by end-CY11 as part of its phase-2 appraisal
and exploration drilling program.
 Valuation and risks. We retain our DCF-based target price of
`330 based on our long-term (from FY13) crude price assumption
of US$80/bbl. We maintain Sell on fair valuations and uncertainty
about Vedanta deal may linger. Risks: higher crude prices and
reserves.