Cairn India- Gas discovery in Sri Lanka:: JPMorgan

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Cairn announced a gas discovery in its offshore Sri Lanka block. While
further drilling is required to ascertain the commerciality of the discovery,
this is a positive development on the margin, as a positive outcome would
allay investor concerns on the continuity of Cairn's production potential.
 Gas discovery in Sri Lanka: Cairn announced that its fully owned Sri
Lankan subsidiary has made a gas discovery in its offshore block in the
Mannar basin. A 25m hydrocarbon column was discovered in the
exploratory well, at a water depth of 1354m. This is the first well to
discover hydrocarbons in Sri Lanka.
 Positive on the margin: While further drilling is required to establish
the commercial potential of the block, it is positive on the margin – a
positive outcome would allay concerns on the continuity of Cairn's
production. We await further clarifications on drilling timelines. Being
the first successful well in Sri Lanka, it also reaffirms Cairn's reputation
as a frontier E&P company.
 Remain Neutral: We retain our Neutral rating on the stock, given the
impact of royalties becoming cost recoverable and uncertainty on cash
payouts.