North Sea-focused Ithaca Energy has written $440m (£295m) off the value of its oil and gas fields in the UK to reflect the plunge in oil prices.
The company said it may make a loss on production from two North Sea fields in 2015.
However, shares in the Aberdeen-based company rose around eight per cent after Ithaca said it could make money from its output overall even if the crude price fell well below current levels.
Ithaca said the hedging contracts it agreed in the first quarter to sell oil in future mean it has a breakeven price for its current producing assets of just $10 per barrel of Brent crude.
The company netted a $80m gain in the first quarter on its hedging programme. This will allow Ithaca to sell 9,000 barrels oil daily at an average $76 per barrel until June 2016.
Brent crude traded at $55.58 per barrel yesterday compared with $115 in June.
The company won plaudits for the strategy, which shows how firms have been able to limit the impact of the crude price fall.
Analysts at Royal Bank of Canada wrote: "We view Ithaca's expanded hedging position as a positive given ongoing oil price volatility."
In January Ithaca said it had hedging contracts in place which would allow it to make money at $20 oil.
However, Ithaca provided further evidence of the challenges that the oil price has posed for companies operating in the North Sea in its results announcement yesterday.
The company made a loss of $24.5m after tax in 2014 compared with $145m profit in 2013.
The loss was stated after Ithaca recorded impairment charges of $442m before tax in respect of oil and gas assets driven primarily by the lower commodity price environment. The charge was $173m after tax.
The company said the value of the Athena and Anglia fields has been fully written down due to the expectation that 2015 may be the last year of production given costs may well exceed revenues in the current price environment.
While the company increased production during the year, helped by acquisitions, revenues fell to $378.6m from $413.9m.
The company said the price it got for oil fell to $97 per barrel from $107 in 2013. The fall was partially offset by a $3 per barrel hedging gain.
Ithaca is working with partners to try to deliver supply chain efficiencies and cost reductions.
However, chief executive Les Thomas said: " In 2014 we took significant steps to build and strengthen our business, growing production and reserves, while diversifying our debt structure. "
He said Ithaca is focused on delivering the "transformational" Stella development.
The expected start of first production from the Stella development 175 miles east of Aberdeen has been pushed back to the second quarter of 2016, from late 2014 originally following delays in work on the production vessel that will be used on the field.
But Ithaca said recent drilling activity significantly de-risked the initial annualised production forecast for the field of 30,000 barrels oil equivalent per day, worth 16,000 boepd to the company.
Ithaca increased average production to 10,947 boepd in 2014, from 10,392 boepd in 2013, helped by the acquisition of assets from Sumitomo for $163m.
Ithaca said the value of its reserves increased by 5 per cent annually overall, to $1.7bn including the Summit assets, in spite of the oil price fall.
Production in 2015 is forecast to average approximately 12,000 boepd.
Shares in Ithaca Energy closed up 2.5p at 34.5p.
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