TRAP Oil said it will retain its exclusive focus on the North Sea after emerging "relatively unscathed" from the hike in taxes in the March Budget.

David Kemp, finance director of Trap Oil, said the increase in the tax rate charged on North Sea profits, to 62% from 50%, was unhelpful.

However, he said the change should have limited impact on Trap Oil, which expects to increase its exposure to the North Sea in coming months.

The AIM-listed oil and gas firm is in talks regarding the possible acquisition of producing assets in the North Sea.

Mr Kemp expects a deal will be agreed this year. The company plans to bid for exploration acreage in the next UK offshore licensing round with partners.

While critics of the tax change claimed it could provoke a flight from the North Sea, Trap Oil’s experience shows the effect of the change varies according to the type of business involved.

Formed to acquire assets in the North Sea, Trap Oil paid £30m for Banchory-based Reach Oil & Gas in July. This owned a portfolio of interests in finds that will be appraised, exploration acreage and a small field off Northern Scotland that is due to come on stream later this year.

Led by chief executive Mark Groves Gidney, Trap Oil will only pay tax on North Sea production when the income from that exceeds the hefty costs of the exploration and development work that it will complete.

Majors that have lots of production will feel the effect immediately.

“In the short to medium term, we anticipate that these changes will be of benefit to us as purchase prices for producing assets have reduced,” said Trap Oil.

Mr Kemp said Trap Oil expected the Government to make further tweaks to the regime to encourage the kind of exploration and development work it will complete.

He noted that some asset managers have bought shares in AIM-listed Trap since the company raised £60m through an initial public offering in March. This was supported by blue chip investors.

The company made a £1.8m loss after tax in the six months to June, in line with expectations.