FAROE Petroleum has slashed the valuation of its UK North Sea portfolio but is understood to be interested in buying assets in the area, although it has focused exploration activity off Norway.

Aberdeen-based Faroe achieved strong growth in underlying profits last year, helped by the increase in oil prices during the year.

However, the company incurred £13m impairment charges in the year, which were mainly related to the Schooner and Ketch fields in UK waters.

Faroe noted production from Schooner and Ketch in the Southern North Sea is expected to end in the third quarter of 2018 with the closure of the export system and onshore gas facility at the Theddlethorpe terminal in Lincolnshire.

The facilities are operated by ConocoPhillips. The US giant was reported last year to have decided to close them. A range of oil and gas firms made moves to rationalise their North Sea portfolios amid the downturn triggered by the fall in oil and gas prices from 2014.

Faroe said the Schooner, Ketch and Blane fields are its main UK producing assets.

But chief executive Graham Stewart said the company achieved an excellent production performance last year and made good progress with plans for developments off Norway that are expected to result in a big increase in output.

Around 76 per cent of last year’s total production came from Norwegian fields.

Faroe has an active drilling programme off Norway where the company can benefit from generous tax breaks for exploration activity. It has no wells scheduled off the UK, where exploration levels fell to record lows last year.

However, an industry source said Faroe is looking for opportunities in the UK North Sea and believes it is an area where there is material upside for the company.

Mr Stewart has underlined the company’s interest in acquiring UK production, to help utilise the tax losses it has accumulated.

Faroe increased its holding in the Blane field in July when it bought a stake from JX Nippon for $5m.

The company increased underlying annual profits to £82.2m last year from £25.8m in 2016.

Average daily production fell to 14,349 barrels of oil equivalent daily, from 17,395, amid upgrade work on the Njord facilities off Norway and natural decline in other fields.

It is expected to average 12,000 to 15,000 boed this year.