NORTH Sea-focused EnQuest has slipped $20 million (£15m) into the red after slashing $80m off the valuation of assets held off Scotland.

The move reflected the renewed fall in the oil price in recent months, which has left EnQuest cautious about the outlook for the market.

The fall has dented hopes trading conditions might improve in the North Sea following the long downturn triggered by the crude price plunge, which started in 2014.

It came as EnQuest grappled with the challenges posed by bringing the giant Kraken field off Shetland into production.

London-based EnQuest said last month production from Kraken had been running below expectations. It is facing complications in commissioning the processing facilities on the giant production vessel (FPSO) used.

Chief executive Amjad Bseisu reiterated yesterday that EnQuest expects production from Kraken to reach 50,000 barrrels oil daily in the first half next year. Its partner in the development is Cairn Energy.

ButEnQuest’s total average production fell to 37,015 barrels oil equivalent daily in the first half, from 42,520 in the same period last time.

EnQuest noted it had not done any drilling to boost production rates from existing fields pending Kraken coming onstream in June.

It expects full year production to average 33,331boed to 40,716 boed, against up to 51,000boed previously.

Average production costs increased to $25 per barrel oil equivalent from $23/bbl last time following the fall in production volumes.

EnQuest is pumping oil from Kraken relatively cheaply using state of the art modern facilities. But it said full year operating costs are expected to be around $27/bbl “principally due to the Kraken FPSO commissioning related reduction in 2017 production guidance”.

Net debt rose to 1,9bn at 30 June, from $1.8bn at 31 December. Mr Bseisu said: “Deleveraging the balance sheet remains a key post Kraken start up objective.”

Directors believe the restructuring completed by EnQuest in November has put the group on a stable footing. EnQuest said it had applied for, and received, a waiver in advance of the end September loan covenant test.

It noted: “Management has also continued to take action to implement cost saving programmes to reduce planned operational expenditure, general and administrative spend and capital expenditure in 2017 and 2018 in light of the continuing lower oil price.”

EnQuest’s plans assume Brent will fetch around $52 per barrel this year and $53/bbl in 2018.

It sold for $56/bbl in March, compared with $115/bbl in June 2014.

The company completed Kraken for less than expected, following sharp falls in the cost of support services in the area.

EnQuest maintained the valuation of its Malaysian assets, which accounted for 25 per cent of first half average daily production.

It lost $21m before tax in the six months to 30 June, compared with $75m profit in the first half of 2016. Sales fell to $342m from $382m.

EnQuest made $29m profit after tax, against $152m last time.

The company has benefited from tax reliefs that were introduced to encourage investment and has accumulated hefty tax losses that can be set against UK profits.