FAROE Petroleum chief executive Graham Stewart has said the firm expects oil and gas prices to stay low for some while but is eyeing North Sea acquisitions at what he called an economically compelling time to invest.

After Faroe posted a £53 million annual loss, Mr Stewart said the Aberdeen-based company is taking all necessary measures to withstand the test of continuing low commodity prices despite recent signs the market may have started to recover.

Mr Stewart noted analysts believe global oil production may run ahead of demand until next year, putting continued pressure on crude prices. European gas prices could fall amid a surge in supplies from the USA and Australia.

His comments will stoke concern about the outlook for the industry in the North Sea where the fall in the crude price has taken a heavy toll. The Wood Mackenzie consultancy warned recently that mounting distress will force many firms to sell assets in the area after spending more than 18 months battling with the effects of the slump.

Brent crude traded at around $40 per barrel yesterday, up from below $30 last month but still less than half the $115/bbl level reached in June 2014.

But Mr Stewart underlined his confidence that Faroe will be one of the beneficiaries of the upheaval in the industry. This is likely to result in consolidation in the independent sector as firms with strong balance sheets expand while weaker players retrench.

Mt Stewart believes that with £68.5m net cash at 31 December Faroe is well placed to buy assets. Experts note many are on the market.

He said: "Looking ahead to 2016, the business is in a good position to face the continuing challenges of our industry and to seek to capitalise on our relative financial strength as we pursue attractive consolidation opportunities in our core areas on the UK and Norwegian continental shelves."

Mr Stewart said Faroe could also benefit from the change in market conditions that have occurred as cuts in activity by oil and gas firms have impacted on the supply chain.

“The cost of rigs and field developments has fallen sharply in recent times, paradoxically making this an economically compelling time to invest,” he noted.

Mr Stewart said the low commodity price environment presented a major challenge for Faroe but insisted the company made good progress in 2015.

Faroe increased average production from to 10,530 barrels oil equivalent per day from 9,106 boepd in 2014.

The increase was partly driven by the acquisition of stakes in two UK fields from Roc Oil of Australia for around £13m.

The company made a discovery off Norway in September, with the Boomerang well.

Faroe lost £53m after tax in 2015, and £55m in the preceding year.

Revenues fell to £113m, from £128.8m.

Mr Stewart noted drilling activity will be down this year and in 2017 on the average of around four wells recorded in recent years, partly because partners are cutting spending on exploration.

Faroe relinquished or withdrew from around a third of its licences last year, leaving it with 33 at the end of the year against 50 at the start of the period.

Separately, US giant ConocoPhillips is reported to be planning to shut down a giant North Sea pipeline system. The Lincolnshire Offshore Gas Gathering System handles output from a range of fields.