CAIRN Energy chief executive Simon Thomson has said the oil and gas firm is on the hunt for new opportunities in the North Sea after raising $75m (£61m) from selling an interest in a giant field off Shetland.

The Edinburgh-based company has sold an initial 4.5 per cent interest in the output from the Kraken field to Flowstream ahead of the expected start of production in the second quarter of this year.

Cairn is also in line to receive $51m dividends from its former subsidiary in India after winning a minor victory in its dispute with the country’s government.

The cash injections will boost the firepower of Cairn as the company looks for new growth opportunities.

The company’s enthusiasm for exploration has been reinforced by its success in Senegal where Mr Thomson noted Cairn has attracted the attention of the global industry by making big finds.

But Cairn also underlined the fact it sees potential to achieve significant success closer to home from exploration and field development work.

Cairn has bought into a big prospect off Ireland.

Mr Thomson said 2017 will be a big year for the company in the North Sea, where the company has applied for more exploration acreage.

With Cairn expecting to start production from the Kraken field in coming weeks and from the giant Catcher field in the fourth quarter, the company will be in line to generate huge amounts of cash from its output.

“Re-establishing a new cash generative production base is an important milestone for Cairn in 2017,” said Mr Thomson.

He noted Cairn has not had any production since 2012 when the company sold the bulk of its interest in the Cairn India business. This controls the huge finds made by Cairn in India under its founder Sir Bill Gammell.

Kraken and Catcher will form key parts of Cairn’s strategy to build steady cash flows to fund activity around the world..

Mr Thomson expects Cairn to generate good returns in the North Sea, even with Brent crude selling for $56 per barrel against $115/bbl in June 2014.He noted the production costs on Kraken and Cather are expected to average just $17/bbl.

Cairn bought into the fields in 2012 under his plan to build a portfolio balancing potentially transformational exploration in places like Senegal with lower risk activity in the North Sea.

Asked if Cairn might make more North Sea acquisitions, Mr Thomson said: “We could acquire more assets either on the production or exploration side but they would have to pass pretty strict investment criteria.”

He said: “That tends to point to individual assets rather than portfolios.”

Cairn has been reported to be a front runner to buy the North Sea portfolio that Dong Energy plans to offload.

The expected costs of the Kraken and Catcher projects have fallen significantly following the drop in the price of services amid the downturn.

Cairn acquired an additional 4.5 per cent of Kraken from First Oil Expro for nominal consideration in February last year when the Aberdeen firm went into administration. Cairn has a 29.5 per cent stake in Kraken.

Recent appraisal drilling off Senegal has confirmed the scale and the potential of the SNE find made in 2014. Cairn expects to start production from the field in 2021-23.

The company has been told it can receive $51m dividends from Cairn India pending as it participates in an arbitration process in the country.

Cairn has been prevented from selling its remaining stake in Cairn India since the Indian government made a $3.2bn tax claim against it in 2014. Cairn insists it has paid all taxes due and is seeking $1bn compensation from the government.The final arbitration hearings will be held next January.

Cairn has acquired a 30 per cent interest in a licence off south west Ireland from Providence Resources. It retains an interest in a block off Greenland but is not conducting any activity on it.

Mr Thomson said Cairn’s strong balance sheet gave it considerable flexibility. The company had $335m cash at the year end and up to $400m undrawn borrowing facilities.

Losses narrowed to $95m after tax in 2016. The company lost $516m in 2015, after writing $319m off the value of the Cairn India stake.