CAIRN Energy chief executive Simon Thomson has said the firm is eyeing material exploration prospects in the North Sea after it made good progress in the area in the first half.

Edinburgh-based Cairn generated $172 million (£132m) revenues from the sale of North Sea oil but was dragged deep into the red by the costs of its bitter tax dispute with the Indian government.

Read more: North Sea oil and gas industry to generate £10bn surplus this year

“We have some pretty material prospectivity that we will be looking to drill out next year in the UK,” Mr Thomson told reporters yesterday. “Part of that is down to understanding the basins; new play types; using technology to look again at areas that may have been passed over.”

The company lost $603m before tax in the six months to June 30 after incurring $550m charges in respect of the long running saga in India.

The country’s government recently raised the stakes in the dispute although this is approaching a resolution.

Cairn expects an international arbitration panel to deliver a verdict on the case around the end of the year following a hearing in The Hague last month.

Read more: Cairn Energy facing massive legal bills

The company is seeking $1.4 billion compensation from the Indian government for the losses it has suffered since the dispute started in 2014.

“We are as confident if not more confident of our position post the hearing,” Mr Thomson said.

The money that Cairn has started to generate in the North Sea should allow it to continue with an active exploration and development programme around the world irrespective of the outcome.

The company benefited in the first half from production from the Kraken heavy oil field off Shetland and the Catcher field east of Aberdeen. These came onstream in June last year and December respectively.

Cairn expects to start production from the Nova field in the Norwegian North Sea in 2021.

The company bought back in to the North Sea under Mr Thomson’s plan to combine relatively low risk development work on existing finds in the area with potentially transformational drilling in regions in which there has been limited exploration activity.

These include Senegal where the company made the giant SNE find in 2014.

Read more: Senegal oil strike is huge boost for Cairn

Cairn is targeting first oil from SNE in 2022. The field is expected to produce up to 100,000 barrels oil daily with Cairn in line for a 40 per cent share.

Mr Thomson underlined the fact Cairn also sees significant exploration potential in the North Sea although drilling activity in the area has fallen to record lows.

On Monday industry body Oil & Gas UK said the industry was at a crossroads, noting the risk that billions of barrels could be left undeveloped unless firms stepped up the hunt for new finds and developed more of those lying idle.

Cairn is drilling a well East of Shetland after agreeing in June to buy into the acreage concerned. This has been worked up by the independent Azinor Catalyst.

Yesterday oil and gas consultancy Wood Mackenzie said the relatively under-explored West of Shetland region would prove a source of production growth in the years to 2030.

Read more: West of Shetland generating growing excitement in oil and gas industry

Cairn has acquired early stage exploration positions in Suriname, Cote D’Ivoire and Mauritania recently.

The firm is planning to drill wells off Mexico next year, on licences acquired in 2017, in what it called an under-explored region.

The dispute with India concerns events leading up to the flotation of Cairn’s former subsidiary in India in 2007. The business owns giant finds made in India by Cairn under founder Sir Bill Gammell.

Cairn sold a controlling stake in the business to Vedanta for $5.5bn in 2011. It has been prevented from selling its remaining stake amid the tax dispute.

The Indian government sold some of Cairn’s stake in the first half triggering a $231m non-cash accounting charge. Cairn booked a $319m charge in respect of the fall in the market value of the shares it holds in the first half.