CAIRN Energy chief executive Simon Thomson has said problems suffered with a big field off Shetland have not dented the firm’s enthusiasm for the North Sea where it sees the potential to make big finds.

Bosses of Edinburgh-based Cairn faced a grilling about the Kraken field east of Shetland at the company’s annual general meeting after cutting the valuation of the asset by $166 million (£130m) recently.

Read more: Cairn slashes valuation of flagship East of Shetland oil field

Noting production had lagged well behind initial expectations one shareholder asked what had gone wrong.

Mr Thomson said the heavy oil field had been plagued by production equipment issues. But he said Cairn has been making progress with partners towards improving the performance of the field, with production hitting 45,000 barrels per day yesterday.

After the meeting he told journalists the problems did not in any way put Cairn off the thought of investing in other North Sea field developments.

He pointed out that the Catcher field that Cairn has a stake in east of Aberdeen has been producing ahead of expectations.

Read more: North Sea heavyweight eyes growth as investment in giant Catcher field pays off

Mr Thomson noted that Cairn is generating huge amounts of cash from Kraken and Catcher. The company can use this to build on the success it has achieved as an exploration firm working in frontier areas.

Cairn announced yesterday that it has acquired early stage acreage off Nicaragua in Central America.

“It’s a real frontier play and therefore relatively high risk but it’s very interesting,” said Mr Thomson.

However, he stressed that Cairn reckons there is still exploration potential left in the well-worked waters off the UK.

“One of the wells that I’m really excited about this year is Chimera in the UK,” said Mr Thomson. “It’s a big prospect, relatively high risk but if it comes in it’s extremely valuable.”

Cairn sold a 40 per cent interest in Chimera to Suncor Energy last year and has had approaches from other potential farm-in partners.

The fact there is extensive production infrastructure in place in the UK North Sea increases the appeal of the area.

Mr Thomson said 2018 was a landmark year for Cairn, which enjoyed a first full 12 months of production from its UK assets.

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The company has funding in place to develop the giant SNE find it made off Senegal, from which first oil is expected in 2022.

Mr Thomson noted Cairn has said it may look to realise some value from its stake in the field when a formal decision to proceed with the development is made by the firm and partners in the development. A Final Investment Decision is expected to be made in the second half of this year.

With Cairn expecting to start producing oil from the Nova field off Norway in 2021, the company should be well placed for growth regardless of the outcome of its long-running tax dispute in India.

Cairn is seeking $1.4 billion damages from the Indian government.

Read more: Cairn Energy shares plunge after setback in Indian tax dispute

Mr Thomson said it was frustrating that the international arbitration panel that is considering the case is not expected to issue its findings until late 2019.

However, Cairn’s confidence in its case is undiminished.

Mr Thomson reiterated that Cairn expects to make a significant payout to shareholders if it wins its claim.

Kraken was expected to produce 50,000 barrels per day at peak when the field was brought onstream in 2017. Production last year averaged 30,300 bopd.

The field is operated by EnQuest, which has not cut its valuation of the asset.

The Catcher field is operated by Premier Oil, which increased its exposure to the North Sea amid the downturn triggered by the crude price plunge from 2014 to 2016.

At Premier’s AGM on Thursday directors noted the potential to bring other finds in the Catcher area onstream.

Premier suffered a revolt on executive pay at the meeting, with 42% of votes cast opposing the company’s remuneration report.

A spokesperson said yesterday: “The Remuneration Committee will analyse the voting outcome and will continue to engage with major shareholders to more fully understand their perspectives.”

Premier's chief executive, Tony Durrant, has seen his basic pay frozen since 2014 with his total remuneration heavily dependent on the company’s performance.

Cairn Energy’s remuneration report was approved by 96.1% of votes cast at the AGM.

Read more: Cairn Energy chief sees total pay fall 25%

Mr Thomson succeeded Cairn’s founder Sir Bill Gammell as chief executive of the firm in 2011.

Cairn made bumper finds in India under Sir Bill.

The Indian government launched a $1.6bn claim against Cairn in 2014, regarding events leading up to the flotation of its former subsidiary Cairn India in 2007.

The panel considering the dispute in The Hague had expected to issue an award soon after the conclusion of the main merits hearings in August until procedural matters cropped up.