NEPTUNE Energy has hailed a strong performance from a bumper UK North Sea gas field soon after approving plans to develop an oil find in the area.

The company said increased production from the Cygnus gas field in the first quarter helped offset a drop in output from Norwegian assets as it underlined its belief in the potential for growth in the North Sea.

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Work has been progressing well on the Seagull oil field east of Aberdeen, which Neptune and partners approved in March.

Neptune also noted that it expects to start drilling the “important” Isabella exploration well nearby in the third quarter.

The comments came in an update which highlighted the scale of the business that Neptune has built in short order amid the shake up in the North Sea triggered by the crude price plunge from 2014.

Neptune produced an average 151,800 barrels of oil equivalent per day (boepd) in the three months to March 31 and generated $362 million cash from operations.

The company’s achievements could help stoke interest in the North Sea among international players amid signs that growing numbers see the opportunity to generate good returns in the area.

Led by former Centrica boss Sam Laidlaw, Neptune won backing from private equity heavyweights including Carlyle Group and CVC for a plan to capitalise on the opportunities it expected to be created following the oil price fall.

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It has built a big portfolio helped by acquisitions including the purchase of the oil and gas business developed by French utility Engie for around £3.9bn, which was agreed in 2017.

Neptune bought Apache’s interests in Seagull and Isabella in August.

The Engie deal left Neptune with a North Sea portfolio that includes assets it described as strategic, such as Cygnus off the Lincolnshire coast.

Neptune reckons the field, which came onstream in 2016, supplies six per cent of the UK’s gas production.

The company yesterday noted the potential to “unlock considerable gas” in the Southern North Sea.

Read more: Exploration deal coup for oil and gas pioneer

Market players have said changes to regulations regarding the calorific content of gas supplied to the National Transmission System could make some undeveloped fields more commercially attractive.

Neptune’s production in the UK North Sea increased to 16,700 boepd in the first quarter from 13,700 boepd in the preceding three months.

“This was as a result of improved production efficiency and fewer third party restrictions at Cygnus,” said Neptune.

The results also reflect the profitability of Neptune’s operations in the UK North Sea, where its operating costs averaged $6.9 per barrel oil equivalent.

Neptune got an average $58.5 per barrel of oil and $6.5 per thousand cubic feet gas during the period.

The company noted it has recently launched a cost saving drive in the Netherlands where operating costs were $12.1/boe in the first quarter. In Germany, where operating costs were $22.6/boe in the quarter, Neptune is looking to cut administrative 50 jobs.

Operating costs were flat at $7/boe in Norway, in which Neptune produced an average 72,200 boepd in the first quarter, against 77,100 boepd in the preceding three months.

Neptune produced an average 24,400 boepd in North Africa and Asia in the first quarter.

Oil and gas firms mounted a drive to cut costs and increase operating efficiency in the UK North Sea in response to the fall in the crude price from $115 per barrel in 2014 to less than $30 early in 2016.

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The price has risen since then following moves by major exporters led by Saudi Arabia to curb production. However, booming production in the US has offset the impact of the cuts, amid concerns about the outlook for global growth.

Brent crude sold for around $68.30/bbl yesterday, compared with $75/bbl in April.

Neptune made $207m before tax in the first quarter, compared with $88m in the same period last time.

Private equity-backed Chrysaor has bought big North Sea portfolios from Shell and ConocoPhillips in recent months.