NORTH Sea-focused EnQuest has underlined the potential of the giant Kraken field off Shetland, on which it has faced challenges, as it hailed the benefits of a bumper acquisition.

Work on a flank area of Kraken has left EnQuest confident it contains as much as 100 million barrels oil, which could be brought into production fairly quickly.

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The company noted it should be possible to connect wells on the Western Flank area with subsea facilities already installed for Kraken, which it brought into production with Cairn Energy in 2017.

EnQuest’s progress will be followed closely. The development of Kraken generated huge excitement as the North Sea oil and gas industry battled the fallout from the crude price plunge that started in 2014.

The project utilised modern technology to transform the economics of a heavy oil field that had been considered too challenging to develop previously.

Success with Western Flank would increase confidence in EnQuest’s view that Kraken contains around 400 million barrels in total.

Read more: Shetland production issues weigh on oil company's shares

Cairn slashed its valuation of Kraken by $166 million in March after average daily output fell short of expectations following production issues. EnQuest did not follow suit.

Announcing a 150 per cent increase in first half profits yesterday, EnQuest noted improved production efficiency at Kraken.

EnQuest said it has been working closely with the Bumi Armada, which operates the production vessel used on the field, to improve production uptime. It added: “Overall subsurface and wells performance has remained strong.”

The group expects production from Kraken to average from 30,000 to 35,000 barrels oil daily this year.

It noted: “Since first production in June 2017, more than 21 million barrels of oil have now been produced.”

EnQuest also highlighted the strong performance of the mature Magnus field north east of Shetland.

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It acquired the field along with a managing interest in the Sullom Voe processing terminal on Shetland from BP in a $185m deal clinched in 2017.

“With material reserves and resources, Magnus provides the opportunity for long-term, low-cost reserves and production increases,” said EnQuest.

Sector watchers hope independents such as EnQuest will help stoke North Sea activity by investing in assets that majors had lost interest in.

However, the supply chain may remain under pressure.

EnQuest noted that it had recently announced essential organisational changes to ensure Sullom Voe remains competitive. These are expected to result in around 80 job losses.

EnQuest said a 55% increase in first half revenues, to $858.2m from $548.3m was driven by material growth in production “primarily reflecting the contribution from Magnus”.

Profit before tax and net finance costs rose to $264.5m from $105.2m.

The company, which also has operations in Malaysia, cut operating costs to $20.1 per barrel from $22.6/bbl.

It got an average $66.1/bbl for its output, against $59.5/bbl last time.

Chief executive Amjad Bseisu said: “We have generated strong cash flows in the period and significantly reduced our debt, with our net debt.”

EnQuest has headquarters in London and an operations centre in Aberdeen.

Shares in the firm closed up seven per cent, 1.29p, at 19.8p.