A leading Scottish oil firm, Capricorn Energy, has underlined the appeal of investing in the North Sea, amid the prospect of disruption to supplies following Russia’s assault on Ukraine.

The former Cairn Energy said a range of factors combined to make the North Sea an attractive place to invest as the company said it was in the market for acquisitions that would allow it to increase production.

Chief executive Simon Thomson confirmed the Edinburgh-based company might buy more assets in the North Sea, after acquiring exploration acreage in the area last year.

He noted the factors in the North Sea’s favour include the speed with which finds can be brought into production in the area.

“The good thing about the North Sea is there is a plethora of existing infrastructure which can be used and also repurposed,” he told journalists.

He added: “The focus of the industry where it can help is on focusing on those areas where there is fast tie-back using existing infrastructure.”

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Asked whether the war in Ukraine had made it more important for North Sea assets to be developed Mr Thomson expressed sadness about the “awful” events in the country and his hopes that the conflict would end as quickly as possible.

He observed: “In terms of the UK we’ve been pretty consistent in saying there’s three things that are important: There’s security of supply, affordability and of course emissions related to that.

“We continue to see the North Sea as an attractive investment destination.”

Mr Thomson made the comments after Capricorn published annual results which he said covered a transformational year.

READ MORE: Edinburgh oil firm gets long-awaited $1bn tax refund in India

After reshaping its portfolio and securing a $1 billion tax refund from the Government of India, Mr Thomson believes Cairn has the balance sheet strength to support acquisitions while also allowing the company to make big payouts to investors.

He declared: “The most important point to make is that Capricorn is in growth mode.”

Last year Capricorn sold stakes in two big North Sea fields on which it reckoned production had peaked for $460 million and used the proceeds to fund the $323m acquisition of a portfolio of Egyptian assets from Shell.

The Herald: Capricorn Energy chief executive Simon Thomson tours facilities in Egypt with Salah Abd Elkareem of the Bapetco oil and gas businessCapricorn Energy chief executive Simon Thomson tours facilities in Egypt with Salah Abd Elkareem of the Bapetco oil and gas business

Mr Thomson said the Egyptian assets have performed well. He noted the potential to increase output from existing finds and to make new ones.

Capricorn got an average $77.80 per barrel for its Egyptian output last year, during which production costs averaged just $6 per barrel of oil equivalent.

Oil and gas prices have increased dramatically following the start of the war in Ukraine.

Brent crude sold for $132.05/bbl yesterday afternoon, up $8.84/bbl on the day, after President Biden banned imports of Russian oil and gas into the US. Business minister Kwasi Kwarteng said the UK will phase out oil imports from Russia this year.

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Capricorn also demonstrated its faith in the exploration potential of the North Sea last year by buying into acreage containing gas prospects that had been worked up by a relative minnow, Deltic Energy. It has agreed to drill a well on the Diadem prospect with Shell.

Mr Thomson noted that Capricorn would expect to be able to develop North Sea finds deemed commercial relatively quickly.

He said Capricorn is “very actively looking” for suitable acquisitions, with a focus on producing assets. Majors have put a range of assets up for sale around the world.

Capricorn is in line to get further payments in respect of the UK assets it sold last year, and interests in Senegal disposed of previously, dependent on oil and gas prices.

The company made $895 million profit in 2021 after losing $394m in the preceding year.

The Herald: Capricorn Energy chief executive Simon Thomson by the site of a big find made by the company in India in its Cairn Energy daysCapricorn Energy chief executive Simon Thomson by the site of a big find made by the company in India in its Cairn Energy days (Image: Capricorn Energy)

The result reflects the benefit of the $1billion settlement received last month from the Government of India following the end of a long-running tax dispute.The company plans to pay out up to $700m of the proceeds to shareholders.

An international tribunal found in its favour in 2020 in respect of the dispute, which concerned events leading up to the flotation in India of Capricorn’s former subsidiary in the country in 2007. That business owns finds Capricorn made in India during its Cairn Energy days, under its founder Sir Bill Gammell. Mr Thomson succeeded Sir Bill in 2011.

Capricorn has interests in a wide range of countries, including Israel and Mexico.