NORTH Sea-focused Longboat Energy has underlined the potential to make big gas finds in the area as it looks to continue a notable run of exploration success.

The company, which was formed by former bosses of Aberdeen-based Faroe Petroleum, has started drilling work on a prospect that experts reckon could contain the equivalent of around 160 million barrels of oil.

Aim market-listed Longboat made what it described as a significant discovery last week with Norwegian giant Equinor.

Longboat has focused activity off Norway, which offers generous tax breaks for exploration.

While Longboat also sees potential off the UK, in January the company noted the “unnecessary uncertainty” caused by the political furore over the Cambo field.

READ MORE: Oil firm highlights uncertainty caused by Cambo controversy as it drills off Norway

Concerns about the stability of the UK’s regulatory and fiscal framework expressed by Longboat in January were addressed by the Energy Security Strategy published last week by the UK Government.

Longboat has made clear it is in the market to buy production assets in the UK North Sea. Such acquisitions would make sense in terms of its tax planning.

However, the outlook for the sector has been clouded by the fallout from the war in Ukraine.

In its annual results announcement last month, Longboat said: “We are loath to reference the outlook for the Company to the desperate events in Ukraine but inevitably there will be an impact.

“In the short term, the spike in commodity prices will make the M&A market challenging for both buyers and sellers, although more so for buyers. Conversely the move away from Russian oil and gas will make the case even stronger for Norwegian resources.”

HeraldScotland: Longboat Energy chief executive Helge HammerLongboat Energy chief executive Helge Hammer

Longboat provided a further sign that firms still see lots to go for in the North Sea and highlighted the advantages of working in the area yesterday, when it said drilling operations had started on the Cambozola exploration well. This is operated by Equinor.

“Cambozola is a play opener and one of the largest gas prospects to be drilled in Norway in 2022,” said Longboat, adding: “In the event of a successful discovery ... there will be follow-up prospectivity on the licences.”

The value of gas resources has soared amid the sharp rise in the price of the commodity fuelled by the recovery from the pandemic. The price increased further after Russia launched its assault on Ukraine. European countries are trying to reduce their reliance on imports of gas from Russia.

READ MORE: North Sea gas field start up welcomed amid fallout from Ukraine war

Longboat noted that Cambozola is in an area of the Northern North Sea in which there is significant existing production infrastructure. The company would probably hope to be able to develop any find made in the area relatively quickly and cheaply.

Cambozola is only around 20 miles from the site of the Kveikje discovery, which Longboat announced last week. Initial estimates suggested the find could contain up to around 50 million barrels recoverable oil.

Kveikje was the third find made by Longboat in the drilling programme it started last year. The company also expects to start drilling the Copernicus well this year. It has said this will target a very large gas prospect.

Longboat started drilling on Cambozola days after Cambo hit the headlines again. On Thursday Israeli-owned Ithaca Energy announced it had acquired Siccar Point Energy, which last year submitted plans to develop Cambo with Shell. After the plans were opposed by environmentalists Shell put them on hold.

READ MORE: Cambo output could help cut more carbon-intensive imports claims firm that bought into field in $1.5bn deal

Ithaca said last week that the development of Cambo could help boost energy security in the UK and make sense on environmental grounds, as it could help to reduce imports of more carbon-intensive supplies.

Faroe Petroleum became a leading player in the North Sea helped by drilling successes and acquisitions. It was acquired by Norway’s DNO in 2019 following a hostile takeover bid that valued it at £640m.

Longboat Energy shares closed up 3.5p at 75p.