FAROE Petroleum has increased its production estimate for this year and said it sees opportunities to buy North Sea assets and services at good prices amid the crude price plunge.

However, the company has suffered another drilling setback off Norway with the last well in its 2015 programme.

Aberdeen-based Faroe said it expects output to average 9,500 to 10,500 barrels oil equivalent daily in 2015, compared with 9,000 to 10,000 boed previously, following what chief executive Graham Stewart called a strong performance from its fields.

While the Njord field was offline until June last year as work was completed on the production platform, Faroe said no significant further shut down periods are expected on any of its largest fields.

The success has underpinned Mr Stewart’s confidence in the strategy followed by the firm.

“Faroe Petroleum continues to perform very well despite continuing low oil prices, sector instability and some mixed exploration results,” he said.

Faroe has used acquisitions to grow its production base. While oil prices have tumbled since June last year the company can use the cash generated from its production to help fund investment in other assets.

This has put Faroe in a good position compared with firms that may be struggling to service hefty borrowings following the fall in the crude price.

Directors believe Faroe’s strong cash position will enable the company to capitalise on a fall in the price of North Sea assets and the cost of services such as drilling support since the crude price started tumbling in June last year.

Mr Stewart underlined Faroe’s appetite for acquiring more North Sea assets after the company increased its stake in the producing Blane field in the UK North Sea in September, in a deal worth around £13m.

In an update on trading the company said: “Faroe’s recent acquisition of Roc Oil’s UK interests comprising the Blane and Enoch oil fields, is an example of the potential offered by today’s market to acquire good quality assets on attractive terms.”

Faroe reckons the next phase of the Njord project and the planned Butch oil field development should deliver healthy economic returns even at low commodity prices.

However, the company said the Blink exploration well in the Norwegian Sea had failed to find hydrocarbons.

The Portush and Bister wells drilled off Norway in September and May respectively also produced disappointing results.

But Faroe noted the potential of the Pil and Bue finds it had made last year, on the same licence as Blink. The company made a find nearby with the Boomerang well in September.

In April Faroe said the Skirne East well off Norway resulted in a discovery that was smaller than predicted but still promising.

The company said the total exploration programme cost in 2016 is expected to be significantly lower than 2015 reflecting lower rig rates. It will drill three wells, compared with five in 2015.

Analysts at Panmure Gordon brokerage wrote: “Notwithstanding the disappointing exploration results for this year, we continue to believe that Faroe is a well-run business with significant upside.”

Shares in Faroe Petroleum closed down eight per cent, 5.5p, at 66.5p.