HURRICANE Energy has said it expects to generate $200 million cash annually from production from a giant field West of Shetland and predicted its success in the area could be a game-changer for the oil and gas industry.

The independent said it is on course to start production from the Lancaster field in the first half on schedule and budget in a development that could have big ramifications.

Read more: Hopes of Shetland oil boom boosted

Estimated to contain around 500 million barrels oil, Lancaster lies in an under-explored geological area West of Shetland which Hurricane’s founder Robert Trice realised had huge potential.

The start of production from the field would put Hurricane on the way to generating massive amounts of cash that it could use to bring other finds on its acreage into production.

The company’s progress has already helped stoked interest in the West of Shetland area as oil and gas firms look to make the kind of bumper finds that can underpin long term production.These are increasingly hard to make in well-drilled areas of the North Sea.

Read more: Bumper gas find stokes excitement about West of Shetland frontier

However, industry leaders said news yesterday that Neptune Energy and BP had approved plans to develop the Seagull find off eastern Scotland showed the North Sea remained an attractive investment opportunity.

Hurricane’s chairman Steven McTiernan said developments over the next year could be "game changing" for the firm and its shareholders and also for the wider UK oil industry.

Hurricane may be able to confirm the potential of another find in coming months.

It will drill appraisal wells on the Greater Warwick Area after North Sea heavyweight Spirit Energy agreed to fund up to $387m work on the acreage.

Spirit, which is part-owned by Centrica, bought into Greater Warwick last year, describing it as one of the last known world-class oil development opportunities in the UK.

Founded by Mr Trice in 2005, Hurricane is one of a range of North Sea-focused independents that have helped generate interest in the United Kingdom Continental Shelf amid challenging market conditions.

Read more: Shetland oil pioneer shrugs off 'Monty Python slap in the face with a wet fish'

Oil and gas firms slashed spending in the North Sea in response to the crude price plunge from 2014.Exploration activity fell to a record low last year when just eight wells were drilled.

Azinor Catalyst, a relatively small firm based in London, turned heads in November after making a find reckoned to contain up to 50 million barrels East of Shetland.

The company drilled the well with Edinburgh-based Cairn Energy and Aberdeen’s Faroe Petroleum, which was acquired by DNO recently.

Azinor’s owner, Seacrest Capital is thought to be in talks to sell the firm, with a potential $100m price tag. Reuters said an oil and gas firm which did not have North Sea representation had made an offer for Azinor. Independents and private equity backed operations have bid for assets.

Private equity investors have committed billions to support growth drives mounted by North Sea firms such as Chrysaor Energy and Neptune Energy in recent years, reflecting the view the downturn created opportunities to cut deals at attractive valuations.

Read more: Financiers highlight rejuvenation of North Sea

The cost of support services fell sharply. The partial recovery in the crude price since late 2016 has encouraged firms to invest in North Sea developments but the supply chain remains under pressure.

BP and Shell approved a range of North Sea developments last year.

Neptune Energy said yesterday that it expected to start production from the 50 million barrel oil equivalent Seagull field with BP and Japex in 2021. Seagull is expected to produce 50,000 barrels oil equivalent per day.

Seagull is much smaller than giant developments such as the Clair Ridge asset which BP brought onstream West of Shetland last year. However BP' North Sea Regional President Ariel Flores said Seagull would help extend the life of the firm's key ETAP production hub in line with its policy of maximising value from existing infrastructure.

Oil & Gas UK upstream policy director Mike Tholen noted: "It is estimated that there are more than three billion barrels of oil and gas contained in marginal fields on the UKCS and being able to tie back to existing infrastructure will be key to unlocking this potential."

Hurricane said it expects to produce 17,000 barrels oil per day from the early production system developed for Lancaster. It will use the results from the EPS to help it decide whether to invest in a full-field development, which could achieve much higher output.