North Sea oil exploration firm EnQuest said in an operational update that its flagship Kraken oilfield was on track to begin producing oil before the end of June “with further excellent progress on drilling.”

EnQuest is a major stakeholder in the massive Kraken field east of Shetland, one of the North Sea’s largest new projects.

However, EnQuest also said its overall production fell 11% year on year in the first four months of the year due to the natural decline of its fields — but it maintained its annual output target.

EnQuest reported production of 37,856 barrels per day (bpd) in the four months to the end of April, below the 42,752 bpd for the same period last year.

But the firm maintained its 2017 target of achieving 45,000-51,000 bpd.

EnQuest shares fell more than 4%.

EnQuest CEO Amjad Bseisu said: “EnQuest is on track to achieve first oil from Kraken before the end of June and to deliver on its production, unit opex and capex targets for 2017. 

“Our strategic priorities continue to be increasing production by delivering on operational and development execution, whilst also continuing to reduce the operating cost base.  

“First production from the Kraken development will give EnQuest its seventh operated hub and will mark a turning point in EnQuest’s progress from a period of heavy investment to one focused on cash generation and deleveraging the balance sheet.

“EnQuest’s proposed acquisition and operation of interests in the Magnus oil field and the Sullom Voe Terminal is on schedule for completion around the end of the year. 

“This transaction recognises EnQuest’s differential operational capability in managing mature assets and infrastructure, essential in the North Sea basin at this point in its evolution. 

“Magnus will be EnQuest’s eighth operated hub and provides the potential for significant future growth.”