Enterprise Oil, the biggest UK exploration and production company, which is hoping to bring a gas field off the Irish west coast into production, yesterday set itself target returns in an effort to reassure investors.

The target - of a 12-15 per cent return on assets by 2001, at an oil price of $15 a barrel - comes after a year when exploration and production companies have faced wildly oscillating oil prices. Many investors have been cautious because of concerns about the sustainability of the E&P companies' earnings.

Pierre Jungels, chief executive, said: "We need to demonstrate that on a long-term basis an E&P company can deliver growth and return on assets."

Enterprise announced a steep rise in operating profits to £69.8 million sterling (€105.75 million) from £14.8 million in the six months to June 30th, in spite of broadly unchanged oil prices over the period. Production rose 3 per cent to the equivalent of 197,235 barrels of oil per day.

Much of the improvement came from tighter cost control, with the cost of a barrel falling to £5.08 sterling from £5.80. Net income was virtually unchanged at £35.6 million - although last year's figure included an exceptional gain of £30.4 million from asset sales.

Mr Jungels said the benefits of this year's restructuring, which are intended to save £20 million a year, would start to come through in the second half. He also underlined Enterprise's commitment to keep a lid on exploration spending and reduce its wildcat drilling exposure.

Next year's production will be up by 10 per cent - lower than the company's previous indications of 300,000 barrels a day because of reduced spending on infill drilling in the North Sea.

Mr Jungels said the company would from now on be focusing on areas of the world where "we have a strong understanding of the business environment".

Earnings per share emerged at 6.5p (6.6p); the interim dividend is 2.8p (6.9p); and the full-year total is expected to reach 7p. The shares rose 9p to 483p.