bp has announced a company "reset" as it plans to "drive improved performance" while growing "free cash flow, returns and long-term shareholder value".

A statement from the oil and gas giant said it is looking to reduce and reallocate capital expenditure in order to “significantly” reduce costs and drive "improved performance".

As a result, it is increasing its oil and gas investment to approximately $10bn per annum and is strengthen its portfolio.

The reshaping of its portfolio is designed to drive growth, with a focus on "advantaged and integrated positions", along with a strategic review of Castrol.

bp is also looking towards a more "selective investment" model in biogas, biofuels and EV charging, with investment of $1.5bn to $2bn per annum in transition businesses, which is $5bn lower than in previous guidance.

As a result, the firm is targeting structural cost reductions of between $4bn and $5bn by the end of 2027 and a reduction of net debt to between $14bn and $18bn in the same period.

Furthermore, it is aiming for more than 20% compound annual growth in adjusted free cash flow by the end of 2027.

Chief executive at bp, Murray Auchincloss, said: "Today we have fundamentally reset bp's strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns.

"We will grow upstream investment and production to allow us to produce high margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions. And we will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset bp, with an unwavering focus on growing long-term shareholder value."

Head of equity research at Hargreaves Lansdown, Derren Nathan, added: "bp's not taken its eye off the transition completely, but spending is reducing, and projects are likely to be far more selective.

"If the plan can be executed, bp will be heading towards a much firmer financial footing. Whether this is enough to win the backing of investors with varying agendas remains to be seen."

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