BP to drop production targets in favour of total shareholder return

BP is expected to scrap its oil production targets when it announces its first quarter results next week.

The move follows the embarrassments of last year when the oil giant was forced to scale back its production targets three times in a matter of weeks.

Those failures were seen as a setback for the highly regarded chief executive, Lord Browne of Madingley.

BP is expected to shift its focus to targets such as return on capital and total shareholder return.

Lord Browne has been making it clear for some time that the group would pursue value rather than volume.

The move is logical because BP has recently been selling some production capacity.

Last month it sold its £830m stake in the Forties oil field to Apache, an American oil company.

However, the decision to drop the production targets will be seen as a reaction to the company's recent failure to meet them.

Last Autumn BP had to scale back its target for production growth from 5.5 per cent to three per cent.

The setbacks rattled Lord Browne who later told a House of Commons Select committee that BP had asked its middle-ranking executives to "step to one side for a moment" while the company tried to assess what was going on at the grassroots level.

When BP briefs City analysts on its results on 11 February, they will be looking for clues as to how BP will spend the money from the Forties field sale.

The group has netted around $2bn from sales since October, and the City will want to know whether the cash will be returned to shareholders or spent on other assets.

Meanwhile, BP remains tight-lipped on whether it plans more sales in the North Sea, but the company has said that there will be more disposals this year.

BP declined to comment yesterday.