BP now aims to grow oil and gas production.

Across the energy sector, major companies that shifted their position in response to the need to lower carbon emissions and curb climate change have returned their focus to oil and gas, where returns have become easier to obtain as fossil fuel prices have rebounded from Covid-19 pandemic lows.

BP is seeking to regain investor confidence after underperforming its peers and has come under added pressure to make transformative changes after activist investor Elliott Investment Management built a stake in the company.

“The refocus on hydrocarbons is positive for BP as is the overall lower spending, which is driven by lower renewable spending,” said Allen Good, director of equity research at Morningstar.

“Along with the asset divestitures it should improve the balance sheet and returns. However, there still is little, if any, production growth,” Good said.

BP said it was reviewing its lubricants business, Castrol, and targeting $20 billion in divestments by 2027.

The company plans to raise its dividend by at least 4% per share annually and expects first-quarter share buybacks of $750 million to $1 billion.