BP's chief executive Lord Browne: "Improving level of return"

In a marked contrast to the recent woes announced at rival Shell, BP's comments thrilled investors.

The firm also promised to return to its shareholders all free cash generated by the current high oil prices.

BP said it was now focusing on organic growth rather than the continued takeovers seen since 1997.

Ambitious targets

Analysts now estimate that BP will purchase some �2.76bn of its own stock in 2004, as the first part of its three-year share buyback plans.

BP has just been much more focused than Shell, and has worked hard to maintain an extensive exploration effort Oil analyst Bruce Evers BP's share price

The firm's prediction that it will now increase production by 5% a year until 2008, could in fact be even higher, it said, thanks to its lucrative joint venture in Russia.

"We believe we're beginning to be able to deliver a level of return - consistently and sustainably year by year - which will improve on anything we've seen so far," said BP chief executive Lord Browne.

In the past seven years BP has carried out a number of successful acquisitions, including that of Amoco and Burmah Castrol.

Its upbeat trading figure come a fortnight after rival Shell was forced to admit it has overestimated its own oil reserves for the second time in as many months.

Exploration effort

Bruce Evers, an oil analyst at Investec Bank, said BP's comments were "all pretty good stuff".

"It is certainly better than Shell," he added.

"The buyback alone could be worth several billion pounds and BP has 50-odd new projects coming along, and huge reserves."

Mr Evers added: "BP has just been much more focused than Shell, and has worked harder to maintain an extensive exploration effort."

By 15.36 BST BP's share price was up 9.25 pence or 2.12% to 444.75 pence.