BP (BP) - Get BP p.l.c. Sponsored ADR Report gave investors grounds for more optimism Tuesday when the board upgraded their five-year forecasts for operational and financial performance at the oil major.

BP now forecasts a material improvement in cash flow by 2021 with upstream contributing $13 billion to $14 billion annually and downstream chipping in $9 billion to $10 billion.

"We expect this combination of continued cost discipline with the growing cash flow from our core businesses - and the recent portfolio additions - will steadily drive down the cash balance point of the business," said CFO Brian Gilvary, following a presentation to analysts.

BP shares rose by 0.5% in response to the announcement, to change hands at 454 pence, against a 0.26% loss for the Stoxx Europe 600 TMI Oil & Gas index.

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Cash costs per barrel are seen falling during the period, with the break even at $40 or below, possibly as low as $35 per barrel. Added to this, the balance sheet targets are held firm with gearing expected to remain in the range of 20% to 30%.

Volumes of production are seen improving thanks to acquisitions while operating margins on upstream projects have been forecast some 35% higher than they were in the 2015 year. Both of these factors will support better returns to shareholders.

"We can see growth ahead right across the Group. While always maintaining our discipline on costs and capital, BP is now getting back to growth - today, over the medium term and over the very long term."

The increase in volumes is seen driven by productivity gains and acquisitions, such as the ADCO onshore concession and Zohr asset in Egypt, which alone could add as much as 200,000 barrels per day to BP's production by the end of the decade. 

Reduced costs are the culmination of more than 6 years of divestment and restructuring first intended to address the fallout from the DeepWater Horizon oil spill in 2010 and latterly, the commodity price rout that wreaked havoc upon the industry from 2014 onward. The London based company has disposed of more than $75 billion of assets since 2010.