BP has boosted hopes the oil and gas industry is firmly on the road to recovery by announcing plans to return more cash to investors after doubling third quarter profits.

The oil and gas giant made $1.9 billion (£1.4bn) underlying profit in the three months to September compared with $0.9bn in the same period last year helped by the partial recovery in the crude price and increased output.

BP lifted production 14 per cent partly due to bringing the giant Schiehallion field off Shetland in the second quarter.

Its results announcement came days after the Brent crude price rose above $60 per barrel for the first time in two years.

The price has remained above that psychologically important level since Friday following signals major producers such as Saudi Arabia will extend production curbs that were introduced to support prices.

Brent crude traded at less than $30/bbl in the first quarter of last year.

BP directors clearly feel the company is in a good position after completing an aggressive cost cutting drive in response to the slump in the crude price from $115/bbl in June 2014.

Finance chief Brian Gilvary noted the company can generate enough cash to cover dividend payments and invest in growth at $50/bbl.

He said: “Given the momentum we see across our businesses and our confidence in the outlook for the group’s finances, we will be recommencing a share buyback programme this quarter.”

BP is set to become the first major to resume buybacks since 2014.

The decision to do so may lead some to hope brighter times lie ahead for BP’s North Sea business. It has been hit hard by the cost cutting moves made by the company in response to the crude price plunge.

BP has announced plans to cut around 900 jobs in the North Sea and sold off a range of what it deemed non-core assets in the area since 2014.

It employs around 2,300 people in the UK North Sea.

The company has focused investment on large fields off Shetland including Schiehallion, on which it can produce oil relatively cheaply using modern technology.

BP is on track to start production from the giant Clair Ridge field off Shetland next year.

In August chief executive Bob Dudley noted Schiehallion and Clair Ridge are in a group of seven major developments that are expected to help BP achieve a big increase in the profitability of its production operations.

He said then that BP was deeply committed to the North Sea, which was one of its heartlands.

Mr Dudley said yesterday that BP generated healthy earnings and cash flow in the third quarter.

However, he added: “ There is still room for further improvement and we will keep striving to increase sustainable free cash flow and distributions to shareholders.”

BP held the third quarter dividend at 10 cents per share.

The results announcement appeared to go down well with investors and BP shares closed up two per cent, 8.6p, at 510.2p.

Nicolas Hyett, equity analyst at Hargreaves Lansdown, said the share buy back programme was the first bone BP had offered to investors after taking steps to address the challenges it has faced in recent years.

He noted BP has spent the past seven years addressing the problems posed by the disastrous Gulf of Mexico oil spill in 2010 and the crude price plunge.

"Those headwinds are finally fading into the history books,” said Mr Hyett.

But he added: ”There’s still lots to do at BP before the group is back in rude health. At almost $40bn, the debt pile is still huge and paying it down seems likely to soak up much of the cash freed up by the falling Gulf of Mexico payments."

Analysts had expected BP to achieve underlying profits of around $1.6bn.

BP’s exploration and production arm made $1.56bn profit before interest and tax in the third quarter.

Production averaged 3.6 million barrels per day.

The E&P arm lost $0.2bn in the same period last year.

The downstream refining and marketing business made $2.3bn profit against $1.4bn last time.

The company incurred $0.2bn costs in respect of the Gulf of Mexico oil spill in the third quarter taking the total to $63.4bn.