BP upstream chief executive Bernard Looney will take the reins from CEO Bob Dudley early next year, with investors eager to understand what this means for the FTSE 100 giant.

The U.K.-based oil and gas major announced Friday that Dudley, who has worked with BP for 40 years and held the position of CEO for almost a decade, will be replaced by Looney on February 5, 2020.

In a press release, BP Chairman Helge Lund said that it was a logical time to make the announcement "as the company charts its course through the energy transition."

Dudley, who is 64 years old, has decided to step down after the delivery of the firm's 2019 full-year results on February 4, 2020. He will then retire on March 31 later that year.

Looney, 49, will continue with his current role until February 5, at which point he will take the reins from Dudley and join the BP board.

"I think one thing that has really marked Bernard's tenure as the head of upstream is a move towards digitalization and he has also had a very strong focus on cost control," Jason Gammel, senior oil and gas analyst at Jefferies, told CNBC's "Street Signs" on Friday.

"So, those are things that are evolutionary in some respects. But digitalization for the industry could be revolutionary as well."

Gammel said that while Dudley's legacy has been "absolutely outstanding," Looney's track record made him a "great" choice to become CEO of the energy giant next year.

Shares of BP had risen by more than 1% by early Friday afternoon.

Looney has run BP's upstream business since April 2016 and has been a member of the firm's executive management team since November 2010.

The upstream division includes 17,000 people operating across almost 30 countries and produces around 2.6 million barrels equivalent of oil and gas a day.

An Irish citizen, Looney joined BP in 1991 as a drilling engineer and worked in operational roles in the North Sea, Vietnam and the Gulf of Mexico.

Former WPP CEO Martin Sorrell told CNBC's "Squawk Box Europe" on Friday that Looney is likely to find making his mark at BP more difficult than when Dudley first took charge in 2010.

That's because Looney is "taking it over at a time when things are in relatively better shape."

Sorrell added that Looney would likely be forced to take his time in revising BP's traditional operation.

"The trend is towards transforming at relatively low speeds and I think that's the big issue that all companies face in digital transformation," he said.

"You have to take big hits because if you're trying to restructure a legacy operation which has outlived its purpose and is not for purpose, you have to make legacy cuts and you have to take hits to the balance sheet that shareholders are often unwilling to take."

Dudley took over as CEO of BP on October 1, 2010 in the wake of the biggest oil spill in U.S. history. The Deepwater Horizon catastrophe killed 11 people and threatened the company's existence.

His job was to try to restore the company to a position it held before the explosion, managing the company's balance sheet as it faced billions of dollars' worth of penalties and clean-up costs.

More recently, BP agreed to a request from shareholders in May for greater detail and transparency on how each capital investment decision would align with the Paris climate agreement an international accord that seeks to limit global warming to less than 2 degrees Celsius.

Last month, Dudley said BP would sell some of its most carbon-intensive projects and reduce investment in others to try to improve the firm's environmental footprint.

The energy giant has been targeted by climate activist groups on numerous occasions in recent months, with demonstrators increasingly angry about the lack of progress toward a lower-carbon future.

"The new CEO has an opportunity to turn the page on years of denial, inaction and prevarication," John Sauven, executive director at Greenpeace U.K. told CNBC via email.

"BP should now pivot away from fossil fuels, shift to renewable energy and support a just transition for its workers," Sauven said.

Greenpeace has urged BP to end exploration projects for new oil and gas and switch to investing only in renewable energy.

In an apparent reference to Greenpeace's demands when speaking to CNBC earlier this year, Dudley said: "The reality is it is going to take all forms of energy to solve this. One of the groups wants us to go 100% into renewables (but) it has got to be a race to reduce emissions not a race to renewables."

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Evolution or revolution? BP's incoming CEO tasked with navigating energy transition - CNBC