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BP smashes forecasts as profits soar 148% logo

  • Tuesday October 28 2008 18.30 GMT

Oil giant BP has reaped the benefits of this summer’s record oil prices, smashing all forecasts with a 148% rise in third-quarter profits.

The figures are likely to spark fresh protests from motorists and businesses that have been hit hard by higher petrol prices.

The shares rose 24.25p to 461.5p today, a gain of 5.55%. BP said it would pay a dividend of 14 cents a share in December, up some 30% in dollar terms from a year ago and 60% higher in sterling terms.

“Although it has since fallen away sharply, the high oil price of the third quarter obviously helped our absolute result,” said BP’s chief executive, Tony Hayward.

Oil surged to a record high of $147 a barrel in July, but the price has since more than halved amid mounting fears of a global recession. Today the price of crude rose to $64 a barrel.

BP, Europe’s second-biggest oil producer behind Royal Dutch Shell, posted replacement cost profits of $10bn (£6bn) for the quarter from July to September, up from $4bn a year earlier. Replacement cost profit is a measure often used by oil companies and is calculated using the cost of replacing supplies at current prices, rather than the prices at which they were bought.

Revenues climbed 45% from $71bn to $103bn over the quarter.

“We are well-placed to weather the prevailing financial storm and to benefit from the business opportunities that may well arise from a downturn,” Hayward said. “Our balance sheet is strong and we have committed less of our portfolio to high-cost options like tar sands and gas conversion than some of our peers.”

Analysts were worried about the impact of the recent fall in oil prices on BP, but noted that the company had made good progress on restructuring its crude-processing division, which has underperformed rivals in recent years.

“In refining and marketing they have a restructuring plan under way and that looks as if it has helped the results there,” said oil analyst Tony Shepard at brokerage Charles Stanley.

The oil firm, which expects to spend up to $22bn on capital investment this year, counts pension funds among its major shareholders.


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