Signs of recovery at BP as underlying results show rise

Stripping out one-off costs, including an additional $7.7bn (4.8bn) charge related to capping the blown-out well, BP said underlying results rose 18 per cent, compared to the same period in 2009, to $5.53bn (3.45bn).

This was well ahead of an average forecast $4.60bn (2.8bn) from a poll of seven analysts, although it lagged behind an 88 per cent rise in underlying profits at rival Royal Dutch Shell and a 55 per cent rise in net income at Exxon Mobil, the largest Western major oil company by market value.

The good performance was due to a big drop in the effective tax rate and strong performance from BP's refining unit. The results, upbeat comments about lifting investments next year and comments suggesting the oil giant could reinstate its dividend in 2011 lifted its shares.

"A lot of the uncertainty is out of the way, and it is slowly but surely getting back to business," Manoj Ladwa, senior trader at ETX Capital, said.

However, some analysts said the result was not necessarily a harbinger of better things as the tax rate would likely revert towards normal levels and BP itself said it would be hard to repeat the strong profits from the refining unit.

"The underlying beat is therefore of low quality," Oswald Clint, oil analyst at Bernstein said in a research note.

BP and its rivals benefited from a 12 per cent rise in crude prices in the quarter, compared to a year earlier, a 29 per cent rise in United States natural gas prices and a doubling in British gas prices.

Higher output in the quarter helped to lift BP's peers but the London-based oil company said its production fell four percent year on year.

COSTLY VENTURE: The remains of the Deepwater Horizon rig blaze in the Gulf of Mexico, an accident which may have cost BP up to $40bn.