Dividend up as BP profits slip

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OIL giant BP cheered investors today as it unveiled a higher quarterly dividend, despite profits coming under pressure as its far-reaching disposal plan hit production.

The British supermajor reported underlying replacement cost profit of 5.2 billion US dollars (£3.2bn), compared to 5.5 billion US dollars (£3.4bn) in the same quarter last year.

The slide in profits came as production of oil and gas, excluding its recently-sold stake in Russian joint venture TNK-BP, dipped three per cent to 2.26 million barrels of oil a day.

But chief executive Bob Dudley said the results showed “strong progress” as he announced a 12.5 per cent hike in its quarterly dividend to 9 US cents (5.6p) a share. Shares surged more than three per cent to 440p today.

On a quarter-by-quarter basis, underlying replacement cost profit was 40 per cent higher as it benefited from better refining margins in its downstream business.

BP has sold off large chunks of its business as part of its pledge to raise cash to pay the costs of the 2010 Deepwater Horizon disaster.

While the TNK-BP exit fell outside this pledge, it has recently sold a Texas City refinery, five oil and gas fields in the US Gulf of Mexico and its Bristol-based liquefied petroleum gas (LPG) distribution arm.