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October 28, 2009

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Home » Business » Energy

BP quarter exceeds market forecasts

BP Plc, Europe's second-largest oil company, yesterday reported a 34 percent fall in third-quarter profit to US$5.3 billion - better than markets expected - as oil and gas prices fell from record levels a year earlier.

The figure compared with a US$8 billion profit in the third quarter of 2008 but was up from US$4.4 billion in the second quarter and well ahead of analysts' forecasts.

BP shares gained 4.5 percent to 592.9 pence (US$9.70) as the London Stock Exchange opened yesterday.

Replacement cost profit, a key oil industry measure, was down by half to US$4.98 billion from US$10.03 billion a year earlier, though well up from US$3.14 billion in the second quarter.

The figures exclude inventory gains and losses and tax charges and credits.

The company declared a dividend of 14 US cents per share, unchanged.

"BP's contribution to what is becoming a strong third-quarter earnings season is likely to meet with broker upgrades, potentially strengthening the market consensus even further from its current buy status," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

Earnings reflected a big drop in oil prices from US$115 a barrel last year to about US$68 a barrel, and an even deeper decline in gas prices.

Production of 3.9 million barrels per day in the third quarter was up 7 percent from the previous year, helped by fewer disruptions from hurricanes, BP said.

Production for the first nine months of this year was 3.98 million barrels per day, up 4 percent compared to 2008.

Replacement cost profit for the first nine months was US$10.5 billion, compared to US$23 billion in 2008. Net profit was down from US$24.5 billion to US$12.3 billion.

Costs for the same period were down more than 15 percent from last year, according to BP.


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