BP has reported above-consensus fourth-quarter profits thanks to high oil prices and strong refining margins.
The company also cheered shareholders with a 26 percent surge in its dividend to 8.5 cents, but failed to replace all the oil it pumped with new SEC verified-reserves.
BP, the world's second-largest listed oil company by market capitalisation, said yesterday fourth-quarter proforma profit rose to $3.646 billion. Adding back non-operating charges of $1.13 billion, BP's "clean" result was $4.8 billion, well ahead of a Reuters' poll which gave an average forecast of $4.584 billion.
This compares to a "clean" profit figure, the measure most watched by financial markets, of $2.7 billion for the fourth quarter of 2003. Full-year profits were over $16 billion.
BP's result follows record earnings at European rival Royal Dutch/Shell and global sector leader Exxon Mobil, which also basked in the excellent operating environment for oil firms.
BP shares were up 0.6 per cent at 547 pence in early trade, compared with a 0.18 per cent rise in the European oil and gas sector.
The big jump in the dividend follows calls from some investors for BP to shift its focus away from buybacks to dividends as the means of returning cash to investors.
BP said it achieved 89 per cent reserve replacement on a SEC basis, renewing concerns about the industry's ability to replace the oil it pumps with new finds.
"This is a reasonable outcome but echoes the challenges faced by the sector," Cazenove said in a research note.
BP said the figure was depressed because of the effects of high oil prices on its Production Sharing Contracts (PSCs).
Many new oil production deals now involve PSCs, under which a host government allows an oil company to recoup its costs by taking a share of a project's output. As the oil price rises, it takes fewer barrels to cover these costs and so the number of barrels an oil firm can book as reserves falls.
BP said it was confident on its future prospects and that it would continue share buybacks. "Our strategy is on track and unchanged, our operations are in line with our previous indications, and we have a strong base of material assets and markets for a sustainable future," Chief Executive John Browne said in a statement.