BP quarterly profit drops by 62%

BP is the UK's largest oil company

UK oil giant BP has said its first-quarter profits fell 62% from a year ago as oil prices remained lower.

For the first three months of 2009, BP's replacement cost profit was $2.4bn (£1.64bn), down from $6.2bn in the same period of 2008.

The price of crude oil has recently hovered at about $50 a barrel, down from a record high of $147 last July.

"The overall weak environment for marketing and petrochemicals is expected to continue," BP said.

REPLACEMENT COST PROFIT

Replacement cost profit is the reporting measure typically used by oil companies and reflects the current cost of supplies

The measure strips out gains or losses related to any changes in the value of the firm's stock of fuel products

The oil giant said another factor behind the fall in first-quarter profits was lower earnings at its Russian joint venture TNK-BP.

A protracted dispute between BP and the Russian shareholders in the venture was resolved last September when Robert Dudley stepped down as TNK-BP's chief executive.

Thunder Horse

Production during the quarter "continued to ramp up" at its Thunder Horse platform in the Gulf of Mexico, which it owns with US giant Exxon Mobil, the world's largest oil company.

The long-delayed Thunder Horse facility is currently producing the equivalent of about 300,000 barrels of oil a day, and will eventually be the largest single oil producing facility in the US.

BP said it would increase its dividend by 4% to 14 cents a share for the first quarter, while in sterling terms, the company's dividend rose by 40% over the year.

Shares in the oil giant rose 1.4% to 489.75 pence.

The company also said its refining capacity would remain higher than in 2008.