BP increases dividend as profit exceeds analysts’ estimates

BP Plc, Europe’s second-biggest oil company, raised its dividend as third-quarter profit beat analysts’ estimates.

Net income climbed to $5.4 billion from $5 billion a year earlier as underlying earnings from refining and marketing jumped to a record, London-based BP said today in a statement. It raised the dividend by 12.5 percent to 9 cents a share.

Chief Executive Officer Bob Dudley is rebuilding the company after the 2010 Gulf of Mexico oil spill erased a third of its market value. He agreed to sell BP’s half of TNK-BP to OAO Rosneft for about $27 billion in cash and shares this month, adding to $35 billion of disposals in the past three years.

The dividend increase “was not expected by the market, which was betting on a flat” payout, said Dominique Patry, an analyst at Credit Agricole Cheuvreux SA. The amount of crude processed at BP’s refineries was the most in seven years, and a “favorable refining environment” bolstered underlying profit from that division, he said.

Profit adjusted for one-time items and changes in inventory totaled $5.2 billion, compared with $5.5 billion a year earlier. That beat the $4 billion average estimate of 11 analysts surveyed by Bloomberg.

BP rose as much as 5.7 percent in London, the biggest intraday gain in more than a year, and traded up 5.4 percent at 447.85 pence as of 10:01 a.m. local time.

Higher Payout

The dividend increase relects “our confidence moving forward,” Dudley said in a Bloomberg Television interview with Ryan Chilcote today. “The company’s growing, it’s now back on its feet, and there are better things yet to come.”

BP said third-quarter production, excluding the Russian TNK-BP venture, fell 3 percent to 2.26 million barrels of oil equivalent a day. BP’s share of TNK-BP output gave it about 1 million barrels a day. The U.K. company expects output to rise in the fourth quarter after completing field maintenance.

BP this month agreed to sell its half of TNK-BP to Rosneft, which plans to buy the entire venture for about $55 billion in the biggest oil-industry deal in more than a decade. BP will reinvest some of the cash from the transaction in Rosneft shares, boosting its stake in Russia’s biggest producer to almost 20 percent.

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