BP expected the reveal profits boost

Feb 3 2009

BP is set to post a 40% rise in annual profits as the oil giant reaps the benefit of higher crude prices.

The firm's results come days after rival Royal Dutch Shell landed a European profits record of £22 billion for 2008.

Analysts expect BP to deliver an underlying surplus of £18.8 billion in its own results - recovering from a turbulent 2007 which saw the resignation of long-time chief executive Lord Browne under a cloud and operational problems.

But although sky-high oil prices - which peaked at more than 147 dollars a barrel last July - have boosted overall results, fourth-quarter figures will be below last year as crude retreated sharply in a deepening global slowdown.

Prices are now hovering at about 40 dollars a barrel, little more than a quarter of the peak reached last summer.

Analysts expect underlying fourth-quarter profits of £2.2 billion - about a third lower than the same quarter in 2007 and almost two-thirds below the £6.2 billion it posted between July and September last year.

The City will also be focused on BP's investment plans as stark prospects for the global economy lead to depressed expectations for prices of commodities such as oil and metals in the months ahead.

But under chief executive Tony Hayward - who took over from Lord Browne in 2007 - the group has been looking to boost efficiency to close the gap on Shell, with measures such as 5,000 job cuts in order to streamline the business.

Although exploration and production profits are likely to suffer from the lower oil prices, the firm has improved the efficiency of its refining operations in the US.

Charles Stanley analyst Tony Shepard said: "It has recovered well from earlier problems and actions implemented are producing good results both in exploration and production and refining."