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Last Updated: Tuesday, 23 October 2007, 09:07 GMT 10:07 UK
Production woes knock BP profits
BP petrol station
BP has seen profits fall even as oil prices have risen
UK oil giant BP has seen its third quarter profits slump 45%, hit by a slowdown in production and problems in its refinery business.

Profits at BP were down to $3.88bn (1.89bn) for the three months to the end of September from $6.98bn a year earlier.

Oil and gas production for the period was 4% lower.

The firm's production was hit by temporary shutdowns at its Whiting and Texas City refineries.

Higher maintenance costs further also contributed to lower profits, following a fatal blast in Texas in 2005.

BP's results are calculated on the basis of replacement cost, which reflects the current cost of supplies and is widely seen as the best measure of an oil firm's underlying performance.

Overhaul

BP's performance has materially lagged our peer group in the last three years
Tony Hayward, BP group chief executive

On a nine month basis the firm saw profits fall 22% to $18.35 from $14.31bn for the first three quarters of 2006.

The firm said it would pay a quarterly dividend of 10.825 cents a share.

The latest results come after BP revealed earlier in October that it would overhaul the firm in a bid to improve its standing.

The changes come under the leadership of Tony Hayward who replaced Lord Browne as the head of BP in May, who resigned over a scandal in his personal life.

Following the results analyst Richard Hunter at Hargreaves Lansdown said : "The proposed streamlining of operations was well flagged in advance and the outlook for the remainder of the year looks promising."

He added: "The challenges may not be over but at least the rot seems to have been stopped".

Before Tuesday's figures Mr Hayward had said BP's performance had "materially lagged our peer group in the last three years".

The overhaul will include getting rid of certain levels of management as well as consolidating the firm's existing business.

BP shares closed up 7 pence, or 1.16%, at 612p.



SEE ALSO
BP chief unveils radical overhaul
11 Oct 07 |  Business
BP faces fines after Texas blast
22 Jul 07 |  Business
Top managers blamed for BP blast
03 May 07 |  Business
BP chief executive Browne resigns
01 May 07 |  Business
BP investors back Browne payout
12 Apr 07 |  Business
Higher safety costs hit BP profit
06 Feb 07 |  Business
Profile: Lord Browne
12 Jan 07 |  Business

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