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BP profits fall as costs rise, hikes dividend

Oil giant BP is hiking its dividend after announcing a fall in profit in the first quarter fall due to higher costs in searching for oil.

The company said it was "too early" to assess the effects of the crisis in Ukraine on its Russian assets in a statement Tuesday. The oil major plans to keep its investment in Russia's Rosneft, despite a decision by the United States to impose sanctions against the Russian energy company's chief executive Igor Sechin.

Chris Ratcliffe | Bloomberg | Getty Images

Read MoreRussia sanctions: who's losing out so far

BP's underlying replacement cost profit fell to $3.2 billion in the first quarter of 2014, down from $4.2 billion at the same time in 2013. Its dividend will rise to 9.75 cents per share for the first quarter, up 8 percent from last year.

Profits were expected to come in at $3.1 billion for the quarter by analysts.

Read MoreBP CEO hits out at class action lawsuits

The company has paid out $42.7 billion to date over the disastrous Deepwater Horizon accident, which led to a major oil spill in the Gulf of Mexico. The final bill for the crisis is still uncertain.

It recently started three new projects: two in the Gulf of Mexico and one in Azerbaijan.

Production at BP has been hit by planned maintenance work in major oil fields including the North Sea and Gulf of Mexico areas. It is set to fall further in the second quarter.

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