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BP beat third-quarter earnings forecasts by a big margin as its cost-cutting program proved more successful than expected, prompting the British oil major to increase its target for savings for the year.
The London-based company's shares opened 4.8 percent higher on the earnings.
BP [BP-LN Loading... ()] said third-quarter replacement cost net profit, which strips out unrealized gains or losses related to changes in the value of fuel inventories, fell 50 percent to $4.98 billion, due to lower oil and gas prices.
Excluding one-offs, the result was $4.67 billion, compared to an average forecast of $3.16 billion from a Reuters poll of 11 analysts.
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Sharon Lorimer |
A lower-than-expected tax rate flattered the result but reductions of over 15 percent in costs in the oil and gas production and refining units was the key driver of the better-than-expected earnings, a spokesman said.
"These results demonstrate real operational momentum across the company. We continue to transform our cost base," Chief Executive Tony Hayward said in a statement.
The strong progress on squeezing out costs could boost investor optimism about cost-cutting programs at rivals such as Royal Dutch Shell [RDSA-LN Loading... ()] , which reports on Thursday.
The company said oil and gas production averaged 3.917 million barrels of oil equivalent per day, up 7 percent compared to the same period in 2008.
BP said its debt-to-equity or gearing ratio fell in the quarter, against expectations that it would rise.
BP and its rivals had been borrowing this year to meet high dividend payments, or in some cases, cutting their dividends.
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