Oil giant BP bounces back into black

Europe's biggest oil company BP roared back into profit in the fourth quarter of 2009, turning its fortunes around by raising output and slashing costs in a major efficiency drive, it said Tuesday.

Net profits stood at 4.295 billion dollars (3.1 billion euros) in the final three months of last year, BP said in a results statement.

The company, which has suffered a series of disasters in recent years, had posted a hefty loss of 3.344 billion dollars in the same part of 2008 as a result of tumbling oil prices.

Chief Executive Tony Hayward described 2009 as a ''very good year'' for the group, despite the weak economic environment.

''These results provide the clearest demonstration of the progress we have made and the momentum we have established in growing our business and making it more efficient,'' Hayward said in the group's results statement.

However, BP -- which recently overtook Royal Dutch Shell to become Europe's biggest energy group by stock market value -- saw its shares slide as underlying earnings dashed market expectations.

Since his appointment in 2007, Hayward has implemented a major cost-cutting programme and an increase in BP's oil output, as he sought to repair BP's battered reputation.

BP added Tuesday that net profit tumbled almost 22 percent to 16.578 billion dollars last year, compared with 21.7 billion dollars in 2008.

Stripping out exceptional items and changes to the value of its oil inventories, profit soared 68 percent to 4.38 billion dollars in the fourth quarter.

However, the group missed analysts' consensus forecasts for a profit of 4.7 billion dollars.

- Following powerful sets of results in the past few quarters, these were a disappointing set of results from BP this time round - said NCB oil sector analyst Peter Hutton.

''The market has got used to BP beating consensus by some margin -- we forecast that this time they would come in below, but not by this much.''

BP shares sank 3.91 percent to 571.33 pence in late afternoon trade on London's benchmark FTSE 100 index, which was 0.73 percent higher.

The company said its production rose four percent to 3.998 million barrels of oil equivalent a day in 2009.

- The increase in production was well ahead of the company's expected long-term average growth rate of 1-2 percent and reflected the ramp-up and start-up of major new projects, including the first full year of production from the Thunder Horse field in the US Gulf of Mexico - BP said.

Cash costs for 2009 were more than 4.0 billion dollars lower compared with 2008.

- Reducing the underlying cost structure of the group remains a management priority in 2010 - BP said.

''The company's drive to streamline and simplify its business, begun in late 2007, has, in addition, resulted in a net headcount reduction of around 7,500.''

Hayward made it a key priority to slash BP costs after replacing John Browne as chief executive nearly three years ago. Previously, Hayward had been head of exploration and production at BP.

Browne, who transformed BP into the world's third-largest energy group, was forced to quit as chief executive after revelations that he lied to a High Court judge over how he had met his gay partner of four years.

The global oil sector was boosted as oil prices had surged to a record 147 dollars a barrel in July 2008.

However, they subsequently plunged under 34 dollars in February 2009 as the global economic downturn hit demand for energy. Prices are currently trading between 70 and 75 dollars.

BP's Anglo-Dutch rival, Royal Dutch Shell, will announce fourth-quarter results on Thursday.