BP's annual profit more than doubles

Underlying replacement cost profit for the final three months of 2018 came in at $3.5bn, up from $2.1bn in the same period the year before.

For the year, meanwhile, underlying replacement cost profit rose to $12.7bn, which was more than double the $6.2bn reported for 2017 and above consensus expectations of $11.9bn.

Underlying replacement cost profit in the upstream business rose to $3.89bn in the fourth quarter from $2.22bn in Q4 2017, while profit in the downstream segment increased to $2.17bn from $1.47bn.

Return on average capital employed was 11.2% compared to 5.8% in 2017 and the company declared an interim dividend of 10.25 cents a share for the fourth quarter, up 2.5% from the previous year.

Meanwhile, excluding Gulf of Mexico oil spill payments, operating cash flow for 2018 was $26.1bn, up from $24.1bn the year before.

BP said it generated proceeds of $3.5bn from selling assets last year and intends to complete more than $10bn divestments over the next two years.

Chief executive Bob Dudley said: "We now have a powerful track record of safe and reliable performance, efficient execution and capital discipline. And we're doing this while growing the business - bringing more high-quality projects online, expanding marketing in the Downstream and doing transformative deals such as BHP.

"Our strategy is clearly working and will serve the company and our shareholders well through the energy transition.

The company said it expects underlying production for 2019 to be higher than the previous year due to major projects.

"The actual reported outcome will depend on the exact timing of project start-ups, acquisition and divestment activities, OPEC quotas and entitlement impacts in our production-sharing agreements," it said.

At 1620 GMT, the shares were up 5.4% to 547.92p.

Richard Hunter, head of Markets at Interactive Investor, said: "Global oil majors are performing strongly at present, but these numbers from BP are superlative.

"Given the complexity of the operation, BP has the ongoing challenge of keeping the overall engine purring. This has been done with some aplomb, and any number of the metrics have benefited not only from a generally higher oil price over the year, but also a streamlining of operations which has resulted in higher efficiency. This in turn means that the company estimates that it can continue to be comfortable with oil around $50 per barrel, although it has also run the slide rule over lower levels by way of contingency planning."

RBC Capital Markets said: "Overall, we see this as a strong set of results, with stronger underlying earnings translating into cash. Key questions for BP are likely to relate to: 1) what are the 'one-off' components of today’s beat, including stronger gas trading and lower cash taxes, while we also expect to get more colour on the upgraded divestment programme."

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "What stands out about BP at the moment is its pipeline of new projects around the world - the benefits of which we have seen in 2018. That is showing little sign of slowing, and with the group also dabbling in renewable and green technologies, BP’s got its eyes set firmly on the future."