Oil giant BP said today that its annual profits jumped 39% to $25.6bn (£18.1bn) as last year's soaring oil prices fuelled results.
The performance came despite a profits blow in the final three months of the year, as prices retreated sharply from the record of almost $150 a barrel reached in July.
But BP's profits — alongside rival Royal Dutch Shell's European record of £22bn in profit last week — leaves the duo with a combined £40bn haul from 2008.
BP's fourth-quarter profits fell 24% to $2.6bn (£1.8bn) — below most analysts' forecasts — caused by the fall in oil prices as well as one-off losses of $700m (£493m) from its Russian joint venture, TNK-BP.
But chief executive Tony Hayward said the company was “continuing to show powerful recovery” from the problems which beset the firm in 2007.
Excluding production-sharing agreements, BP pumped 3.84 million barrels of oil a day in 2008 — 5% ahead of the previous year — with start-ups from nine major new projects including its huge Thunder Horse platform in the Gulf of Mexico.
BP has been dogged by problems at its US refineries, but has rebuilt capacity at its Texas City and Whiting sites.
The availability of its refineries rose to 91% in the last three months of 2008 — the highest level for three years. Mr Hayward has led a drive to cut costs out of the business since taking over in 2007.
He said: “The mantra in BP today is: ‘every dollar counts, every seat counts'.”
BP shed 3,000 staff in 2008 and expects to axe more than the 5,000 posts originally planned by the middle of this year.
“In the current climate we especially need to maintain the momentum we have established in the drive to make BP more efficient,” added Mr Hayward.
“The next year or two will be challenging, but we are well-placed to meet that challenge.”
The company said it expected continued low demand for its products as many countries enter recession.
It said: “The economic environment remains challenging, with continued slowing of global economies and uncertainty in the global financial markets.”
Despite the difficult economic environment, BP expects to grow production this year, and lay out up to $22bn (£15.5bn) in capital spending.
Annual refining and marketing profits rose 60% to $4.2bn (£2.9bn) thanks to the firm's improved operating performance.
Exploration profits lifted to $38.3bn (£26.7bn) after the overall increase in oil prices during the year.
Despite a jump in BP's average selling prices from $67 to $90 a barrel over the whole of 2008, it fell by more than half to $52 in the final three months of last year compared to $111 between July and September.
BP's shares fell 2% following the results as investors reacted to the sharper than expected fall in fourth-quarter profits.
Seymour Pierce analyst Alan Sinclair said the numbers were “well below the consensus" but made no change to his profits forecasts for this year and next.