Well positioned

Europe‘s second-largest oil company, BP, has beaten forecasts to report underlying profits of $8.9bn (£5.7bn) for the third quarter of 2008.

The London-based company said that despite operational setbacks, oil and gas production rose slightly in the quarter to 3.664 million barrels of oil per day, compared to the third quarter of 2007.

The underlying results, which exclude unrealised gains or losses related to changes in the value of fuel inventories, recorded a net gain of $1.147bn following an increase in oil prices.

However, analysts warn that the recent collapse of crude oil from more than $147 per barrel to around $64 will prove challenging for the company and its competitors.

Tony Hayward, BP’s chief executive, said: ‘I believe that BP is well positioned to cope with such volatility. Our balance sheet is strong and we have committed less of our portfolio to high-cost options such as tar sands and gas conversion than some of our peers.’

The company believes that its strong results signal a turnaround under Hayward, who is set to continue plans for cost reductions and front-line efficiency.