BP posts lower than expected annual profits.

BP has announced annual profits of $13.955 million (£8.755m), down 45% compared to a year ago, lower than analysts’ predictions last week.

The oil giant has enjoyed much success with its exploration in 2009 – including its giant oil discovery in the Tiber well in the Gulf of Mexico, as well as the access to new oil fields in Iraq, Indonesia and Jordan.

However, despite the slightly disappointing annual profits, BP’s fourth quarter profits showed an increase of 33% to $3.447m as oil and gas production increased by more than 4% ¬– well ahead of the company’s expected long-term average growth rate of 1-2%.

Chief Executive, Tony Hayward, said: “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.”

According to the results statement, cash costs have dropped by more than $4 billion with more than 60% of this delivered from cost cutting exercises. In February 2009, Mr Hayward said he was making cost-cutting a priority given the economic climate, which was set to include the loss of more than 2,000 jobs.

The statement said that reducing the underlying cost structure of the Group will remain a management priority for 2010.

Mr Hayward added: “Our strategy remains the same: delivering profitable growth in the upstream; driving cost efficiency in the downstream and at the corporate centre; and investing with discipline and focus in Alternative Energy.

“2009 has been one of the best years for BP and its shareholders since the merger with Amoco. But we are not resting on our laurels. There’s a lot more to be done.”

BP’s shares fell 4.2% on the London Stock Exchange after the announcement.

The US oil giant Exxon Mobil posted its 2009 profits yesterday (1 February), disappointing its shareholders with a drop of 23% compared to 2008, blaming a weak demand for fuel during the global economic downturn. 

Royal Dutch Shell is expected to release its 2009 annual results on 4 February.