BP says second quarter profit up 28 percent

BP, Europe's second biggest oil producer behind Royal Dutch Shell PLC, posted profit of $9.47 billion for the three months ending June 30, up from $7.38 billion in the same period a year ago. Revenue jumped 49 percent to $110.98 billion as the price of a barrel of oil rose by around 35 percent over the quarter.

Profit would have been even higher without changes imposed by accounting rules, prompting unions to renew calls for a windfall tax on the profits of both BP and Shell.

"These are another set of exceptionally strong numbers, echoing the first quarter performance," said Hargreaves Lansdown stockbroker David Hunter. "Given the tailwind of historically high energy prices, this is somewhat to be expected, although such a strong successive quarterly performance could signal a marked turnaround in the group's fortunes."

BP Chief Executive Tony Hayward has made operational improvements his priority since he took over the top job over a year ago.

Hayward, who replaced John Browne, has focused on bringing new production and refining capacity on line to improve earnings, which have lagged behind rivals such as Exxon Mobil Corp. and Shell.

The company's closely watched replacement cost profit jumped 5.5 percent to $6.85 billion, from $6.49 billion.

The replacement cost figure is viewed by many analysts as the best measure of an oil company's underlying performance because it excludes changes in the value of crude inventories, measuring the amount it would cost to replace assets at current prices.

BP makes the bulk of its profits in its upstream business, which incorporates exploration for and production of oil. Pretax profits in that division rose 52 percent to $10.8 billion.

In contrast, the downstream business, which includes refining oil and selling it at BP's 24,000 gas stations worldwide, it made a profit of just $539 million, a significant drop from the $2.7 billion it made in the same period a year earlier.

BP's shares rose 2.7 percent to 533.75 pence ($10.62) on the London Stock Exchange, with analysts suggesting the increase was tempered by problems surrounding the company's Russian joint venture TNK-BP.

The unit's American CEO Robert Dudley left Russia last week after being called in for questioning by prosecutors.

His departure followed months of pressure on the TNK-BP, which is under attack from its Russian shareholders and the Russian government. The business' profit nearly doubled to $1.35 billion pounds over the quarter.

Charles Stanley analyst Tony Shepard said BP's operational improvements "should start to come into focus for investors and more than outweigh the disappointing events surrounding TNK-BP."

The strong results were less popular with union leaders, after the company earlier this year announced plans to lay off 5,000 of its 97,000 employees. Unions also point out that the huge profits come as consumers face the worst economic conditions in years, including higher energy prices to light and heat their homes.

"It is high time our government moved to stop the fuel corporates picking the pockets of the poor and needy," said Tony Woodley, a spokesman for the Unite, Britain's biggest union. "A windfall tax now would ensure the money was there to help the old and vulnerable through these tough times."

BP, however, argues that it makes less than 1 pence in profit on every liter of petrol it sells at its 1,300 filling stations across Britain. It adds that it paid $14.5 billion in taxes worldwide last year.