Falling oil and gas prices hit BP

LONDON, England (CNN) -- BP, the world's third-largest publicly traded oil company, said profit fell by more than a third as gas and oil prices declined, while refining profits slumped.

Second-quarter profit, excluding one-time items, fell to $2.18 billion from $3.43 billion a year earlier. Earnings per share came in at 9.72 cents, compared to 15.29 cents in the second quarter of 2001.

BP, along with other major oil and gas companies, has been hit by falling prices as the global economy struggles through a period of sluggish growth. The London-based company received $25.07 for a barrel of Brent Crude in the three months to June 30, down $2.32 on the year-ago price.

At the same time, refining margins -- the difference between the cost of crude and the selling price of by-products -- were down 64 percent worldwide from the second-quarter of 2001.

Profits at BP's refining and marketing business, which includes the ownership of 5,300 petrol stations worldwide, slumped to $685 million in the second-quarter from $1.76 billion a year earlier.

"The half year's trading conditions were significantly less favourable than a year ago,'' Chief Executive John Browne, who is committed to delivering earnings growth of 10 percent, said in a statement.

To underline his confidence that it could reach that target, BP raised quarterly dividend to six cents. The company's results were in line with analysts' expectations.

"Our continued performance delivery has underpinned our capacity to increase the dividend," Browne said.

BP's stock rose 1.6 percent to 487 pence in mid-morning London trading on Tuesday.