By Andrew Callus
LONDON (Reuters) - BP Plc kicked off the results season for top global oil firms on Tuesday with forecast-beating profits and a dose of what the industry's investors want - a dividend hike, plans for asset sales, and a promise to keep a lid on spending.
The world No. 5 among investor-controlled oil and gas groups worldwide scaled back its guidance on capital spending next year to $24-$25 billion compared with previous guidance of $24-$27 billion for the years up to 2020.
BP also raised its quarterly dividend by 5.6 percent to 9.5 cents a share and said it would sell $10 billion (6.2 billion pounds) of assets over the next two years, returning most of the proceeds to shareholders - a higher rate of disposals than previously promised under a programme aimed at jettisoning $2 to $3 billion dollars worth of assets per year until 2020.
Shareholders throughout the sector have been worried that rising costs will allow spending to balloon, crimping cash flow should oil prices drop, and reducing the industry's ability to offer them returns. They want spending controlled and spare cash siphoned back into their pockets.
"The stockmarket doesn't want the oil majors to spend money. Instead, investors want their cash back. And BP has obliged this morning," said analyst Neill Morton of Investec, who noted that the share prices of Europe's integrated oil firms as a multiple of their earnings stand at a 20-year low relative to the broader market.
BP shares climbed 4.8 percent to 473 pence after the results, supporting other stocks in the sector. Exxon Mobil, Chevron, Royal Dutch/Shell and Total report results later this week.
BP's underlying replacement cost net profit for the third quarter of 2013 was $3.692 billion compared with a company-supplied consensus analyst forecast of $3.170 billion.
The figure was sharply lower than the $5.017 billion a year earlier - mainly because of much weaker refining margins, divestment of refineries and reduced income from its Russian business, but it was more than the second quarter's $2.712 billion when a big Russian tax charge hit the bottom line.
Rosneft, the state-controlled Russian company into which BP folded its Russian business last year in exchange for a 19.75 percent stake, delivered $808 million of the profits. It also reported quarterly results on Tuesday.
BP has already sold $38 billion of assets - mainly to pay for the 2010 Gulf of Mexico oil spill of 2010 - but asset sales have become a theme throughout the sector as it struggles with rising costs and eyes potentially lower oil prices in future.
Most of the top oil companies have been making noises this year about "active portfolio management" and "value over volume".
BP recently won a small victory in its sea of legal defeats over the oil spill and to reflect that, it derecognised about $400 million of provisions within the $20 billion fund it has set aside for certain types of compensation.
However, it raised slightly its overall cumulative charge for the costs of clean-up, fines, and compensation for the spill to $42.5 billion from $42.4 billion due to other small extra provisions.
(Reporting by Andrew Callus; editing by Sarah Young and Tom Pfeiffer)