BP has revealed the cost of one of its worst periods in recent memory, reporting a 45 per cent plunge in quarterly profits despite a run of near-record oil prices.

Third-quarter figures, the first full-quarter under Tony Hayward, the new chief executive, bore the scars of a series of delays to big oilfields, higher costs, refinery shutdowns in the United States and the closure of a crucial North Sea pipeline.

Headline profits in the three months to September 30 stood at $3.87 billion (£1.89 billion), compared with $6.89 billion in the same period a year ago.

On a “clean” basis, which strips out exceptional one-off gains and losses, profits were 27 per cent lower than a year ago at $4.21 billion.

Last month, Mr Hayward signalled that the results would be poor when, in a widely leaked internal memo, he attacked BP’s recent performance as “dreadful”.

Analysts took heart yesterday from the fact that the figures were not as bad as had been expected after Mr Hayward’s comments and BP’s shares finished 5p higher at 612p. They touched 627p, the highest price for 14 months, last week.

James Neale, oil and gas analyst for Citigroup, said: “On a scale of one to ‘dreadful’, the results were not bad and the market will be relieved.

“However, anticipation levels are high that the fourth quarter will mark the start of the company’s rehabilitation.”

BP refused to add any comment to the results announcement yesterday, except to say that it hoped to achieve a number of “operational milestones” by the end of December.

These will include an increase in capacity at the Texas City refinery in America to 400,000 barrels a day – only 70,000 below full output - as well as the start of production at the vast Atlantis field in the Gulf of Mexico.

However, BP reiterated that production would not begin at Thunder Horse, another huge field in the Gulf of Mexico, until the end of 2008 – three years behind schedule.

Analysts said that both fields were key to the turnaround plan outlined by Mr Hayward two weeks ago, when he spoke of the need for a “fundamental shift” in the way BP works.

Thousands of jobs are expected to go, with up to four layers of management removed in some parts of the business, as BP frees up resources for the front line.

Yesterday’s figures showed that oil and gas production across the BP empire fell 4 per cent year-on-year to 3.65 million, below the 3.8 million-to-3.9 million average targeted for 2007 as a whole.

As well as delays to Atlantis and Thunder Horse, BP has been hit by the closure of the CATS pipeline in the North Sea and planned maintenance work in Alaska and Azerbaijan. BP’s production in Russia fell in the third quarter to 892,000 barrels per day (bpd), down from 948,000 bpd a year ago.

Refining margins were also lower and throughput fell after a series of capacity cutbacks at the Whiting refinery in Illinois.

Refining availability across the group as a whole was still just 83.4 per cent despite the gradual recomissioning at Texas City following the fatal explosion at the site in early 2005.

Trading losses meant BP’s Gas, Power and Renewables business, which is being disbanded by Mr Hayward, fell $57 million into the red in the quarter. The performance meant that BP’s profits over the first nine months of the year were down 22 per cent at $14.3 billion. Net cash flow over the nine months was £20.4 billion. Shareholders will receive a quarterly dividend of 10.825 cents per share, or 5.3p per share in sterling, both marginally higher than a year ago.

Richard Griffith, oil analyst at Evolution, said that BP’s underlying performance was 11 per cent ahead of market expectations, dubbing it a “flying start” for Mr Hayward.

However, he added: “Of more importance is how BP performs from now on as the internal programmes gather momentum. Today we may have finally passed the low water mark for BP’s quarterly results and operational performance.”

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