BP will report a sharp jump in profits today, although the figure is unlikely to top the record set by rival Royal Dutch Shell last week.
Analysts have forecast pre-tax profits of $5.6bn (€4.6bn) for BP’s fourth quarter, taking annual earnings to $21.7bn (€18.1bn) - or £1.4m (€2m) an hour.
That would be a third higher than the $16.2bn (€13.5bn) it banked in 2004, but not as much as Shell’s 2005 haul of $22.94bn (€19.1bn).
Shell’s profits were a new record for a UK company, but they led to claims that the giant was profiteering at the expense of motorists and one million households in fuel poverty – accusations which Shell denied.
In a trading statement last month, BP estimated that production fell 2% in the final three months of 2005 compared with a year earlier, from 4.1 million barrels of oil per day to 4.01 million barrels.
But Barclays Stockbrokers analyst Paul Singer said the results would still be “strong” compared with the third quarter, when production dropped to 3.8 million barrels due to the devastating season of hurricanes in the United States.
BP has already warned that the hurricanes cost it more than $1bn (€834m) in 2005. Production was cut at its rigs in the Gulf of Mexico and at onshore refineries such as Texas City, where there was a fatal fire in March.
Analysts expect the fall in production to be more than offset by higher oil prices, which jumped from $45 a barrel to more than $70 in 2005.
Teather & Greenwood analyst Tanya Clarke said BP would miss its oil and gas production target because of the hurricanes, but would benefit from the oil price which was “considerably higher” than expected.
The bulk of BP’s profits come from its upstream business, which involves getting oil and gas out of the ground.
It has been boosted by the rising price of crude oil on the back of tensions in oil-producing countries such as Nigeria and Iran and the hurricanes.
As well as the size of the profits, the City will scrutinise BP’s forecast for oil and gas output in 2006 and what reserves it found in 2005, compared with how much it pumped out of the ground.
BP is the second-largest oil company in the world behind Texas-based Exxon Mobil, which made $33.86bn (€28.2bn) in its last financial year - the biggest surplus yet in corporate history.
The success of the likes of Shell and BP led Chancellor Gordon Brown to raise the supplementary North Sea charge on energy companies from 10% to 20% in November’s Budget.