(RTTNews) -  British oil giant BP Plc (BP: News ,BP.L: News ) reported Tuesday a 33.7% fall in profit for the third quarter, as a 7% growth in production was offset by lower oil and gas prices. Replacement cost profit, excluding inventory holding gains and losses, declined 50%. However the company said its underlying profits were well above market estimates, on strong operational and cost performance.

Third-quarter profit attributable to BP shareholders was $5.34 billion or 28.18 cents per share, compared with $8.05 billion or 42.56 cents per share last year. On American Depository share, or ADS basis, quarterly profit was $1.71 per basic share, lower than prior year's $2.58 per basic share.

The company noted that its underlying profits of $4.7 billion for the third quarter were well above market estimates. Underlying replacement cost profit for the quarter fell 47%, largely due to around 50% fall in average hydrocarbon prices.

The company noted that non-operating items and fair value accounting effects for the third quarter had a net $307 million favorable impact, compared to a net $1.15 billion favorable impact in the previous year.

BP's third-quarter replacement cost profit, which reflects the replacement cost of supplies and excludes inventory holding gains and losses, was $4.98 billion or 26.59 cents per basic share, down 50% from last year's $10.03 billion or 53.43 cents per basic share. Replacement cost profit for the period was $1.60 per basic ADS, down from $3.21 per basic ADS a year earlier.

On average, six analysts surveyed by Thomson Reuters expected the company to post earnings of $1.04 per share for the quarter. Analysts' estimates typically exclude special items.

BP said its earnings benefited from a greater percentage of higher-margin barrels, in particular from the Gulf of Mexico, as well as good performance from TNK-BP.
In the quarter, pre-tax profit fell to $7.59 billion from $12.29 billion in the prior year quarter, and profit before interest and taxation declined to $7.90 billion from $12.53 billion a year ago. Replacement cost profit before interest and tax was $7.36 billion, lower than last year's $15.50 billion.

Total revenues and other income for the quarter declined to $67.86 billion from $104.83 billion in the year ago quarter. Total third party sales and other operating revenues were $66.22 billion, down from $103.17 billion in 2008.

According to chief executive Tony Hayward, the quarterly results reflected another quarter of very good progress, and that strong operational and cost performance had helped offset a tough external environment including weak gas prices and refining margins.

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