Profit attributable to shareholders fell to US$2.88 billion (EUR 2.23 billion) from (US$3.69; EUR 2.85 billion) in the fourth quarter of 2005. Revenue for the fourth quarter, including asset disposals, rose 1.6 percent to US$63.8 billion (EUR 49.3 billion).
For the full year, profit rose 15 percent to US$22.253 billion (EUR 17.2 billion).
"The fourth-quarter result reflects the recent declines in the overall price and margin environment, as well as operational factors and increased safety and integrity investments," said Chief Executive John Browne, who will be retiring in July.
"Our record full-year replacement cost profit and operating cash flow supported the group's capital program and increased dividends and share buybacks."
The shares declined 1.1 percent on the London Stock Exchange to 535.5 pence (EUR 8.12; US$10.51).
BP has recently struggled with a series of troubles including the temporary closure of some operations at the Prudhoe Bay oil field in Alaska and delays to the opening of the key Thunder Horse platform in the Gulf of Mexico, as well as problems stemming from a 2005 explosion at a Texas refinery that killed 15 workers, reports AP.
"BP must be relieved that along with these numbers 2006 can finally be consigned to history," said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers in London. "On balance, the market consensus is cautiously positive and BP is still generally preferred to Royal Dutch Shell as the core holding in the sector."
BP's output averaged 3.84 million barrels of oil equivalent per day in the quarter, down 5 percent from a year earlier. The company said the drop reflected divestments and reduced entitlements from production-sharing agreements.
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