BP PLC has raised its quarterly dividend by 14 per cent after posting double-digit gains in profit and revenue in the last three months of 2011 despite further big payments to compensate for the disastrous oil spill in the Gulf of Mexico.

BP also said Tuesday that it expects to complete payments to the Gulf of Mexico Trust Fund this year to cover its liability for damage from the massive blowout of the Macondo well in April 2010.

For the three months ending Dec. 31, BP reported a profit of $7.69 billion US, up 38 per cent from the $5.57 billion posted a year earlier. Revenue was up 15 per cent at $96.3 billion.

Replacement cost profit, a closely watched industry measure, was 65 per cent higher at $7.6 billion.

"2012 will be a year of increasing investment and milestones as we build on the foundations laid last year," said CEO Bob Dudley.

"As we move through 2013 and 2014, we expect financial momentum will build as we complete payments into the Gulf of Mexico Trust Fund, restore high-value production and bring new projects on stream."

For the full year, BP reported a profit of $39.8 billion compared to a loss of $3.7 billion in 2010; replacement cost profit was $23.9 billion compared with a loss of $4,914 million in the previous year.

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BP CEO Bob Dudley, shown in July, says profit growth should pick up through 2013 and 2014, as the firm completes payments into the Gulf of Mexico Trust Fund. (Ben Stansall/AFP/Getty )

And as of Dec. 31, the cumulative charges paid from the Gulf Trust fund amounted to $14.5 billion.

The hike in the quarterly dividend, to eight cents per share, is the first increase since BP resumed paying dividends a year ago.

"The dividend is still far from the historical heady heights, however, whilst the ongoing fallout from the Gulf of Mexico spill is a distraction," said Richard Hunter, head of equities at Hargreaves Lansdown.

"More positively, the fund put aside to finance these claims seems sufficient, whilst further planned divestments will enable BP to focus more strategically on higher growth opportunities."

BP closed down 0.6 per cent at $46.60 in New York.

"It was good to see a dividend increase with the results and it is a good sign of confidence in the improving operational performance," said Tony Shephard, analyst at Charles Stanley & Co., who rated the shares as "hold."

"BP's share valuation is low relative to the other oil and gas majors but it still faces uncertainty over the Gulf of Mexico tragedy."

BP has 5 rigs in the Gulf

BP faces its day in court in New Orleans on Feb. 27 with the opening of a limitation and liability trial over the spill.

BP PLC, rig owner Transocean Ltd. and cement contractor Halliburton Co. have been fighting each other over who was responsible for causing the blowout, which was finally halted in July, 2010.

U.S. investigators have said that BP bears ultimate responsibility for the spill, but has faulted all three companies to some degree.

"We continue to believe that BP will settle sooner rather than later given the U.S. presidential election and we see a 50 per cent chance this will occur in the next few weeks," said Stuart Joyner, analyst at Investec Securities.

BP has reached settlements with some of its partners and contractors including $4 billion from Anadarko Petroleum Corp., which had a 25 per cent stake in the well: $1.1 billion from MOEX, which had a 10 per cent stake; and $75 million from Weatherford International Ltd. which supplied casing components.

"As I have said before, we are prepared to settle if we can do so on fair and reasonable terms, but equally, if this is not possible, we are preparing vigorously for trial," Dudley said.

BP says it currently has five deepwater rigs working on BP-operated fields in the Gulf of Mexico plus an appraisal well. It expects to have three more rigs working in the Gulf by the end of the year.