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By Bloomberg

BP Plc said fourth-quarter profit fell as oil prices slumped, forcing Europe’s third-largest oil company to cut spending.

Profit adjusted for one-time items and inventory changes dropped to $2.2 billion from $2.8 billion a year earlier, the London-based company said in a statement today. That beat the $1.6 billion average forecast of 13 analysts surveyed by Bloomberg. The results were bolstered by better-than-expected income from BP’s 20 percent holding in Russia’s state-run oil producer OAO Rosneft.

A slump in oil prices to less than $50 a barrel from more than $100 seven months ago has forced producers to review projects, slash spending and sell assets as they try to safeguard returns to investors. BP Chief Executive Officer Bob Dudley told staff last week their pay will be frozen this year, while the company cut jobs in the North Sea, Azerbaijan and Trinidad and Tobago.

“We have now entered a new and challenging phase of low oil prices through the near and medium term,” Dudley said in the statement. “Our focus must now be on resetting BP: managing and re-balancing our capital program and cost base.”

BP shares rose as much as 5.8 percent, the most in more than a year, to 463.1 pence in London and traded at 455.5 pence at 8:25 a.m. London time.

Even so, the producer reported a $4.4 billion net loss in the quarter after writing down the value of oil and gas fields because of lower oil prices.

Spending Cut

BP expects to cut spending to $20 billion this year, compared with previous guidance of $24 billion to $26 billion. It spent about $23 billion in 2014.

BP had a contribution of $470 million from its shareholding from Rosneft, Russia’s largest oil producer. That compares with $1 billion a year ago and was higher than analysts had expected.

The company maintained its dividend at 10 cents a share from the previous quarter.

“The dividend remains the first priority,” Dudley said.

The company is trying to shore up its balance sheet with asset sales after the Gulf of Mexico oil spill in 2010 that led to a $43 billion provision to cover costs. Last month, a judge ruled that less oil was spilled than the U.S. government estimated. The third phase of the trial, which determines how much BP must pay, began almost two weeks ago.

The company has sold more than $4 billion of assets in a $10 billion sale program planned for 2014 and 2015.

BG Group Plc, the U.K.’s third-largest oil and gas company, posted a net loss of $5 billion today after reporting impairments of its Australian gas assets.

Royal Dutch Shell Plc, Europe’s largest oil company, last week said fourth-quarter adjusted profit rose to $3.3 billion from $2.9 billion and the company cut its budget by $15 billion over the next three years.