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BP: Catching Up to ExxonMobil?

The British energy major has fields on tap; it's boosting refining and cutting costs. But it has miles to go to beat the U.S. giant's profits

Tony Hayward, the new chief executive of energy giant BP (BP), has a long way to go if he's going to come anywhere close to the financial performance of top rival ExxonMobil (XOM). That was clear from BP's results for 2007, which Hayward announced at BP's London headquarters on Feb. 5. The company's net profit from continuing operations for the year was $21.2 billion, a 5% decline from 2006. ExxonMobil, by contrast, had net income in 2007 of $40.6 billion, up 3%.

Still, Hayward is upbeat, probably because he thinks he can improve BP's results fairly easily. If the new CEO can fix BP's U.S. refining and marketing operations and get the huge, but delayed, Thunderhorse deep-water oil and gas drilling platform in the Gulf of Mexico on stream, there is considerable upside potential for BP—though maybe not enough to close the gap with ExxonMobil. One sign of his optimism: Hayward is hiking the dividend 31%, to 13.525 cents per share, though he says share buybacks likely will decrease. BP shares climbed as much as 3.5% in London trading on Feb. 5 before settling down nearly unchanged.