OIL major BP smashed market expectations yesterday as it released third-quarter profits that were down year-on-year but still managed to wow investors.<br /><br />Profits were down 50 per cent from the $10bn (£5.8bn) it reported a year ago, at $4.98bn. This was because oil now trades at around $80 a barrel, plummeting from a peak of $147 a barrel last July. Analysts had expected just $3.2bn in profits.<br /><br />Shares in the company closed up five per cent at 594.4p.<br /><br />“It is now two years since Tony Hayward, chief executive at BP, said he would restructure the company in order to increase efficiency, and the strategy is now beginning to show results after a difficult few years,” IHS Global Insight analyst Thomas Pearmain said.<br /><br />Haywood has been striving to simplify the organisational complexity of BP, putting his own mark on the company since he took over from Lord Browne in May 2007. Haywood said he expects to cut costs by a total of $4bn by the end of this year.<br /><br />“Cash costs are down by more than $3bn compared with the same period last year, which indicates that the efficiency drive that Hayward has implemented is making strong progress,” Pearmain added.<br /><br />BP also said unit production costs were down 18 per cent from the same period last year, while oil and gas production went up seven per cent.<br /><br />Net income at the group’s Russian joint venture TNK-BP hit $1.7bn, up 34 per cent, and BP said the arm was well-positioned to produce a solid performance for the year.<br /><br />The TNK-BP project had hit trouble after a falling out between BP and Russian shareholders. The matter was resolved when TNK-BP chief executive Robert Dudley stood down. BP is the first of the oil majors to report this week, with ExxonMobil and Shell still to come.