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BP CHOOSES GROWTH OVER DIVIDENDS

BP will likely pay a much smaller dividend and spend more on oil exploration as it remakes itself into a leaner, more growth-oriented company following the Gulf of Mexico oil spill, its new chief executive said Tuesday.

CEO Bob Dudley's remarks came in an interview as BP raised its estimate of the spill's cost by $7.7 billion to nearly $40 billion, and posted a two-thirds decline in net profit for the third quarter, as the Deepwater Horizon disaster continued to haunt the company.

The British oil giant remains in recovery mode six months after its Gulf of Mexico oil well blew out, killing 11 workers and triggering the worst offshore spill in U.S. history. Its market value has fallen by more than a third since April 20, the day of the blowout.

In late-afternoon trading on the New York Stock Exchange, BP's American depositary shares were up 1.6% at $41.44.

As cleanup costs escalated over the summer, BP suspended its dividend and announced a $30 billion asset-disposal program. Those moves fundamentally changed a company that had long prided itself on its rich payout and strong production growth.

Last year BP spent $10.9 billion on dividends and produced about four million barrels of oil and natural gas a day, more than most of its major rivals, but asset sales will reduce its output. Some industry watchers have said BP's devotion to a high dividend had limited what it could spend on finding new sources of oil and gas. Last year BP's dividend accounted for one-seventh of the total payouts by companies in London's FTSE 100 index.