INSTANT VIEW - BP says profit rises

LONDON (Reuters) - Oil major BP (BP.L) reported a sharp rise in its second-quarter net profit on Tuesday, beating analysts expectations thanks to high oil prices.

The company said its replacement cost (RC) net income, which strips out unrealised gains from changes in the value of fuel inventories, rose 6 percent to $6.85 billion (3.44 billion pounds).

The RC result was dampened by a $2 billion non-cash charge related to long-term gas sales contracts which accounting rules force BP to treat as derivatives and value using spot prices.

Excluding these charges and one-off items such as field sales, the RC result was $8.63 billion, ahead of an average forecast of $7.70 billion in a Reuters poll of nine analysts.

Oil prices averaged over $120 a barrel in the second quarter -- almost double the level in the same period of 2007 -- before rising to a record high above $147/barrel on July 11.

COMMENTARY:

DAVID BUIK - BGC PARTNERS:

"But for the market, which is in poor shape due to weak sentiment, these are an outstanding set of results. They need to be, as the share price has dropped in the last six months. The 28 percent gain in net income is excellent. It's good to see BP's oil fields in Texas and Canada coming onfield as they need them until this spat with (Russia's) TNK is sorted out, which is decidedly ugly.

"All in all, (Chief Executive) Tony Hayward has realised what the problem is, and they are trying to create revenue streams in areas that are not dominated by Russia. But unfortunately, TNK-BP is responsible for as much as 23 percent of income.