BP plc (BP - Get Report) posted stronger-than-expected fourth quarter earnings Tuesday, wrapping up a lucrative earnings season for western oil majors, as underlying profits surged from a year ago despite a slump in global crude prices.

BP said underlying replacement cost profits, which strip out the value of oil held in inventory, rose to $3.477 billion over the three months ending in December, up 65% from the $583 million reported over the same period last year and topping the company-supplied forecast of $2.63 billion. BP also said it will pay a 10.25 cents per share dividend, an increase of 2.5%.

"We now have a powerful track record of safe and reliable performance, efficient execution and capital discipline," said CEO Bob Dudley. "And we're doing this while growing the business - bringing more high-quality projects online, expanding marketing in the Downstream and doing transformative deals such as BHP."

"Our strategy is clearly working and will serve the company and our shareholders well through the energy transition," he added.

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BP said payments linked to the 2010 Gulf of Mexico oil spill, the biggest environmental disaster in U.S. history, topped $3.2 billion over the whole of 2018 but are likely to fall to around $2 billion, after tax, in the current calendar year.

BP shares were marked 4.6% higher by late afternoon in London and changing hands at 544 pence each, a move that extends the stock's gain from its late-December lows to around 12%.

Last week, BP's European rival, Royal Dutch Shell plc (RDS.A - Get Report) , posted its best annual profit in four years and said it would buyback $2.5 billion in shares as global crude prices continue to rise from their late December lows.

Shell said so-called 'clean cost' earnings for the three months ending in December, which strip out the movements of oil held in inventory, rose 30% from the same period last year to $5.688 million and topped the company-provided consensus of $5.28 billion.

For the whole of 2018, Shell said, profits rose 36% to $21.4 billion, the highest since 2014, as the fourth quarter earnings eased concerns that last year's slump in oil prices, which saw crude fall 41% from early October to Christmas Eve, would hammer energy sector profits. Shell also said it would pay a 47 cent fourth quarter divided.