Updated from 3:31 a.m. EDT

LONDON (

TheStreet

) --

BP

(BP) - Get Report

, the European oil giant, reported third-quarter earnings fell 34% on lower oil prices, but the results were ahead of forecasts as it controlled costs and improved upstream production volumes.

BP said output at its exploration and production segment rose 7% from a year earlier and unit production costs were down 18%.

Third-quarter earnings were $5.34 billion, or $1.71 per American depositary share, compared with year-earlier earnings of $8.05 billion, or $2.58 per ADS.

Replacement cost profit in the third quarter was $4.98 billion, down more than 50% from $10.03 billion last year.

Excluding one-time items, earnings were $4.67 billion. Analysts surveyed by Thomson Reuters has expected earnings on this basis of $3.16 billion.

Total revenue in the quarter was $67.9 billion vs. $104.83 billion in the same period in 2008.

Crude oil for December delivery was trading Tuesday at $78.85, up 17 cents. The average price of oil during BP's third quarter was just above $68 a barrel. In July 2008 a barrel of crude oil traded at more than $147 a barrel.