NEW YORK ( TheStreet) -- BP ( BP) reported profit of $7.1 billion in the first quarter, a rise of more than $1 billion from the year-ago period, but its replacement cost profit slipped from $5.6 billion to $5.5 billion year over year. High oil prices and the spread between WTI crude and Brent crude also helped refining profit to more than double quarter over quarter to more than $2 billion, and was almost three times the level of year-ago refining profit of $729 million. BP has been aggressively selling off assets to meet its target of $30 billion in asset sales to cover Gulf of Mexico oil spill liabilities. BP has also benefited, like all oil companies, from rising oil prices. Both of these factors are evident in the $7.1 billion profit. However, the decline in replacement cost profit year over year indicates that the lower production after selling off assets and oil spill charges continue to weigh on BP. The effective tax rate for replacement cost profit increased to 37% in the first quarter, from 34% a year ago. BP shares were rising by 1.5% in early trading on Wednesday. As BP sheds assets, replacing lost production has been highlighted as a key issue for the company. All major oil companies have as a No. 1 priority replacing production over the long term. In the case of BP, the key issue has been linked lately to the headlines from Russia and BP's inability to seal a deal with Rosneft for Arctic exploration. BP took an additional $400 million charge in the first quarter related to the BP oil spill, on top of the $41 billion BP has already written off related to spill liabilities, a minor increase in the oil spill write-off level compared to the previous two quarters. BP's revenue of $88.3 billion was ahead of the Wall Street consensus of $71 billion, buoyed by the asset sales. BP's earnings of $1.75 per ADS in the first quarter were short of the Wall Street consensus of $1.89. BP kept its dividend rate at the same 42 cent per ADS level at which it reinstated the dividend last quarter. BP production was at 3.58 million barrels of oil equivalent per day, an 11% decline, which after accounting for the divestitures, was reduced to 7%. In exploration and production specifically, BP replacement cost profit before interest and tax for the first quarter was $8.4 billion, compared with $8.3 billion for the same period in 2010. Lower production volumes (including from the impact of divestments), higher costs (including rig standby costs in the Gulf of Mexico), higher exploration write-offs and a lower contribution from gas marketing and trading were factors cited by BP in the first quarter results. BP said the production fall of 11% versus the first quarter 2010 was weighted toward its highest margin areas and primarily reflects the impacts to the Gulf of Mexico production as a result of the drilling moratorium, as well as higher turnaround and maintenance activity in the North Sea and in Angola, and the Trans-Alaska Pipeline System interruption, partly offset by first production from Iraq. BP said in its earnings, "Looking ahead, we expect second-quarter production to reflect the continued impact on operations in the Gulf of Mexico following the drilling moratorium, the impact of acquisitions and divestments, and the seasonal ramp-up in turnaround activity, which is expected to be higher than in 2010." In refining, BP sounded a note of caution after the huge first quarter profit surge, saying in its earnings release, "looking ahead, we expect the supply and trading contribution in the second quarter to be lower than the very strong firstquarter performance. In the fuels value chains, WTI differentials may narrow somewhat compared with recent levels, reducing the benefit to our US Midwest refineries. We expect the usual seasonal improvement in refining margins in the second quarter but anticipate some softening in petrochemicals margins." -- Written by Eric Rosenbaum from New York.