Oil giant BP Plc reported a 53 percent drop in second quarter net replacement cost profit to $3.14 billion on Tuesday, due to a halving in crude and gas prices and weaker refining margins.

Excluding one-off items, which represented a net gain of $202 million, the RC result, which strips out unrealized gains or losses related to changes in the value of inventories, was $2.94 billion.

This was ahead of an average forecast of $2.81 billion, from a Reuters poll of eight analysts, for second quarter replacement cost net income at Europe's second largest oil company by market value.

Chief executive Tony Hayward said in a statement that he expects cash costs for the full year to be down by more than $3 billion compared with 2008.

BP is the first of the top tier of Western oil companies , known as the five Supermajors, to report their second quarter results.

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