BP said its oil and gas production fell 5 per cent in the fourth quarter of 2006 compared to the previous year.
BP said in a statement it expected fourth quarter output to drop to around 3.82 million barrels of oil equivalent per day (boepd), due to lower Alaskan output, a mild northern hemisphere winter and Opec members limiting output to support oil prices.
Shares in the world's third-largest western oil company by market capitalisation fell 1.7 per cent to 544 pence each earlier this morning, compared to a 0.52 per cent drop in the DJ Stoxx European oil and gas sector index. BP was the biggest blue-chip loser in an overall stronger European stock market.
The result represents the London-based company's sixth quarter of falling output, and puts production for all of 2006 at around 3.92 million boepd, down 2.3 per cent on 2005.
At the start of 2006, BP aimed for production of 4.1 to 4.2 million boepd but in October scaled this back to 3.95 million boepd, as pipeline corrosion forced it to slash output at the largest oil field in the United States at Prudhoe Bay, Alaska.
The pipeline corrosion, criticism from regulators over a fatal explosion at BP's Texas City refinery and accusations of fuel market manipulation hit BP's shares in 2006, wiping out a premium, on a price-earnings basis, that BP's shares had enjoyed over most rivals.
Project delays and falling production have also prompted investors to question BP's once-lauded management.
However, many western oil firms are struggling to grow output, as resource-holding governments restrict the majors' access to their biggest fields, and the cost of exploration soars.
Investors hope BP will return to growth in 2007, but analysts say they may have to wait until the second half of the year to see it.