(CNN) -- Oil company BP posted increased fourth quarter profits and raised its dividend on Tuesday, hailing the improved result as a turning point in the long climb back from Gulf of Mexico oil spill of 2010.
Net income rose to $7.7 billion from $5.6 billion in the fourth quarter of 2010, the company said in a statement. The dividend was raised 14% to 8 cents a share.
Chief executive officer Robert Dudley said the third quarter result was a tipping point for the company and that production and profit would begin to increase.
"2012 will be a year of increasing investment and milestones as we build on the foundations laid last year," Dudley said in a statement.
"As we move through 2013 and 2014, we expect financial momentum will build as we complete payments into the Gulf of Mexico Trust Fund, restore high-value production and bring new projects on stream."
The Gulf of Mexico oil spill blighted the fortunes of Europe's second-largest oil company, forcing it to shut down fields for safety reviews and sell assets to raise cash. Its share price is on average more than 30% lower since the spill, and the company has had to set aside $40 billion to pay for damages and legal bills.
The company had earlier increased the asset-sale target to about $38 billion, and plans to dispose of the Texas City and Carson refineries by the end of this year.
Dudley pledged to increase the company's cash flow by 50% by 2014 by focusing on the most profitable production projects.
Fourth-quarter earnings, adjusted for one-time items and changes in inventory, were $5 billion, compared with $4.36 billion a year earlier.
Operating cash flow generated by BP in 2011 reached about $22bn -- more than 60% higher than in 2010. Dudley said that net cash flow in 2014 -- in a $100 oil price environment -- would be around 50% higher than in 2011.
Half of the additional cash is expected to be used for re-investment and half for other purposes including increased shareholder distributions.
The company also announced a 14% increase in its quarterly dividend -- to 8 cents per share for the fourth quarter of 2011 -- the first rise since the company resumed paying a dividend a year ago.
Looking forward, BP said it plans to drill 12 exploration wells, double the 2011 total, and to be operating with eight rigs in the Gulf of Mexico -- up from the current five deepwater rigs working on BP-operated sites - by the end of the year.
"We now have a robust pipeline of opportunities with exploration prospects that will generate new resources and projects well into the next decade. We will see a continued ramp up of exploration over the next two to three years," Dudley said.