Despite fall in third quarter profits, the oil company's results were better than expected

BP has announced it will sell $10bn (£6bn) of assets in the next two years to fund returns to shareholders, as it continues to shrink in the wake of 2010's disastrous Gulf blowout.

The oil company has already sold $38bn of assets to pay for the damage caused by the accident at the Macondo well in the Gulf of Mexico, which killed 11 men and became the largest environmental disaster in US history. However, the proceeds from the next $10bn sale are mostly destined for shareholders.

The announcement came as BP said its underlying replacement cost profit – its preferred profit measure, which strips out the effect of oil price fluctuations – was $3.7bn (£2.3bn) for June to September, down from $5bn for the same period last year.

BP said that production for the first nine months of 2013 was 3% higher than last year. It blamed the fall in profits on weaker refining margins, selling off refineries and reduced income from its lucrative Russian business.

In March, BP sold its half of Russian firm TNK-BP to Russian state oil firm Rosneft, bringing the curtain down on a fraught but highly profitable deal with a quartet of Russian oligarchs. In return, BP picked up more shares in Rosneft, gaining a 20% stake in the world's biggest oil producer.

In a move that pleased investors, BP announced it was increasing its dividend by 5.6% to 9.5 cents a share.

With the US district court in New Orleans expected to rule early next year on the fine BP must pay under the Clean Water Act, the company faces billions in compensation costs.

BP has already set aside $42.5bn for cleanup costs, fines and compensation related to the spill.

BP and its partners face fines of as much as $1,100 for each barrel of oil released into the Gulf if they are found negligent in their actions while drilling the well and in limiting the effects of the accident. Those fines could rise to $4,300 a barrel if the responsible parties are found to have acted with gross negligence or "wilful misconduct". The US government has told the court that about 4.9m barrels escaped into the sea; BP claims 3.26m barrels were spilt.

As the second phase of the trial ended earlier this month, Louisiana's coastal protection authority reported a surge in oil washing up on its beaches this year. More than 3m tonnes of "oily material" were cleaned up in the first eight months of this year, a 20-fold increase on last year.