Chief Executive Bob Dudley said on Tuesday BP was ready to settle on "fair and reasonable terms" but added he was also ready to fight.

The comments came as the company unveiled fourth-quarter results which showed its estimate for the total cost of the spill rose by $1.8 billion in 2011 to $43 billion. Some analysts think the final figure could be much higher.

The increased estimate reflected higher costs of shoreline clean up, which BP said was now largely complete, and a new $500 million charge related to legal costs beyond 2012.

BP had already set aside over $1 billion to pay its lawyers, suggesting the disaster will end up a major boon for attorneys.

The London-based oil giant said it faced around 600 civil lawsuits from people in states as far away as South Carolina and Kentucky, as well as litigation from the government and Gulf Coast states.

Europe's second-largest oil group by market capitalization said contributions from its partners in the blown-out Macondo well, Anadarko Petroleum and Japan's Mitsui, would reduce the final bill it faced.

The over $5 billion BP has received has contributed to the $20 billion fund created to compensate those impacted by the United States' worst-ever offshore oil spill, and will allow BP to end its own payments into the fund in 2012, a year earlier than expected.

Progress in meeting the costs of the spill allowed BP to announce an increase in its dividend, which had been cut at the height of the spill in 2010.

BP lifted the quarterly payout to 8 cents a share from 7 cents, backed by strong cashflows due to higher oil price.

BP said its replacement cost (RC) net profit rose 65 percent compared to the same period last year, to $7.61 billion in the quarter, boosted by a $4 billion contribution from Anadarko.

Stripping out one-offs, the result rose 14 percent to $4.99 billion, in line with an I/B/E/S consensus forecast of $4.89 billion. Rival Royal Dutch Shell Plc reported an 18 percent rise in underlying profits in the quarter while industry leader Exxon Mobil only managed a 2 percent rise.

BP's muted increase was despite a lower than expected tax rate, and a 26 percent rise in the Brent crude price in the quarter compared to the same period of 2010.

BP shares traded up 0.4 percent at 492 pence at 3:40 a.m. ET, outstripping a 0.1 percent rise in the STOXX Europe 600 Oil and Gas index.

(Editing by Mark Potter)

• A Permanent Economic Emergency