LONDON (Reuters)—BP P.L.C. ratcheted up the rhetoric around multibillion-dollar claims from the Gulf oil spill by warning it would "vigorously" contest lawsuits over one of the world's worst environmental disasters.

While reiterating BP's "bias for settling" at hearings scheduled later this month, CEO Bob Dudley said he would only do so "on fair and reasonable terms."

As he unveiled higher fourth-quarter profit on Tuesday and a rise in the dividend, which he said showed BP was putting the spill behind it, Mr. Dudley acknowledged the lawsuits were the biggest uncertainty facing the British oil major.

"We have many people who do say, we are interested in investing in BP but not until all this is behind you," he told a press conference.

BP faces 600 civil lawsuits from people in states as far away as South Carolina and Kentucky, as well as litigation from the U.S. government.

"We always have had this bias toward settling and moving on, and reducing uncertainty," Mr. Dudley said.

But he added, "We are preparing vigorously for trial. We have confidence in our case."

Analysts at Morgan Stanley have predicted BP will agree to pay the U.S. government $20 billion to $25 billion in the coming weeks to settle fines and natural resources damages, but Alastair Syme, oil analyst at Citigroup Inc., said he expects the case to go to trial as planned on Feb. 27.

BP, Europe's second-largest oil company by market value, also lifted its estimate of the total cost of the United States' worst-ever offshore oil spill by $1.8 billion to $43 billion due to higher costs for shoreline cleanup, which BP said was now largely complete, and a new $500 million charge for legal fees.

By contrast, BP's statement showed the company has valued the doomed Macondo prospect at just $400 million.

The disaster forced a major restructuring at London-based BP, but Mr. Dudley said the group was returning to growth and that 2012 would be a "year of milestones" after a "year of consolidation" in 2011.

Underscoring its confidence, BP increased its quarterly dividend to 8 cents a share from 7 cents, backed by strong cash flows due to higher oil prices.

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"It is a good sign of confidence in the improving operational performance," said Tony Shepard, oil analyst at Charles Stanley & Co. Ltd.

BP's 14-cents-a-share quarterly payout was cut at the height of the spill and reintroduced at half that level in 2011.

BP said its replacement cost net profit rose 65% compared with the same period last year, to $7.61 billion in the quarter, boosted by a $4 billion contribution from Anadarko Petroleum Corp., which had a stake in Macondo, towards cleanup costs.

Stripping out one-offs, the result rose 14% to $4.99 billion, in line with an I/B/E/S consensus forecast of $4.89 billion.

Rival Royal Dutch Shell P.L.C. reported an 18% rise in underlying profit in the quarter, while industry leader Exxon Mobil Corp. managed only a 2% rise.

Replacement cost profit excludes gains or losses related to changes in the value of fuel inventories and so is comparable with net income under U.S. accounting rules.

BP's muted increase was despite an unusually low tax rate, higher gas prices and a 26% rise in the Brent crude price in the quarter compared with the same period of 2010.

Lower production weighed on the fourth-quarter result, with assets sales—in part to help pay for the oil spill—pushing output down 5.1% to 3.49 million barrels of oil equivalent per day in the quarter.

Mr. Dudley said he expected output to fall further in 2012, despite investor hopes that BP's smaller asset base would facilitate higher growth.

Echoing a trend across the sector, BP said it was lifting its capital expenditure budget for 2012, as it invests more in exploration and production.

Some analysts have questioned whether the additional spending will generate the same returns oil giants like BP, Shell and Exxon have enjoyed in the past.

Mr. Dudley said that, over time, upstream oil and gas assets offered returns of around 15%, and that the expected this to continue going forward.

In the latest sign the British oil group is getting back to business in the Gulf of Mexico, BP said it had sanctioned a major new project in the area.

BP said over $5 billion of contributions from its partners in the blown-out well, Anadarko and Japan's Mitsui, meant it would be able to end its own payments into a $20 billion compensation fund in 2012, a year earlier than expected.