BP Stock Drops 5% as Company Suspends Share Buyback Program

TLDR

• BP suspended share buybacks to strengthen its balance sheet as oil prices remain under pressure from oversupply concerns.
• The British energy company reported Q4 profit of $1.54 billion, matching forecasts but down from $2.21 billion in Q3.
• Shares fell 5.4% in London trading after the buyback suspension announcement, with U.S. shares down 6% pre-market.
• Full-year profit dropped to $7.49 billion from nearly $9 billion in 2024 as crude prices weighed on results.
• BP increased its cost-reduction target to $5.5-6.5 billion by 2027 while new CEO Meg O’Neill takes over April 1.

BP shares slid Tuesday after the oil major announced it would suspend share buybacks and allocate excess cash toward strengthening its balance sheet. The move comes as lower crude prices continue to pressure energy sector profits.

The company reported fourth-quarter underlying replacement cost profit of $1.54 billion, in line with analyst expectations. However, this represented a sharp drop from $2.21 billion in the previous quarter.

BP shares fell 5.4% in London trading, landing near the bottom of the pan-European Stoxx 600 index. U.S.-listed shares dropped 6% in pre-market activity.

BP p.l.c., BP

The board decided to suspend buybacks and redirect excess cash to accelerate balance sheet improvements. BP’s most recent buyback totaled $750 million, announced with Q3 results in November.

Lower upstream realizations drove the quarterly profit decline. An unfavorable production mix and reduced refinery throughputs also hurt results.

A temporary outage at the Whiting refinery further impacted performance. Seasonally lower customer volumes added to the headwinds.

Full-Year Results Miss Expectations

BP’s full-year 2025 net profit came in at $7.49 billion, missing the $7.58 billion analyst consensus. This marked a decline from nearly $9 billion in 2024.

The company declared a Q4 dividend of 8.320 cents per ordinary share. The stock currently offers a dividend yield of 5.6%.

Fourth-quarter net debt stood at $22.18 billion, down from approximately $23 billion in the year-ago period. Operating cash flow reached $7.6 billion, up from $7.43 billion a year earlier.

BP set its 2026 capital expenditure budget at $13-13.5 billion, at the lower end of guidance. The company raised its structural cost-reduction target to $5.5-6.5 billion by end of 2027, up from the previous $5 billion target.

Oil Sector Faces Broader Challenges

Oil prices recorded their largest annual loss since the Covid-19 pandemic in 2025. Oversupply concerns have intensified pressure on energy companies to maintain shareholder returns.

BP’s competitors Shell and Equinor both posted weaker quarterly earnings last week. Lower crude prices ranked among the primary factors cited.

Equinor slashed its 2026 share buybacks to $1.5 billion from $5 billion in 2025. The Norwegian company is also reducing investments in renewables and low-emission energy initiatives.

Shell maintained buybacks at $3.5 billion, marking its 17th consecutive quarter of $3 billion or more in repurchases. The different approaches highlight varied strategies for navigating current market conditions.

Interim CEO Carol Howle noted progress on key priorities including cash flow growth, enhanced returns, cost reduction, and balance sheet strengthening. “We are clear on the urgency to deliver,” Howle said in a statement.

Woodside Energy’s Meg O’Neill will assume the CEO role on April 1, replacing Murray Auchincloss who stepped down in late 2025. Wall Street analysts maintain a Hold consensus rating on BP with an average price target of $40.31, suggesting roughly 3% upside potential.