BP halts share buybacks as it takes £3bn hit from green energy push
BP has paused share buybacks and hiked its cost savings target as it revealed sharply lower annual profits amid steep falls in oil prices.
The FTSE 100 oil giant unveiled a 16 per cent drop in underlying replacement cost profits, the firm's preferred earnings measure, to $7.49billion (£5.48bn), down from $8.9billion (£6.51bn) in 2024.
It came after earnings fell 30 per cent between the third and fourth quarter to $1.54billion.
In a blow to investors, it said it was suspending its share buyback programme 'to accelerate strengthening' of its balance sheet.
The group said: 'This creates a strong platform to invest with discipline into our distinctive deep hopper of oil and gas opportunities.'
It came after BP booked a $4billion (£2.9bn) impairment charge for its gas & low carbon energy segment.
It added that there was a further $1.082bn pre-tax impairment charges in the fourth quarter, primarily relating to its renewable gas and offshore wind businesses.
Top job: Woodside Energy boss Meg O’Neill will start as BP's chief executive in April 2026
BP is redirecting spending from lower-carbon businesses to its oil and gas segments to boost profitability under new chairman Albert Manifold, who has called for cost-cutting to revitalise the firm.
BP said it was now targeting cost savings of $5.5billion to $6.5billion (£4.02bn-£4.75bn) by the end of next year, up from a previous target of up to £3.65 billion.
BP shares fell 4.35 per cent or 20.78p to 456.87p on Tuesday.
It comes after a challenging year for BP, which has come under pressure from activist investor Elliott Investment Management and saw its chief executive, Murray Auchincloss, step down after less than two years in the job.
The company embraced alternatives under the leadership of Bernard Looney but he left under a cloud in 2023 over the disclosure of relationships with BP colleagues.
BP changed course under pressure from major investors as its share price long lagged growth seen by all its major rivals, including Shell.
Meg O’Neill has been appointed to replace Auchincloss and will start in the role on 1 April. She is expected to lead BP's pivot away from green energy.
Carol Howle, who is taking the helm on an interim basis, said: 'We have made progress against our four primary targets – growing cash flow and returns, reducing costs, and strengthening the balance sheet – but know there is more work to be done, and we are clear on the urgency to deliver.
'With a continued emphasis on capital discipline and returns, we are reducing capital expenditure for 2026 to the lower end of the guidance range, while continuing to drive down our cost base.
Adam Vettese, a market analyst for eToro, said: 'BP’s results this morning underline a business that is holding up operationally, but still struggling to convince investors it has a clear growth story.'
He added: 'One of the more controversial aspects of the update is the decision to pause share buybacks.
'While management is framing this as balance sheet discipline, for many shareholders it removes an important support for the share price and raises questions about confidence in future cash flows. Net debt remaining largely flat will also concern investors who had expected more progress on deleveraging.'
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