BP halts share buy-backs as annual profits slide
BP has halted share buybacks after reporting weaker annual profits as it prepares to continue a plan to resuscitate its fortunes under a new chief executive.The company became the first large oil company to suspend its buybacks after its underlying earnings fell to just below $7.5bn (£5.5bn) for 2025, down from almost $9bn for 2024.Oil companies have reported weaker profits over the last year after global prices fell for a third consecutive year and at the steepest rate since the Covid pandemic.
Brent crude was trading at about $69 a barrel on Tuesday.BP’s largest rivals, ExxonMobil, Chevron and Shell, have continued their share buy-back programmes despite falling oil prices, but the market downturn has proved particularly difficult for BP after it U-turned on green investments and was forced to write down the value of its renewables business by $3.1bn.BP said in response it would suspend quarterly share buy -backs from investors for the first time since the early stages of the pandemic, when a global collapse in oil prices forced the 116-year-old company to a record loss.The decision contributed to a near 5% fall in BP’s share price on Tuesday, and the decision to suspend its buy-backs for the rest of the year is expected to pile pressure on the company to win over investors with a new strategic vision after its failed attempt to pursue a green agenda.
Its incoming chief executive, Meg O’Neill, the former head of the Australian oil company Woodside Energy, will take up her role in April as BP’s third boss in as many years,O’Neill is the company’s first external hire for its top job, and she will work alongside the new chair, Albert Manifold, who joined BP in October, to bring “rigour” to its turnaround plan while continuing to face pressure from activist shareholders who are pushing it to prepare for a long-term decline in fossil fuel demand,BP’s interim chief executive, Carol Howle, said the company had made progress on its four primary targets: to grow its cashflows; increase shareholder returns; reduce costs; and strengthen its balance sheet through asset sales,“There is more work to be done, and we are clear on the urgency to deliver,” she said,“We are in action and we can and will do better for our shareholders.
”Share buy-backs have emerged as an increasingly important lever for oil companies to maintain investor support.Buying back shares is considered a more tax-efficient way to offer returns, while in the long term it could make paying dividends cheaper.BP is expected to use the cash it saves to invest in growing its fossil fuel production assets.The company commissioned seven new oil and gas projects last year as part its plan to return its focus to fossil fuels after trying to move into big renewable energy investments.Five of the seven projects were delivered ahead of schedule.
It said fourth-quarter earnings had fallen 30% quarter-on-quarter to $1.54bn, though this was 32% higher than a year earlier and in line with City expectations.BP will also face pressure from investor groups that have criticised the decision to turn away from green investments.“BP is in dire straits because the company has drifted without a consistent strategic direction,” said Mark van Baal, the founder of the shareholder activist group Follow This.The group has filed a resolution before BP’s annual investor meeting in April calling for the company to disclose its strategy for creating shareholder value under scenarios of declining demand for fossil fuels.
“After a half-hearted energy transition, the company is now doubling down on fossil fuels in a market that will soon start to shrink,” Van Baal said.“If BP cannot grow profits and restore its dividend in a growing market, how will the company create shareholder value in a declining one?”Shell reported a 22% fall in adjusted earnings to $18.5bn (£13.6bn) for 2025 last week, but announced $3.5bn-worth of share buy-backs – its 17th consecutive quarter of at least $3bn of buy-backs.
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