BP Halts Share Buybacks as Profits Slide on Weak Oil Prices

BP, the UK oil and gas company, said on Tuesday it will stop buying back its own shares. This comes after it posted a fourth-quarter loss of $3.4 billion. The firm wants to use extra cash to build up its balance sheet and chase new oil and gas projects. Lower oil prices and big write-downs hit its results hard. The move marks a change from past habits of returning cash to investors.

Background

BP has faced tough times in the energy market for months. Oil prices stayed low through much of 2025, squeezing profits for companies like BP. The firm reported full-year underlying replacement cost profit of $7.5 billion for 2025. That is down from $8.9 billion in 2024. Weaker prices played a big role in the drop.

The company has a history of share buybacks to boost shareholder value. In the third quarter of 2025, BP spent $750 million on repurchases. Before that, it cut the amount from $1.75 billion in early 2025. The last time BP skipped a buyback entirely was in 2020. That was during the early days of the coronavirus pandemic when oil prices crashed.

BP also deals with a shift in energy markets. It has pushed into low-carbon areas like solar and biogas. But those parts of the business took hits recently. The company sold a minority stake in its US onshore oil fields for $1.5 billion. It aims to sell more assets as part of a $20 billion disposal plan.

A new CEO, Meg O'Neill, starts in April. She takes over from interim leader Carol Howle. BP's board made the buyback decision now to set up the company for her arrival.

Key Details

BP's fourth-quarter results showed mixed numbers. The underlying replacement cost profit, a key measure that strips out one-off items, came in at $1.54 billion. That matched what analysts expected and marked a 32% rise from the year before. But it fell from $2.2 billion in the third quarter.

The overall loss hit $3.4 billion, compared to a $1.2 billion profit in the prior quarter. Adjusting items totaled $4.3 billion, mostly impairments. BP wrote down $4.2 billion across its businesses. The biggest charges came from its solar unit Lightsource BP and US biogas firm Archaea.

Revenues and other income dropped to $47.74 billion from $48.09 billion a year earlier. Sales grew slightly to $47.38 billion, beating some forecasts. But joint ventures lost $1.04 billion, dragging results down.

BP pointed to several reasons for the weaker performance. Lower oil prices hurt. Upstream production mix was not favorable. Refineries ran at lower levels due to maintenance work.

Cost Cuts and Cash Plans

BP raised its targets for cutting costs. It now aims to save $5.5 billion to $6.5 billion by the end of 2027. Capital spending for 2026 will stay at the low end of its planned range.

The firm completed repurchases worth $750 million in the last three months. Now, all excess cash goes to the balance sheet. Divestments have brought in over $11 billion so far. That includes $6 billion expected from selling a 65% stake in Castrol. For 2026, BP expects $9 billion to $10 billion more from sales, mostly in the second half.

Operations showed strengths. Upstream plant reliability hit a record 96.1% for the full year. BP finished seven major projects in 2025.

"We are taking decisive action to high-grade our portfolio and strengthen our company, including the execution of our $20 billion disposal programme and the decision to suspend the share buyback," said Carol Howle, interim chief executive officer.

BP kept its dividend steady at 8.32 cents per share.

What This Means

The buyback halt shifts BP's focus from quick returns to long-term stability. Shareholders who counted on repurchases may see less immediate value. But a stronger balance sheet could help BP grab oil and gas deals in a low-price world.

Lower oil prices continue to pressure energy firms. BP expects upstream production to stay flat in early 2026. Customer business volumes will dip seasonally in the first quarter.

The impairments signal challenges in low-carbon bets. Writing down solar and biogas assets shows BP rethinking some green pushes. At the same time, it talks up a 'deep hopper' of oil and gas chances. This points to a pivot back to core fossil fuel strengths.

Investors reacted with caution. BP shares fell around 3% in after-hours trading.

Cost cuts and asset sales aim to free up cash. If BP hits its $20 billion disposal goal, it could reshape the company. Proceeds would fund debt reduction or new investments.

The energy transition adds uncertainty. BP balances oil dependence with green goals. New leadership under Meg O'Neill will shape the path forward. Markets watch how BP navigates weak prices and competition from rivals like Shell and Exxon.

For the full year, BP's results reflect a bumpy 2025. The strategic changes seek to build resilience. Success depends on oil prices rebounding and execution on plans.