BP (NYSE: BP) has suspended its quarterly share buyback program, redirecting capital toward debt reduction and renewed investment in oil and gas, sending shares tumbling as much as 5.7% on Tuesday.
The company had been repurchasing $750 million worth of shares each quarter and had maintained that schedule every three months since the second quarter of 2021, according to LSEG data.
BP also took approximately $4 billion in charges against its renewables and biogas assets, compounding investor concern over the scale of the strategic shift.
The suspension comes as incoming CEO Meg O’Neill prepares to take the helm in April, with management indicating that any future decision on restarting buybacks will be left to her.
BP trimmed its net debt to $22 billion from $26 billion in the previous quarter and reiterated a target range of $14 billion to $18 billion by 2027.
The company also dropped a pledge to return 30% to 40% of its operating cash flow to shareholders through dividends and buybacks, a move that Berenberg analysts said the market took negatively.
RBC and Barclays analysts argued that scrapping the buyback was the right decision given BP’s debt load, though shares still fell around 4.2% in late morning trading, against a 0.5% dip in a broader European energy index.
BP’s fourth-quarter underlying replacement cost profit came in at $1.54 billion, up 32% from a year earlier, offering some comfort amid the broader strategic overhaul.
The company also outlined deeper cost-cutting plans that could extend by as much as $1.5 billion through the end of 2027, including the potential divestment of its Castrol lubricant business.
BP highlighted its Bumerangue discovery in Brazil, which it estimates holds 8 billion barrels of liquids in place, with appraisal work expected to begin around the end of this year.
The suspension puts BP at odds with some of its largest peers, as Shell has kept its quarterly repurchase program unchanged, and both Chevron and Exxon have signaled that current shareholder return levels will be maintained.
Norway’s Equinor cut its own buyback program by 70% last week, reflecting broader pressure on European oil majors as lower oil and gas prices squeeze available cash for shareholder distributions.
A year ago, under then-CEO Murray Auchincloss, BP announced a strategy reset back toward hydrocarbons after what the company acknowledged was an ill-fated foray into renewables.
