BP Halts Share Buy-Backs as Annual Profits Slide to $7.5bn
BP has announced the suspension of its share buy-back programme following a significant decline in annual profits, as the oil and gas giant navigates a challenging market and prepares for a strategic turnaround under new leadership.
Financial Performance and Market Pressures
The company reported underlying earnings of just below $7.5bn (£5.5bn) for 2025, a notable drop from almost $9bn in 2024. This decline marks the third consecutive year of falling profits, attributed to a steep decrease in global oil prices, the most severe since the Covid pandemic. In the fourth quarter alone, earnings fell 30% quarter-on-quarter to $1.54bn, though this figure was 32% higher than the same period a year earlier and met City expectations.
This decision to halt quarterly share buy-backs, the first such pause since the early stages of the pandemic, is aimed at strengthening BP's balance sheet. It comes at a time when the company faces mounting pressure from investors to clarify its strategic direction, particularly after a failed attempt to pursue a green agenda.
Leadership Changes and Strategic Shifts
Meg O'Neill, the incoming chief executive and former head of Woodside Energy, is set to take up the role in April, becoming BP's third boss in as many years. She is expected to enforce "rigour" in the company's turnaround plan, which includes:
- Growing cashflows
- Increasing shareholder returns
- Reducing costs
- Strengthening the balance sheet through asset sales
Carol Howle, the interim chief executive, stated that while progress has been made against these targets, "There is more work to be done, and we are clear on the urgency to deliver. We are in action and we can and will do better for our shareholders."
Activist Shareholders and Environmental Concerns
Activist shareholders are intensifying their calls for BP to prepare for a long-term decline in fossil fuel demand. Mark van Baal, founder of the shareholder group Follow This, criticised the company's strategic inconsistency, saying, "BP is in dire straits because the company has drifted without a consistent strategic direction."
The group has filed a resolution for BP's annual investor meeting in April, demanding disclosure of the company's strategy for creating shareholder value in scenarios of declining fossil fuel demand. Van Baal added, "After a half-hearted energy transition, the company is now doubling down on fossil fuels in a market that will soon start to shrink. If BP cannot grow profits and restore its dividend in a growing market, how will the company create shareholder value in a declining one?"
Industry Context and Future Outlook
In a move back towards fossil fuels, BP commissioned seven new oil and gas projects last year, with five delivered ahead of schedule. This shift contrasts with rival Shell, which reported a 22% fall in adjusted earnings to $18.5bn for 2025 but announced $3.5bn worth of share buy-backs, marking its 17th consecutive quarter of at least $3bn in buy-backs.
As BP grapples with these challenges, the company must balance investor expectations with environmental pressures, setting the stage for a critical period under its new leadership.
