BP Halts Share Buybacks as Pressure on Energy Major Mounts

2026년 2월 10일 · Unknown · financial · 출처 Yahoo Finance

(Bloomberg) -- BP Plc is halting share buybacks to shore up its balance sheet as pressure mounts on the UK energy giant to deliver on its turnaround.

The company slashed a $750 million quarterly stock repurchases program that had already been reduced last year, according to an earnings report on Tuesday. BP also withdrew its guidance of returning 30% to 40% of operating cash flow to shareholders.

Most Read from Bloomberg

NJ Transit Service Between Trenton and New York City Resumes Canadian Province New Brunswick to Quit Using Elon Musk’s X For These Old Bus Stations, It’s Not the End of the Line

BP is prioritizing balance-sheet repair over investor payouts, with 2026 spending forecast at the low-end of its guidance range. Analysts said the moves are an effort to make difficult, prudent decisions and clear the decks for Meg O’Neill, the incoming chief executive officer who will take over in April.Meg O’NeillSource: Bloomberg

Still, the company’s indebtedness barely fell last year and BP kept the same target range of $14 billion to $18 billion of net debt for the end of 2027, despite savings from the buyback halt and its push to sell low-returning assets. Net debt ended last year at about $22.2 billion, excluding hybrid bonds and lease obligations.

“We are a little surprised to see the net debt target unchanged given the implied savings from the buyback over 2026-27,” RBC analyst Biraj Borkhataria said in a note.

BP shares fell as much as 5.7% in early London trading on Tuesday.

The fourth quarter capped a tumultuous year for BP that started with activist investor Elliott Investment Management pushing for drastic change and ended with Chairman Albert Manifold ousting Murray Auchincloss from the helm. Oil and gas prices are currently lower than what BP assumed in its multi-year plan announced last year.

The strategic shakeup Auchincloss announced last February pulled back from failed low-carbon ventures and refocused BP on its core oil and gas business. The strategic shift was correct but “increased rigor and diligence are required to make the necessary transformative changes to maximize value for our shareholders,” Manifold said in December’s CEO-swap announcement.

The groundwork has now been laid for O’Neill, who will be handed an upstream portfolio featuring key assets in Brazil, the Middle East and US.WATCH: BP is halting share buybacks to shore up its balance sheet as pressure mounts on the UK energy giant. Alaric Nightingale reports.Source: Bloomberg

BP said on Tuesday that its big Bumerangue discovery in Brazil announced last year has 8 billion barrels of liquids in place, split 50%-50% between crude and condensate. An appraisal program to determine the commercial viability of the project is expected to start around the end of this year.

Story Continues

“The story for BP from here is about the focus on rebuilding trust in capital allocation,” Barclays Plc analyst Lydia Rainforth said in a note on Tuesday.

Like rival Shell Plc, BP has been slower to increase production than US peers Chevron Corp. and Exxon Mobil Corp. So far this year, the shares of the two London-based companies have lagged behind in dollar terms among the top five oil majors, including European peer TotalEnergies SE, which has been expanding aggressively in Africa. BP expects its reported production in 2026 to be slightly lower compared to last year.

BP said cost cuts will be deepened by as much as $1.5 billion through the end of 2027, thanks to the divestment of lubricant business Castrol. As part of its turnaround plan last year, the company had announced targets of $4 billion to $5 billion of cost cuts by the end of 2027.

“Headcount is just one number that we have with regards to the structural cost reductions that we’re looking at across the business,” Interim CEO Carol Howle said in an interview. “And our focus is really delivering across all dimensions.”

The Castrol sale announced in December, which will raise about $6 billion, is expected to contribute to as much as $10 billion in proceeds from divestments in 2026, BP said. Combined with the $5.3 billion of divestment proceeds booked in 2025, BP should need to divest a similar amount in 2027 to reach its target of $20 billion by the end of the three years.

BP’s net income of $1.54 billion in the fourth quarter was in line with the average analyst estimate of $1.53 billion.

In a presentation to investors on Tuesday, BP maintained its assumption for benchmark Brent prices at $72.9 a barrel this year, the same as in its strategic review. Futures have fallen from last year’s peaks above $80 to trade below $70.

Energy Transition

O’Neill, the Woodside Energy Group Ltd. CEO picked to replace Auchincloss, has a track record as a champion of fossil fuels that suggests she’ll speed up a shift away from low-returning clean energy projects that has been welcomed by shareholders.

BP revealed its previously-flagged, roughly $4 billion of writedowns from its energy transition business in the fourth quarter which included Archaea Energy, the biogas business BP agreed to buy for $4.1 billion in 2022, as well as its solar and battery unit Lightsource and offshore wind assets.

Asset impairments charges since the end of 2022 — when BP first began retreating from its low-carbon ambitions — have piled up to nearly $25 billion, RBC’s Borkhataria said before the earnings report.

BP purchased Archaea Energy in 2022 as part of its expansion into lower-carbon fuels. But the renewable natural gas business that was supposed to benefit the environment and BP’s net zero emissions targets has faltered, as have BP’s climate ambitions.

The assets that were part of the writedowns had been core to BP’s green goals, when former CEO Bernard Looney in 2020 announced a move into low-carbon ventures and away from oil and gas.