TLDR
- BP reported a Q4 profit of $1.54 billion, which aligned with expectations but was lower than the $2.21 billion in Q3 2025 due to reduced oil prices and refinery problems.
- The company suspended share buybacks to allocate excess cash for bolstering its balance sheet as crude prices continue to be weak.
- BP shares fell by 5% following the announcement, trading close to the bottom of European markets.
- Full-year 2025 net profit decreased to $7.49 billion from nearly $9 billion in 2024, falling short of analyst expectations.
- BP increased its cost-reduction target to $5.5 to $6.5 billion by the end of 2027 and set 2026 capital expenditure at $13 to $13.5 billion.
BP shares plummeted on Tuesday morning after the British oil giant declared it would halt share buybacks and redirect excess cash to bolster its balance sheet. The London-listed energy firm posted a fourth-quarter underlying replacement cost profit of $1.54 billion, which met analyst expectations but reflected the ongoing pressure from weak crude prices.
is halting $750M share buybacks and pulling its guidance to return 30% to 40% of operating cash flow to shareholders, saying it needs to shore up the balance sheet. BP kept its $14B to $18B net debt target for end 2027.
— Wall St Engine (@wallstengine)
The stock declined by 5.4% during morning trading, positioning it near the bottom of the pan-European Stoxx 600 index. BP’s U.S.-listed shares dropped 6% in pre-market trading as investors reacted to the buyback suspension.
BP’s board made the decision to suspend the share buyback program and fully allocate excess cash “to expedite strengthening” of its balance sheet. The company’s previous buyback was $750 million, announced alongside third-quarter results in November.
The Q4 profit of $1.54 billion was a decrease from the $2.21 billion in the third quarter. Lower upstream realizations, unfavorable production mix, and reduced refinery throughputs contributed to the drop.
A temporary shutdown at the Whiting refinery and seasonally lower customer volumes also had an impact on results. For the fourth quarter, BP announced a dividend of 8.320 cents per ordinary share.
Full-year 2025 net profit stood at $7.49 billion, falling short of analyst expectations of $7.58 billion. This was a decrease from nearly $9 billion in 2024.
Industry Faces Oil Price Headwinds
BP’s competitors are dealing with similar challenges. and Equinor both reported weaker quarterly earnings last week, citing lower crude prices among other factors.
Oil prices recorded their largest annual loss since the Covid-19 pandemic in 2025. Concerns about oversupply have increased pressure on Big Oil’s commitment to shareholder returns.
Equinor announced it would cut share buybacks to $1.5 billion this year from $5 billion last year. The Norwegian energy company is also reducing investments in renewables and low-emission energy projects.
Shell maintained its buybacks at $3.5 billion, marking the firm’s 17th consecutive quarter with $3 billion or more in buybacks. This contrast highlights different strategic approaches to navigating the downturn.
Cost Cuts and Leadership Transition
BP is streamlining operations to address ongoing challenges. Interim CEO Carol Howle stated that the company made progress on four primary targets: increasing cash flow and returns, reducing costs, and strengthening the balance sheet.
“We have made progress towards our four primary targets but know there is more work to be done, and we are clear on the need for urgency,” Howle stated. The company raised its structural cost-reduction target to $5.5 to $6.5 billion by the end of 2027, up from the previous target of up to $5 billion.
BP set its 2026 capital expenditure budget at $13 to $13.5 billion, reflecting the lower end of its guidance range. Fourth-quarter net debt was $22.18 billion, down from around $23 billion in the same period last year.
Operating cash flow for Q4 reached $7.6 billion, up from $7.43 billion a year earlier. Woodside Energy boss Meg O’Neill is set to assume the CEO role on April 1, following Murray Auchincloss’ decision to step down late last year.
Wall Street analysts maintain a Hold consensus rating on BP stock, based on five Holds, three Buys, and one Sell. The average price target of $40.31 suggests approximately 3% upside potential from current levels, with the stock offering a dividend yield of 5.6%.
