BP (NYSE: BP) is suspending share buybacks and retiring the goal to return 30-40% of operating cash flow to shareholders, as the supermajor looks to strengthen its balance sheet amid intense shareholder pressure.
BP reported on Tuesday fourth-quarter earnings generally in line with expectations, but the market expected more to see other metrics, such as debt and guidance.
The supermajor’s underlying replacement cost (RC) profit, the metric closest to net profit, came in at $1.54 billion for the fourth quarter, meeting Street expectations of $1.53 billion.
Despite the profit in line with estimates, the suspended share buybacks and the now-scrapped guidance to return 30-40% of operating cash flow to shareholders sent BP’s stock plunging by 4% as trade opened in London on Tuesday.
As flagged last month, BP booked post-tax net impairments and impairments in equity-accounted entities of around $4 billion, primarily related to the company’s transition businesses in the gas and low-carbon energy segment.
In capital allocation, BP reaffirmed a resilient dividend is its first capital allocation priority. Dividend is expected to increase by at least 4% per ordinary share per year. For the fourth quarter, BP has announced a dividend per ordinary share of 8.320 cents.
BP also reiterated its primary target of $14 to 18 billion of net debt by end 2027.
“With a continued emphasis on capital discipline and returns, we are reducing capital expenditure for 2026 to the lower end of the guidance range, while continuing to drive down our cost base,” Interim chief executive officer, Carol Howle, said.
Howle took over from Murray Auchincloss in December as an interim CEO until Meg O’Neill, formerly of Woodside Energy, steps in the role of BP’s chief executive on April 1.
“We look forward to Meg O’Neill joining as CEO in April as we accelerate our progress to build a simpler, stronger and more valuable bp for the future,” Howle said.
“We are in action and we can and will do better for our shareholders.”
By Tsvetana Paraskova for Oilprice.com
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