BP suspends buyback to trim debt, sending shares down 7%

By Stephanie Kelly and Shadia Nasralla

LONDON, Feb 10 (Reuters) - BP BP.L suspended its share buybacks and took about $4 billion in charges on its renewables and biogas assets on Tuesday, sending its shares down 7% in afternoon trading.

The oil major, which will see a new CEO, Meg O'Neill, take the helm in April, said it would shift money from buybacks to shrinking its debt and refocus investment in oil and gas projects where it expects better returns.

Berenberg analysts were not surprised by the removal of buybacks, but said the market took it as a negative, alongside BP dropping a pledge to pay 30% to 40% of its operating cash flow in dividends and buybacks.

RBC and Barclays analysts said scrapping buybacks was the right move for the company, given its debt.

BP's shares sank as much as 7% in afternoon trading, the biggest daily percentage drop since a global markets rout in April 2025, after the United States introduced sweeping tariffs. A broader index of European energy companies .SXEP fell 0.5%.

BP PAUSES BUYBACKS AS IT CUTS DEBT BURDEN

The oil major trimmed its net debt to $22 billion from $26 billion in the previous quarter, and reiterated a targeted amount of $14 billion-$18 billion by 2027.

Finance Chief Kate Thomson said BP may update investors on a possible resumption of share buybacks when it meets its debt‑reduction target, though hitting that goal wouldn't automatically trigger a restart.

Analysts had raised the prospect of European oil majors' buyback programmes shrinking due to lower oil and gas prices. Indeed, Norway's Equinor slashed its buyback programme by 70% last week, though Shell SHEL.L and Exxon XOM.N have held firm on their buybacks.

BP had repurchased shares worth $750 million over the last three months, and has bought back shares every three months since the second quarter of 2021, according to LSEG data.

The company's fourth-quarter underlying replacement cost profit, or adjusted net income, was $1.54 billion, up 32% from a year earlier.

FOCUS RETURNS TO OIL AND GAS

A year ago, under then-CEO Murray Auchincloss, BP announced a strategy reset back to hydrocarbons, saying the move would improve profitability after an ill-fated foray into renewables by predecessor Bernard Looney.

In an update on the Brazilian Bumerangue discovery, its biggest hydrocarbon find in 25 years, BP estimated it holds 8 billion barrels of liquids in place, split between oil and condensate.

The company said it plans to drill appraisal wells around the end of the year. Citi analysts estimate around 25%-40% of the resources can be tapped.

WRITES DOWN LOW-CARBON PROJECTS

BP had previously flagged up to $5 billion in impairments and, on Tuesday, listed its solar unit Lightsource bp, U.S. biogas unit Archaea and offshore wind businesses as the main reasons. BP bought Archaea in 2022 for $4.1 billion.

"I really don't like taking impairments. I'm very aware that this is our shareholders' capital, but these are the accounting consequences of the discipline that we are putting into our company," Thomson told Reuters on a call. "We've tightened very hard the number of plants we're moving forward."

Thomson and interim CEO Carol Howle declined to give further details but said the impairments allow BP to invest in assets that promise the best returns.