Introduction
BP shares tanked 5.2% on Tuesday after the oil giant suspended share buybacks and ramped up cost-cutting targets. Once a FTSE darling raking in billions, BP’s now scrambling to fix its balance sheet after a disastrous green energy pivot left it trailing rivals like Shell and ExxonMobil. The London-based oil baron’s ditching shareholder rewards to pump cash back into oil production—a stark reversal from its 2020 net-zero dreams. So what’s behind BP’s spectacular fall from grace?
The Green Energy Gamble That Backfired
Back in 2020, BP made a bold bet: slash oil production by 40% by 2030 and go all-in on renewables. Former CEO Bernard Looney pitched an ambitious net-zero vision that looked great on paper but bombed with investors.
Why? While BP chased wind farms and solar panels, rivals doubled down on fossil fuels. ExxonMobil and Shell raked in record profits during the 2022 energy crisis, leaving BP’s green investments looking painfully underwhelming.
The company’s had to backtrack hard. First, it softened the oil production cut to 25%. Then it scrapped the target altogether. BP’s slashed its renewable energy budget by over $5bn annually in 2025, racing back to oil and gas just to keep up.
Leadership Crisis and the Looney Scandal
Just as BP scrambled to reverse course, Looney himself imploded. The architect of BP’s green strategy resigned with immediate effect in 2023 after failing to disclose past workplace relationships.
He admitted he wasn’t “fully transparent,” and BP said he’d given “inaccurate and incomplete assurances” during their investigation. The scandal cost Looney up to £32.4m in forfeited bonuses and share awards.
Shares slipped post-resignation, raising fresh doubts about BP’s strategic direction. Losing the green plan’s mastermind triggered a company-wide reset at the worst possible time.
The Numbers Behind the Struggle
BP’s latest results paint a grim picture. Adjusted profits hit $1.5bn in Q4—down from $2.2bn the previous quarter. Full-year profits tumbled to $7.5bn as crude oil prices dropped roughly 20%.
Net debt sat at $22.2bn, barely budging despite BP’s efforts. The company’s now targeting cost cuts between $5.5bn and $6.5bn by end of 2027—an additional $1.5bn on top of previous goals.
The share price nosedive dragged the entire FTSE 100 down 0.5% early Tuesday before settling at a 0.3% drop. It’s a brutal comedown for a company that was once considered one of the world’s largest energy players.
What’s Next: New Leadership, Old Playbook
Enter Meg O’Neill, ExxonMobil veteran and current Woodside Energy CEO. She’s replacing ousted Murray Auchincloss in April and is widely expected to accelerate BP’s return to fossil fuels.
Investors seem keen on the change. O’Neill’s track record championing oil and gas suggests BP’s “low margin renewables strategy” is headed for the dustbin, as analyst Ashley Kelty bluntly put it.
Chairman Bert Manifold and O’Neill are clearly hitting pause to reassess. The buyback suspension—framed as “balance sheet discipline”—signals they want breathing room to reallocate capital and slash BP’s bloated cost base.
The Road Ahead
BP’s stuck in limbo. It’s operationally stable but lacks a compelling growth story that investors can get behind. The buyback pause removes key share price support, raising questions about future cash flow confidence.
Analysts reckon the buyback freeze is temporary, with resumptions expected once O’Neill settles in. But BP needs more than shareholder payouts—it needs strategic clarity.
Can BP rebuild investor confidence and catch up to Shell and Chevron? That depends on whether O’Neill can deliver a coherent plan that doesn’t involve another embarrassing U-turn. For now, BP’s running on fumes whilst trying to refuel mid-race.
FAQ
Q1: Why did BP suspend its share buyback programme?
A: BP suspended buybacks to strengthen its balance sheet and redirect cash toward oil production investments. The move suggests new leadership wants to pause and reassess capital allocation before committing to shareholder returns.
Q2: What happened to BP’s renewable energy strategy?
A: BP’s 2020 green energy pivot flopped as rivals like Shell and ExxonMobil profited heavily from fossil fuels during the energy crisis. The company’s now slashed renewable budgets by over $5bn annually and refocused on oil and gas.
Q3: Who is Meg O’Neill and why does she matter?
A: O’Neill is the incoming CEO replacing Murray Auchincloss in April. She’s a former ExxonMobil executive with a strong fossil fuel track record, signalling BP will likely accelerate its retreat from renewables.
Q4: How badly have BP shares performed?
A: BP shares dropped 5.2% to 452.7p following the buyback suspension announcement. The company’s share price has significantly lagged competitors Shell and Chevron in recent years, prompting activist investor pressure.
Q5: Will BP’s share buybacks resume?
A: Analysts expect buybacks to restart once new leadership stabilises operations and delivers strategic clarity. The suspension appears to be a temporary pause rather than a permanent policy shift.
DISCLAIMER
Effective Date: 15th July 2025
The information provided on this website is for informational and educational purposes only and reflects the personal opinions of the author(s). It is not intended as financial, investment, tax, or legal advice.
We are not certified financial advisers. None of the content on this website constitutes a recommendation to buy, sell, or hold any financial product, asset, or service. You should not rely on any information provided here to make financial decisions.
We strongly recommend that you:
- Conduct your own research and due diligence
- Consult with a qualified financial adviser or professional before making any investment or financial decisions
While we strive to ensure that all information is accurate and up to date, we make no guarantees about the completeness, reliability, or suitability of any content on this site.
By using this website, you acknowledge and agree that we are not responsible for any financial loss, damage, or decisions made based on the content presented.
