Energy Musings - February 10, 2026
BP announced it would stop share buybacks, answering our question in the Feb. 5 Energy Musings
BP Suspends Stock Buybacks
Five days ago, we wrote about the challenge facing European oil companies due to lower oil prices. (European Oil Company Strategies Questioned, https://energymusings.substack.com/p/energy-musings-february-5-2026).
In our article, we discussed the shareholder proposal before BP shareholders at their annual meeting on April 16, which would require the company to set out a plan for “a disciplined approach to capital expenditure in order to generate an acceptable return on capital.” The proposal was put forth by shareholder activist Australian Centre for Corporate Responsibility (ACCR) and supported by a handful of European pension funds. ACCR has a history of challenging Woodside Petroleum’s management, whose former CEO, Meg O’Neill, is now the new BP CEO.
The proposal is a rebuke of BP’s renewed focus on oil and gas, which environmentalists believe will become a stranded asset under climate change policies. However, they ignore the International Energy Agency’s latest World Energy Outlook 2025, which predicts that oil use will grow through 2050, a sharp reversal from their peak-oil-by-2030 predictions over the past five years.
The shareholder proposal challenges BP management to justify the company’s shift away from renewables and to reinvest in its traditional oil and gas operations. In addition to reviewing BP’s history, we focused on the challenge of shrinking free cash flows amid lower oil prices. This is particularly challenging given the substantially higher debt-to-equity ratios of European oil companies compared with U.S. oil companies.
We ended our article stating: “It will be interesting to see what Shell and BP announce about their shareholder return strategies.” Shell made no change and emphasized its investment in its natural gas operations. However, this morning BP announced it was stopping share buybacks and would dedicate all surplus cash flow to paying down its $22 billion in debt.
BP will join TotalEnergies and Equinor in scaling back share repurchase plans.
The Financial Times wrote:
“On Tuesday, Kate Thomson, BP’s chief financial officer, said the company did not expect to buy back more shares this year and declined to say how long the suspension would last.
“’ Right now, I’m focused on creating the right foundation. Net debt is my first priority,’ she told the FT. ‘A stronger balance sheet reduces financing costs and drives higher free cash flow.’”
BP also reduced its planned capital investment program this year to $13.0-$13.5 billion from $14.5 billion last year and $16.0 billion in 2023. The company increased its cost reduction target to $5.0-$6.5 billion by 2027.
The company also wrote down the value of its green businesses by $3.1 billion, primarily related to Lightsource and its biogas business.
Austerity descends on the oil patch, but not everyone will be impacted.