BP cuts distributions – yet continues to favour oil & gas growth

ACCR is commenting on BP’s 2025 full year results.

Nick Mazan, Oil & Gas Sector Strategy Lead, ACCR, said:

“By cutting its shareholder distributions while continuing to funnel capex into the upstream business, BP doesn’t appear to have shareholder interests at heart.

“Shareholders want to see returns from oil and gas companies, particularly when the longer-term outlook for oil and gas is so uncertain. Axing the share buyback programme could be sign that BP doesn’t have confidence in the market outlook or its operating assets.

“While the pivot back to oil and gas has been justified by scapegoating the low carbon business, our analysis shows that the upstream business has been the source of 75% of disposal losses and impairments since 2020.

“BP’s upstream capital allocation is a cause for concern. Over the past 5 years the company has invested $22bn in the upstream business, which will deliver less than $1bn under forward prices. For example, last year, BP made a final investment decision on Tiber, a $5 billion oil project, despite data from Rystad Energy showing that it’s more expensive than 81% of competing oil projects. Looking forward does not offer much promise for shareholders either, with BP’s pre-FID portfolio not having a competitive advantage.

“Long-term investors want to see BP taking a genuinely disciplined approach to capital allocation to protect shareholder value.”