BP suspended its quarterly share buyback in a bid to strengthen its balance sheet, as the British energy major grapples with weaker oil prices and moves forward with a turnaround plan.

The last time BP didn’t launch a quarterly buyback was in 2020 during the early stages of the pandemic, when oil prices plummeted and energy companies moved to protect their balance sheets.

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The buyback halt at BP illustrates a split among big oil companies, with some continuing to hand billions of dollars to shareholders even as oil prices retreat and others dialing back returns to shore up their finances.

Sector heavyweights like Exxon Mobil and Shell recently said they aim to keep buying back stock at the same pace as last year, while Chevron and France’s TotalEnergies previously signaled they would slow down buybacks.

Shares in BP were down around 5% in European mid-morning trade.

The decision represents a step change in the pace of BP’s efforts to strengthen its balance sheet, its Chief Financial Officer Kate Thomson said in an interview. BP’s previous buyback was $750 million a quarter after cutting it from $1.75 billion in April last year.

BP’s push to become a simpler and more profitable business after years of underperforming its peers comes amid a weaker price environment, after crude prices fell by nearly a fifth last year before climbing back in early 2026.

The company is investing in its traditional fossil-fuel business, has revamped its leadership team and has vowed to make shareholder value central to its operations. Meg O’Neill, an oil-and-gas veteran who most recently led Australia’s Woodside Energy, is due to take over as chief executive in April.

As part of the strategy shift, BP also cut spending on renewable energy assets that hurt profits and led to multibillion-dollar write-downs, while turning to cost savings and asset sales to rein in its net debt.

The company increased its structural cost-reduction target Tuesday to up to $6.5 billion by end-2027. This compares with a previous target of up to $5 billion, and reflects the sale of a majority stake in its lubricants business Castrol.

Pausing the buyback is the right long-term move given BP’s relatively weak balance sheet and emphasis on reducing debt ratios, RBC Capital Markets analysts Biraj Borkhataria and Adnan Dhanani wrote in a note to clients.

Net debt stood at over $22 billion, but this doesn’t include the around $6 billion of proceeds that it is set to receive from the Castrol sale, which it announced in December. BP said it has agreed more than $11 billion in divestment proceeds against its $20 billion target by 2027.

While net debt fell from the third-quarter, BP’s Thomson sees it rising over the first half of 2026 due to higher capital expenditure. It is then expected to fall as proceeds from asset sales flow into BP’s coffers in the second half, she said.

The company is targeting to cut net debt to between $14 billion and $18 billion by the end of 2027.

The company reported an underlying replacement cost profit–a similar metric to net income that U.S. oil companies report–of $1.54 billion for the fourth quarter. This compared with $1.55 billion analysts had expected, according to a company-compiled consensus, and $2.21 billion reported in the third quarter.

Write to Adam Whittaker at adam.whittaker@wsj.com

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