BP’s share price fell almost 5% yesterday and fell another 2% today. Is it time for me to buy?

BP (LFB: BP) share price has had a bumpy ride, falling -28.51% over the last 12 months. It fell 4.97% yesterday (October 29) and fell another 2.01% this morning, and the reason is pretty clear.

In early April, the price of Brent oil peaked at just above $90 a barrel, but today it is approaching the $70 mark. That’s a drop of more than 20%, sending BP’s third-quarter profit to a four-year low. Falling profitability in the oil refining business hasn’t helped.

Despite beating forecasts, third-quarter profit of $2.27 billion was well below $2.76 billion in the second quarter and $3.29 billion last year. Blame is falling demand from China, a weak global economy and speculation that Saudi Arabia may increase production to maintain market share. As a result, BP shares fell a further 4.97%.

Can this FTSE 100 fighter hit back in November?

I thought, FTS 100 the oil and gas giant looked like a bargain when I bought its shares on September 18th. They’re even cheaper today, with the price-to-earnings ratio down to 5.62 and the yield looking even more attractive at 5.92%.

The board continues to reward investors with the green light for another $1.75 billion each quarter. share repurchase in the third quarter. The company expects to return $3.5 billion in the second half of the fiscal year. If this continues, annual share repurchases will match last year’s $7 billion.

However, as profits fall, BP’s powerful share buyback is in jeopardy, with CEO Murray Auchincloss now saying he will consider it for 2025. Investors didn’t like it.

Stock buybacks are a way to increase shareholder value in good years. However, this is not the best year. Not for BP, not anymore. In my opinion, investing in shareholders when earnings are falling seems a bit futile. It’s like the board is trying to buy favor. Or perhaps apologize for underperforming share prices relative to sector peers.

It’s also a questionable strategy given that BP’s net debt remains relatively high at $24.3 billion. Personally, I’d prefer the board use some of its surplus cash to pay that amount. Or maybe I’m just not that big of a fan of buybacks.

This is a company in transition

BP is under a different cloud. What is he going to do about the energy transition? He’s backing away from commitments to renewable energy, but he doesn’t have the courage to go all-in on fossil fuels. At some point something has to give.

If new green technology does reach net zero, BP could suddenly look like a relic. This is probably not the best way to bet, but it is still a danger.

We may have a clearer picture when the board briefs investors on its financial strategy in February. I still think BP looks like a bargain at today’s very cheap valuation and I will buy more shares when I have the money.

Energy prices tend to be cyclical and the price of oil may well recover at some point. But for BP’s shares to really rise, the board needs to tackle its problems decisively. As investor dissatisfaction grows, that day gets closer. And that’s when I expect the BP share price to rise.

In the meantime, I’ll take advantage of these dips and continue to reinvest my dividends. That way, I’ll hold more shares when BP finally gets into the car business again.