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

Brent crude peaked at just over $90 a barrel in early April, but today it’s bumping around the $70 mark. That’s a drop of more than 20%, driving BP’s third-quarter profits to a four-year low. Falling margins in its refinery business didn’t help.

Despite beating forecasts, Q3 profits of $2.27bn were well down on Q2’s $2.76bn and last year’s $3.29bn. Falling demand from China, a weak global economy, and suggestions that Saudi Arabia may increase output to maintain market share are to blame. BP shares fell another 4.97% as a result.

Can this FTSE 100 struggler strike back in November?

I thought the FTSE 100 oil and gas giant looked an unmissable bargain when I bought its shares on 18 September. Today, they’re even cheaper with a trailing price-to-earnings ratio down to just 5.62, while the yield looks even juicier at 5.92%.

The board continues to reward investors by green lighting yet another $1.75bn quarterly share buyback in Q3. It’s committed to return $3.5bn in the second half of the financial year. If it sticks to that, the full-year buyback will match last year’s $7bn.

Yet as profits fall, BP’s bumper buyback is at risk, with CEO Murray Auchincloss now saying he will review it for 2025. Investors didn’t like that.

Share buybacks are a way of adding shareholder value in good years. However, this isn’t a good year. Not for BP, not anymore. Throwing money at shareholders while profits slump looks a little bit needy, in my view. As if the board is trying to buy favour. Or maybe apologise for share price underperformance relative to sector peers.

Also, it’s a questionable strategy, given that BP’s net debt remains relatively high at $24.3bn. Personally, I’d rather see the board use some of its surplus cash to pay that down. Or maybe I’m just not that big a fan of buybacks.

This is a company in transition

BP is under another cloud. What’s it going to do about the energy transition? It’s been rowing back on renewable commitments, but hasn’t got the nerve to go for broke on fossil fuels either. At some point, something has to give. 

If new green tech does crack net zero, BP could suddenly look like a relic. That’s probably not the way to bet, but it’s still a danger.

We may have a clearer view when the board updates investors on its financial strategy in February. I still think BP looks an unmissable buy at today’s dirt-cheap valuation, and I’ll buy more shares when I have the cash.

Energy prices tend to be cyclical and the oil price may well recover at some point. But for BP shares to really take off, the board needs to tackle its problems head on. As investor discontent grows, that day is getting closer. And that’s when I expect the BP share price to kick on.

In the meantime, I’ll take advantage of these dips and keep reinvesting my dividends. That way I’ll hold more shares when BP finally starts motoring again.