BP completed the sale of a 65% controlling interest in its Castrol lubricants business to investment firm Stonepeak for approximately $6 billion in net proceeds, valuing the unit at an enterprise value of about $10.1 billion. The transaction is a cornerstone of BP’s $20 billion divestiture program, which aims to reduce net debt from $26.1 billion at the end of Q3 2025 to a target range of $14–$18 billion by the end of 2027.
Under the deal, Stonepeak will hold a majority controlling interest while BP retains a 35% minority stake in a newly formed joint venture. BP also secured an option to sell its remaining shares after a two‑year lock‑up period. The sale includes an accelerated $800 million prepayment of future dividends linked to BP’s retained stake, boosting the net proceeds to roughly $6 billion. BP plans to use the proceeds to strengthen its balance sheet, fund future capital‑expenditure needs, and support its shift toward core oil and gas operations.
BP’s management framed the transaction as a “very good outcome for all stakeholders” and an “important milestone” in the company’s reset strategy. CEO Carol Howle highlighted that the sale removes a non‑core asset, improves liquidity, and aligns BP’s portfolio with its focus on higher‑margin hydrocarbons. Stonepeak’s senior managing director Anthony Borreca praised Castrol’s heritage, brand, and global footprint, describing lubricants as “mission‑critical products” that will benefit from Stonepeak’s capital support and energy‑sector expertise. Castrol’s global CEO Michelle Jou expressed enthusiasm for the partnership, noting that Stonepeak’s experience with similar businesses will accelerate innovation and growth.
The transaction reflects BP’s broader strategic pivot away from ambitious renewable‑energy targets toward a more traditional oil‑and‑gas focus. The divestiture comes amid activist investor pressure for tighter capital discipline and operational efficiency. By monetizing Castrol, BP can reduce debt, improve financial flexibility, and free capital for core projects, while Stonepeak gains a high‑profile, globally‑present lubricants business that complements its infrastructure and real‑asset portfolio.
Market reaction to the announcement was positive. BP shares rose more than 1% in London trading, driven by investor confidence that the sale will strengthen the balance sheet and support the company’s refocusing strategy. Castrol India shares jumped over 8%, reflecting optimism about the potential for growth under Stonepeak’s ownership and the immediate impact on the subsidiary’s operations.
The deal is expected to close by the end of 2026, subject to regulatory approvals. BP’s net debt reduction target of $14–$18 billion by 2027 positions the company to weather commodity volatility and pursue strategic investments in high‑return projects.
The sale also signals a shift in BP’s ESG narrative. While the divestiture improves liquidity, it has drawn criticism from some stakeholders who view the move as prioritizing short‑term financial metrics over long‑term low‑carbon commitments. Nonetheless, BP’s leadership maintains that the transaction supports a more sustainable, profitable business model focused on core energy assets.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.