BP to Sell 65% of Castrol to Stonepeak in $6 Billion Transaction

BP PLC has reached an agreement to divest a 65% interest in its lubricants subsidiary Castrol to private equity firm Stonepeak for $6 billion, assigning the unit an enterprise value of roughly $10.1 billion. The transaction, announced on Wednesday, advances the British energy company’s multi-year plan to streamline operations and raise cash through asset sales.

The deal represents the largest individual disposal under BP’s current program, which targets $20 billion in divestments by the end of 2027. Proceeds are earmarked to reinforce the group’s balance sheet and fund strategic adjustments. Following completion, BP will retain a 35% stake in Castrol and hold customary governance rights. A contractual lock-up prevents any sale of the remaining shares for two years, after which BP may pursue a full exit.

Castrol, founded in 1899 and acquired by BP in 2000, markets engine oils and industrial lubricants in more than 120 countries. The business generated interest from multiple parties earlier this year, including Reliance Industries, Saudi Aramco, Apollo Global Management and Lone Star Funds, according to market reports issued in May. Stonepeak ultimately secured exclusivity and agreed to a valuation equivalent to around 10 times earnings before interest, taxes, depreciation and amortization, based on figures supplied by people familiar with the negotiations.

Interim Chief Financial Officer Carol Howle, who is overseeing the reshaping of BP’s downstream portfolio, said the Castrol sale aligns with the company’s objective of simplifying its structure and concentrating on integrated operations with stronger returns. Management intends to allocate a portion of the proceeds to debt reduction, continuing a policy begun in 2020 when the group launched an efficiency drive in response to lower commodity prices.

The agreement arrives less than a week after BP announced a leadership change. Meg O’Neill, currently chief executive of Australia’s Woodside Energy, is scheduled to become BP’s fourth CEO in six years on 1 April, replacing Murray Auchincloss. Industry analysts view her appointment, combined with the Castrol transaction, as an indication that BP is preparing to refocus on core oil and gas development after mixed results from earlier investments in low-carbon ventures.

BP has trailed major European rivals on shareholder returns in recent years. The company reported declining annual profits in both 2023 and 2024. Its London-listed shares opened 1.3% higher on Wednesday before trimming gains to trade up about 0.9%. The stock has risen roughly 9% in 2025, partially recovering from a 15.7% slide last year amid management changes, cost-cutting efforts and new hydrocarbon discoveries.

External observers expect additional divestments as the firm reallocates capital. Investment manager Alvine Capital recently described BP’s historic performance as disappointing but suggested ongoing asset sales could help restore investor confidence. BRI Wealth Management has also forecast further portfolio pruning as the company returns to its “bread and butter” of exploration and production.

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The Castrol sale provides BP with immediate liquidity while retaining minority exposure to the lubricant brand. Market participants note that lubricant businesses typically command premium valuations because they generate steadier cash flows than upstream oil projects and are less exposed to fluctuations in crude prices. According to data compiled by the International Energy Agency, global lubricant demand has remained broadly resilient even during periods of volatile energy prices, supporting interest from long-term infrastructure investors such as Stonepeak.

Completion of the transaction is subject to regulatory approvals and customary closing conditions. BP did not specify an exact timetable but said it expects the deal to close in 2025. The company did not detail how the remaining minority stake will be reported in its financial statements, though analysts anticipate Castrol will be deconsolidated once Stonepeak assumes control.

Looking ahead, BP’s strategy reset calls for a review of downstream assets, selective investment in renewable projects with clear returns, and disciplined spending in exploration and production. Management has indicated that further announcements regarding asset sales and capital allocation could follow after O’Neill formally assumes the chief executive role in April.

Stonepeak, headquartered in New York, manages more than $57 billion across infrastructure and real assets. The firm has previously invested in energy, transportation and communications networks but has limited exposure to downstream oil. The Castrol acquisition marks its largest entry into the lubricant sector and is expected to close without a financing contingency, according to people familiar with the matter.

Crédito da imagem: BP press handout