The oil giant sold 65% of its lubricants business to Stonepeak for $6 billion to reduce debt and refocus strategy
BP has agreed to sell a majority stake in its $10 billion lubricants business Castrol to the US investment company Stonepeak, as the new chair rapidly reshapes the under pressure oil and gas company. Stonepeak will acquire a 65% stake in Castrol, in a deal that values the division at $10.1 billion including its debt.
The deal, in which BP will retain a 35% stake in the business through a joint venture, is expected to close at the end of next year. BP said it would use the $6 billion in proceeds from the deal to pay down its own debt, which stood at $26.1 billion at the end of its latest quarter.
It marks the latest step in BP’s push to sell $20 billion in assets as it has faced pressure from the activist US hedge fund Elliott Investment Management to cut costs and reduce debt. Following this deal and previous announcements, the company says it is over halfway to meeting that target.
Strategic reset continues
Interim BP Chief Executive Carol Howle said the sale marks an important milestone in the ongoing delivery of the company’s reset strategy. The oil giant is reducing complexity, focusing the downstream on its leading integrated businesses and accelerating delivery of its plan.
BP is also shifting its strategy away from investment in green energy and renewing its focus on oil and gas following pressure from some investors who were frustrated that its profits and share price had lagged behind rivals. Rivals Shell and Norwegian company Equinor have also scaled back plans to invest in green energy.
The London based oil major said the sale is a milestone in its plans to overhaul its business and strip out costs. BP began the sale process for Castrol in February, when former Chief Executive Murray Auchincloss announced a strategic reset with a stronger focus on oil and gas and promising to cut costs and reduce debt.
Leadership changes reshape company
BP’s new chair is overseeing a radical overhaul of its strategy after a failed attempt to pivot to renewable energy under his predecessor. Last week the company made the surprise announcement that it was replacing its Chief Executive after less than two years in the top job.
Auchincloss will be succeeded by Meg O’Neill, the Chief Executive of Woodside Energy, in April, with Howle taking charge in the interim. O’Neill will become BP’s first female Chief Executive when she takes the helm in April 2026.
Her surprise appointment came only three months after BP appointed a new chairman, Albert Manifold, in October. The former Chief Executive of the building materials company CRH said last week that O’Neill would help BP become a simpler, leaner and more profitable company.
Castrol business details
The Castrol business includes lubricants for the auto and industrial sectors, and has been developing liquid cooling fluids for datacenters. BP first took control of Castrol in 2000 and has maintained the brand as a key part of its downstream operations.
BP’s continued stake in the business gives it exposure to Castrol’s growth plan. The company has the option to sell its stake after a two year lock up period, providing flexibility for future strategic decisions.
The deal was described as a positive step forward for BP, reinforcing its ongoing strategy reset and the aim to reduce its net debt and refocus its downstream business. The significant proceeds from the transaction will allow BP to make a decent dent in its onerous borrowings pile.
Market reaction and broader context
Shares rose slightly in early trading on Wednesday, and are up by about 6% in the year to date. The stock opened higher on the news before giving up most of the gains as trading continued throughout the day.
This deal is the latest in a series of sales by the firm, which included offloading its US onshore wind energy business and its Dutch mobility and convenience arm. The pattern demonstrates BP’s commitment to shedding non core assets and strengthening its financial position.
Elsewhere, Petrofac, one of the biggest North Sea oil and gas contractors, has agreed to sell its asset solutions business to CB&I, a US industrial designer and manufacturer. The companies did not disclose the financial details of the deal, though it will be welcome news for Petrofac, which filed for administration in October.
The company, which employs about 7,300 people, said 3,000 are expected to join CB&I when the deal closes, which should be in the first quarter of 2026. This represents another significant restructuring move in the energy sector as companies adapt to changing market conditions and investor pressures.