BP Shares Rise on $6 Billion Deal to Sell Castrol Stake
Divestment to Stonepeak values the lubricant business at over $10 billion, advancing BP's strategy to reduce debt and streamline operations toward core assets.
BP Plc (NYSE: BP) shares advanced in trading after the company announced a definitive agreement to sell a majority stake in its iconic Castrol lubricants business to infrastructure investor Stonepeak for approximately $6 billion in net proceeds.
Shares in the energy giant climbed 1.3% to $34.58 on the news, as investors reacted positively to the significant step in the company's ongoing portfolio optimization. The transaction values the entire Castrol business at an enterprise value of $10.1 billion.
Under the terms of the deal, BP will sell a 65% interest in Castrol, a globally recognized brand, and will form a new joint venture with Stonepeak. BP will retain a 35% stake, allowing it to maintain exposure to the brand's future growth while securing significant immediate cash an a company press release confirmed. The company stated that all proceeds from the sale will be used to reduce its net debt, a key priority for management.
This divestment is the largest single asset sale for BP to date and a cornerstone of its strategy to simplify its portfolio and meet a divestment target of approximately $20 billion by 2027. The move is seen as a disciplined approach to shedding non-core assets to focus capital on its core oil and gas operations and integrated businesses.
The market's positive reception was echoed by analysts who see the sale as a crucial step in strengthening BP's financial position. Prior to the deal, analysts at Morgan Stanley upgraded BP's stock, noting that a potential Castrol sale would improve the company's net debt and place its share buyback program "on a better footing."
While BP retains a minority interest, the agreement includes a two-year lock-up period, after which BP has the option to divest its remaining holding, providing a path for a full exit and further value realization in the future. The deal attracted interest from multiple parties, signaling the high value placed on the Castrol brand and its market position, according to reports from Energy Voice.
The transaction is expected to close by the end of 2026, subject to customary regulatory approvals. The move to unlock value from the historic lubricants division allows BP to enhance shareholder returns and increase its focus on a simplified, more profitable portfolio as it navigates the evolving global energy landscape.