BP announced on Christmas Eve eve that it’s handing over a 65% stake in its iconic Castrol lubricants business to US investor Stonepeak for around $6 billion. The deal values the slippery division at $10.1 billion, allowing BP to pocket proceeds while retaining just enough ownership to stay in the game.
The transaction delivers a timely boost to BP’s balance sheet, chipping away at its $26 billion debt pile with fresh cash earmarked entirely for repayments. Investors greeted the news with a modest shrug-turned-nod, sending shares up fractionally before settling, perhaps relieved that the company is finally greasing the wheels of its turnaround plan.
Analysts cheered it as a sensible step, noting how it refocuses BP on core oil and gas operations while shedding complexity – all under the watchful eye of a new chairman who seems to prefer lean machines over bloated portfolios.
BP’s new chair, Albert Manifold, wasted no time reshaping the company after taking the helm in October. Just weeks later, he orchestrated the surprise exit of CEO Murray Auchincloss, replacing him with Woodside Energy’s Meg O’Neill come April.
Interim chief Carol Howle now steers the ship, announcing this Castrol sale as a milestone in hitting over half of BP’s $20 billion asset divestment target. The proceeds? Straight to debt reduction, no detours.
Castrol, that familiar green bottle keeping engines humming for over a century, serves cars, factories, and even cools data centers with specialty fluids. Stonepeak snapped up the majority, with Canada Pension Plan chipping in up to $1.05 billion for a slice.
BP hangs onto 35% in a joint venture, complete with an option to cash out fully after two years – a classic hedge against missing future growth. The sale process kicked off in February, back when the strategy reset emphasized oil and gas over renewables.
Pressure from activist hedge fund Elliott helped nudge things along. Yet here BP is, divesting a profitable lubricants arm that showed nine straight quarters of earnings growth. One can’t help noting the timing: abandoning a steady performer just as data center cooling demand heats up.
Shares ticked up slightly in early trading, now about 9% higher year-to-date. Meanwhile, in related energy shuffling, North Sea contractor Petrofac agreed to sell its Asset Solutions business to US firm CB&I.
No price disclosed, but the deal preserves around 3,000 jobs for employees transferring over in early 2026. Petrofac, fresh from administration proceedings, found a buyer willing to integrate maintenance and decommissioning services. CB&I gains a reimbursable model for steadier cash flow.
Both deals underscore a sector trimming sails amid fluctuating fortunes. BP insists the retained stake keeps it exposed to Castrol’s upside. Stonepeak praises the brand’s heritage and innovation.
Howle called it a win for stakeholders. Manifold envisions a simpler, more profitable BP. Whether this overhaul finally smooths the ride remains the question shareholders ponder over their holiday turkey.
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