After considering the detailed strategic analysis of Castrol, BP has decided to dispose of 65 percent shareholding of Castrol to Stonepeak at an enterprise value of $10.1billion.
This is an implied EV / LTM EBITDA of approximately 8.6x that shows the robustness of the business and its potential to grow in the future.
The deal is a breakthrough in the acceleration of the strategy of bp which comprises simplification of the portfolio, enhancement of the balance sheet, and concentration of the downstream on its core integrated businesses.
The transaction will produce net proceeds to BP of about $6.0 billion, including about $0.8 billion as the pre-payment of future dividend receivables within the short and medium term on the remaining 35 percent share in BP.
The implied total equity value of Castrol remains $8.0 billion minus JV minority interests of $1.8 billion and other debt-like obligations amounting to approximately $0.3 billion and subject to customary adjustments.
Therefore, a large percentage of Castrol JV minority interests is associated with the shareholding in the publicly listed Castrol India Limited.
After the deal, a new joint venture will be established with a 65 percent ownership of Stonepeak and 35 percent ownership of bp, which will offer exposure to the Castrol growth plan throughout the next few years, which is based on a long track record of nine quarters of straight years of year-on-year earnings growth. However, after two years of lock-up, BP has the option to dispose of its 35 percent interest in Castrol.
Interim CEO, Carol Howle, said that “Today’s announcement is a very good outcome for all stakeholders. We concluded a thorough strategic review of Castrol, that generated extensive interest and resulted in the sale of a majority interest to Stonepeak. And with this, we have now completed or announced over half of our targeted $20bn divestment programme, with proceeds to significantly strengthen bp’s balance sheet. The sale marks an important milestone in the ongoing delivery of our reset strategy. We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan. And we are doing so with increasing intensity – with a continued focus on growing cash flow and returns, and delivering value for our shareholders.”
The transaction is projected to be concluded by the end of 2026, which is subject to regulatory approvals.
Senior Managing Director and Co-Head of Energy at Stonepeak, Anthony Borreca, stated that “Lubricants are a mission-critical product, which are essential to the safe and efficient functioning of virtually every vehicle, machine, and industrial process in the world. Castrol’s 126-year heritage has created a leading market position, an iconic brand, and a portfolio of differentiated products that deliver meaningful value to its customers. We are excited to work alongside Castrol’s talented employees, coupled with bp’s continued guidance as a minority interest holder, as we support the business’s continued growth.”
The sale is included in the earlier announced by BP divestment programme of $20 billion and adds realised and announced levels of divestment proceeds to date to approximately $11.0 billion.
The entire proceeds of this transaction will be used in net debt reduction to the target of bp of $14-18 billion by the end of 2027. As of the end of Q3 2025 bp’s net debt was $26.1 billion.
Divestment proceeds guidance of 2025 is in excess of $4 billion, of which $1.7 billion has been received to date as at Q3-25 results, with the remaining amount expected to be received by year-end of 2025.
