BP Strikes Deal to Sell Majority Stake in Castrol to Stonepeak for $6 Billion

06:48 AM EST, 12/24/2025 (MT Newswires) -- BP (BP.L) agreed to sell a 65% stake in Castrol to US-based alternative investment company Stonepeak following a strategic review, in a deal valuing the lubricants business at $10.1 billion. The UK-headquartered oil and gas giant expects $6 billion in total net proceeds from the transaction, including an estimated $800 million for accelerated dividend payments, according to a Wednesday release. BP noted that the deal includes minority interests in the business, primarily 49% in India, 35% in Vietnam, 50% in Saudi Arabia, 40% in Thailand and other jurisdictions. BP will retain a 35% shareholding in Castrol through a new joint venture with Stonepeak that will be incorporated upon deal completion, which is anticipated to take place by 2026-end. The retained stake will be treated by BP as an equity accounted investment, with the group also having the option to sell it after a two-year lock-up period. "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," BP interim Chief Executive Officer Carol Howle said, adding that it is part of the company's efforts to boost cash flow and shareholder value. "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." BP intends to use the entire proceeds from the sale to reduce its net debt toward its 2027 target of between $14 billion and $18 billion. The company's net debt stood at $26.1 billion as of the end of the third quarter of 2025. "We continue to question the rationale (beyond the headline multiple) of selling this highly cash generative, low volatility and low capital intensity asset, as ultimately this is detrimental to the long term dividend sustainability and earnings quality of the business," analysts at RBC Capital Markets said, noting a neutral sentiment on BP. "Accelerated dividends now will help reduce debt, but clearly at the expense of medium term cash flows. We think the better long term option would have been to cut the buyback as it has been funded by the balance sheet anyway, or look to divest some of the upstream assets in development." BP's shares traded marginally lower in London as of Wednesday midday.