Highlights

  • bp agrees to sell 65% of Castrol at an enterprise value of USD 10.1 billion.
  • Net proceeds of around USD 6 billion will be used to reduce net debt.
  • bp retains a 35% stake, with exit optionality after a lock-up period.

bp plc (LSE:BP) has entered into an agreement to sell a 65% shareholding in its lubricants business Castrol to infrastructure-focused investment firm Stonepeak. The transaction values Castrol at an enterprise value of USD 10.1 billion and follows a strategic review of the business. The sale represents a significant component of bp’s ongoing portfolio simplification and balance sheet management programme.

The transaction implies an enterprise value to last-twelve-month EBITDA multiple of approximately 8.6x. According to bp, this valuation reflects Castrol’s earnings profile and business outlook. Completion of the deal is expected by the end of 2026, subject to customary regulatory approvals.

Financial Impact and Use of Proceeds
bp expects total net proceeds from the transaction of approximately USD 6.0 billion. This figure includes around USD 0.8 billion related to the prepayment of future dividend income associated with bp’s retained 35% stake, along with other adjustments. All proceeds from the transaction will be allocated to reducing bp’s net debt.

The implied total equity value of Castrol is USD 8.0 billion after accounting for joint venture minority interests of around USD 1.8 billion and other debt-like obligations of approximately USD 0.3 billion. A substantial portion of these minority interests relates to Castrol India Limited, which is publicly listed in India (₹).

As of the end of the third quarter of 2025, bp reported net debt of USD 26.1 billion. The company is targeting a net debt range of USD 14–18 billion by the end of 2027.

Joint Venture Structure and Retained Interest
Upon completion, a new joint venture will be formed with Stonepeak holding a 65% interest and bp retaining 35%. bp’s remaining stake provides continued exposure to Castrol’s earnings profile and future growth plans. A two-year lock-up period will apply, after which bp will have the option to sell its remaining interest.

bp expects to account for the retained stake as an equity-accounted investment and does not anticipate recognising earnings or receiving dividends in the short to medium term, as Stonepeak will have a preference on distributions.

Divestment Programme Progress
The Castrol transaction forms part of bp’s previously announced USD 20 billion divestment programme. Including this deal, completed and announced divestments total approximately USD 11.0 billion. For 2025, bp has guided for divestment proceeds exceeding USD 4 billion, with USD 1.7 billion received as of third-quarter results and the remainder expected by year-end.

Share Price Snapshot
BP was trading at GBX 427.50 per share as of 24 December 2025