BP Sells Majority Castrol Stake to Stonepeak for $6 Billion
BP agreed to sell a 65% stake in its Castrol lubricants business to US investment firm Stonepeak for $6 billion. The transaction values the 126-year-old lubricants unit at $10.1 billion. According to CNBC, the British oil giant will retain a 35% interest through a new joint venture.
The deal closed on December 24, 2025. Canada Pension Plan Investment Board will invest up to $1.05 billion to support the transaction. BP can sell its remaining stake after a two-year lock-up period. Interim CEO Carol Howle confirmed the company has now completed or announced over half of its targeted $20 billion divestment program.
BP shares rose 0.9% following the announcement. The stock has gained 9% in 2025 after dropping 15.7% in 2024. The company reported declining annual profits in both 2023 and 2024.
Debt Reduction Takes Priority
The proceeds will help BP reduce its net debt from $26.1 billion to a target range of $14 billion to $18 billion by the end of 2027. The company expects total net proceeds of approximately $6 billion from the transaction. This includes $800 million for the prepayment of future dividend income on its retained stake.
Bloomberg reported that the sale accounts for a large portion of BP's divestment plan. Energy companies including Reliance Industries and Saudi Aramco had been potential buyers. Private equity firms Apollo Global Management and Lone Star Funds also showed interest in May 2025.
The transaction represents an enterprise value to earnings multiple of 8.6 times. This reflects Castrol's strong business performance and growth potential. The lubricants unit has delivered nine consecutive quarters of year-on-year earnings growth.
Refocus on Core Oil and Gas Operations
The sale reflects BP's strategic shift away from renewable energy investments and back toward traditional hydrocarbons. Dan Boardman-Weston, CEO at BRI Wealth Management, told CNBC the company is returning to its core focus on oil and gas exploration and development. BP has scaled back renewable energy spending under pressure from activist investor Elliott Investment Management.
The global lubricants market was valued at $173.5 billion in 2024 and is projected to reach $178.1 billion in 2025, according to MarketsandMarkets. The market is growing at a 2.7% annual rate. Demand for high-performance engines in automotive and industrial sectors drives this expansion.
Castrol operates in over 150 countries and serves consumer automotive customers plus commercial and industrial end markets. The deal is expected to close by the end of 2026 pending regulatory approvals. BP's transaction comes as the company appointed its fourth CEO in six years. Woodside Energy boss Meg O'Neill will take over on April 1, 2026.
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