BP plc BP, the UK-based energy major, has officially launched the sale of its Castrol lubricants business, marking a significant move in the British energy giant’s plan to raise $20 billion by 2027 through asset sales. The divestment aims to streamline BP’s portfolio and strengthen its financial footing amid strategic recalibration under CEO Murray Auchincloss.
According to sources familiar with the matter, BP has enlisted Goldman Sachs to handle the sale process and has already circulated an information memorandum to potential strategic and private equity bidders. While BP declined to confirm specific details, it noted that its broader divestment program was "progressing," with $1.5 billion in deals already signed.
Castrol’s Global Footprint and Legacy
Founded in 1899, Castrol is one of the world’s most recognized lubricant brands, with operations spanning over 150 countries. It has also enjoyed a high-profile sponsorship history in motorsports, including partnerships in Formula 1 and the World Rally Championship. BP acquired Castrol in 2000 for approximately £3 billion, integrating it into its downstream business.
The lubricants unit is now viewed as a valuable standalone asset. Analysts at Bernstein estimate that the sale could fetch $10-$11 billion, making it one of the largest in BP’s current divestment pipeline.
BP Sharpens Focus With Exit From Non-Core Businesses
The Castrol sale is part of BP’s broader restructuring effort, which includes evaluating several other non-core assets. This includes plans to divest the Gelsenkirchen refinery in Germany, retail operations in Austria, and a 50% stake in Lightsource bp — BP’s solar energy joint venture. Bidders for the Lightsource stake are expected to be shortlisted in July.
BP’s asset sales decision followed as activist investor Elliott Management pressured the company for strategic changes and operational efficiencies. The move also reflects CEO Auchincloss’ return to traditional hydrocarbons, cutting back on low-carbon investments in favor of boosting returns from oil and gas.
Early Interest in Castrol Emerges as BP Opens Bidding
Earlier reports indicated that Saudi Aramco had expressed interest in Castrol. While no bidder has been officially named, the commencement of the formal sale process and the hiring of Goldman Sachs signal increasing momentum.
BP’s divestment program will continue to be closely watched as the company seeks to realign its business mix and respond to investor calls for improved performance and strategic clarity.
BP’s Zacks Rank & Key Picks
BP currently carries a Zack Rank #5 (Strong Sell).
Investors interested in the energy sector may look at some better-ranked stocks like Subsea 7 S.A. SUBCY, Energy Transfer LP ET and RPC Inc. RES. Subsea 7 presently sports a Zacks Rank #1 (Strong Buy), while Energy Transfer and RPC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Subsea 7helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore.
The Zacks Consensus Estimate for SUBCY’s 2025 EPS is pegged at $1.31. The company has a Value Score of A.
Energy Transfer is poised to benefit from long-term fee-based commitments. It is also focused on expanding operations through organic and inorganic initiatives. The firm is looking for solutions to meet growing energy demands from additional demand centers through its pipeline network. Energy Transfer’s systematic investments should boost its total fractionation capacity at Mont Belvieu and raise its top line.
The Zacks Consensus Estimate for ET’s 2025 EPS is pegged at $1.44. The company has a Value Score of A.
RPC generates strong and stable revenues through a diverse range of oilfield services, including pressure pumping, coiled tubing and rental tools. The company is strongly committed to returning value to shareholders through consistent dividends and share buybacks. RPC’s current dividend yield is higher than that of the composite stocks in the industry. Its new Tier IV dual-fuel fleet has boosted profits, with plans to further expand high-efficiency equipment to enhance operational capabilities.
The Zacks Consensus Estimate for RES’ 2025 EPS is pegged at 38 cents. The company has a Value Score of A.
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BP p.l.c. (BP): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis Report RPC, Inc. (RES): Free Stock Analysis Report Subsea 7 SA (SUBCY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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