London: Britain’s BP has agreed to sell a 65% stake in its lubricants business Castrol to US-based investment firm Stonepeak for $6 billion, marking a major milestone in the oil giant’s sweeping strategy reset aimed at strengthening its balance sheet and refocusing its downstream operations.

The company said the entire amount will be used to reduce net debt, reinforcing its financial position as it targets divestments of $20 billion by the end of 2027.

Under the deal, a new joint venture will be created with Stonepeak holding 65% and BP retaining a 35% stake. BP’s retained holding provides continued exposure to Castrol’s growth plan, which has delivered nine consecutive quarters of year-on-year earnings growth, while preserving the option to monetise the remaining stake after a two-year lock-up period.

The sale follows months of market speculation after BP began exploring strategic options for Castrol. Potential suitors earlier this year reportedly included India’s Reliance Industries, Saudi energy giant Saudi Aramco, and private equity firms Apollo Global Management and Lone Star Funds, according to Bloomberg.

BP said the implied EV-to-LTM EBITDA multiple of around 8.6x reflects Castrol’s strong fundamentals and future growth potential. The implied total equity value of Castrol stands at approximately $8 billion, after accounting for minority interests—largely linked to publicly listed Castrol India—and other debt-like obligations.

The Castrol divestment comes days after BP announced a leadership change, appointing Meg O’Neill, former boss of Woodside Energy, as its new chief executive from April 1. She will replace Murray Auchincloss, BP’s fourth CEO in six years.

Stephen Isaacs, strategic adviser at Alvine Capital, told CNBC that while BP has been a “very poor performer for a long time,” the leadership change could be “the last piece of the jigsaw” in restoring confidence.

BP has underperformed peers in recent years, reporting declining annual profits in both 2023 and 2024. However, pressure on the stock has eased in 2025 following the management shake-up, cost-cutting measures and a series of oil discoveries. BP shares were up around 0.9% in early Wednesday trade and have gained about 9% so far this year, after falling 15.7% in 2024.