### Overview of the Transaction

In a significant development, bp has finalized an agreement to divest a 65% stake in Castrol to Stonepeak, valuing the enterprise at an impressive $10.1 billion. This transaction implies an EV/LTM EBITDA ratio of approximately 8.6x, which underscores not only the robustness of Castrol’s current business operations but also its considerable future growth potential. This sale represents a pivotal step in bp’s ongoing strategy to streamline its business model, fortify its balance sheet, and concentrate on the downstream segments where it maintains a competitive edge.

### Financial Implications

As a result of this strategic transaction, bp is poised to reap around $6.0 billion in total net proceeds. This figure incorporates approximately $0.8 billion for the pre-payment of future dividends on the remaining 35% stake that bp will retain, alongside other financial adjustments. Following the deduction of joint venture minority interests amounting to $1.8 billion and additional debt-like obligations around $0.3 billion, the implied total equity value attributed to Castrol stands at $8.0 billion, subject to standard adjustments. Notably, a significant portion of the minority interests in the joint venture is tied to shareholding in Castrol India Limited, a publicly traded entity.

### Joint Venture Formation

Upon executing the transaction, a new joint venture is set to be established, characterized by 65% ownership by Stonepeak and 35% by bp. Retaining a stake in Castrol enables bp to benefit from its growth plans in the years to come, particularly in light of a strong performance record marked by nine consecutive quarters of year-over-year earnings increases. Additionally, after a two-year lock-up period, bp will have the option to divest its remaining 35% stake in Castrol.

### Statements from Leadership

#### Carol Howle, Interim CEO of bp

“Today’s announcement is an outstanding result for all involved parties,” remarked Carol Howle, interim CEO at bp. “The extensive strategic review of Castrol not only generated considerable interest but also culminated in the successful sale of a majority interest to Stonepeak. This transaction enables us to realize significant value for our shareholders, contributing to our overarching goal of bettering bp’s financial landscape. With the completion or announcement of over half of our targeted $20 billion divestment initiative, we are making strides in enhancing bp’s balance sheet. This marks a significant milestone in executing our reset strategy, as we reduce complexity and focus our downstream operations on integrated business models while prioritizing cash flow growth and shareholder value.”

#### Anthony Borreca, Senior Managing Director at Stonepeak

Anthony Borreca, the Senior Managing Director and Co-Head of Energy at Stonepeak, also shared his insights, stating, “Lubricants are an essential component for the efficient operation of virtually every vehicle, machine, and industrial process globally. With a history spanning 126 years, Castrol has established a strong market presence and has built an iconic brand supported by a diverse range of valuable products. We eagerly anticipate collaborating with the skilled workforce at Castrol, alongside bp’s continued oversight as a minority stakeholder, to propel the business’s growth trajectory.”

### Strategic Divestment Goals

This sale forms part of bp’s overarching $20 billion divestment strategy, pushing the total proceeds from successfully completed and announced divestments to approximately $11.0 billion. All proceeds from this transaction are earmarked for reducing net debt, targeting a figure between $14 billion and $18 billion by the end of 2027. As of the end of the third quarter in 2025, bp’s net debt was recorded at $26.1 billion. The projected divestment proceeds for 2025 exceed $4 billion, with $1.7 billion already secured as of the third quarter, while the remainder is expected to be realized by the end of the year.

### Commitment to Shareholder Value

bp is unwavering in its commitment to maximizing shareholder value, pledging to pursue the following objectives:

– **Opportunities for Portfolio Improvement:** Actively seeking ways to high-grade its portfolio while eliminating complexity.

– **Financial Strengthening:** Ongoing efforts to enhance the balance sheet and optimize operational costs.

– **Disciplined Investment:** Continued focus on prudent investments aimed at maximizing cash flow and returns.

Through these endeavors, bp is accelerating its transition into a more streamlined, efficient, and profitable enterprise.

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