Energy firm BP confirmed rumours it could sell its historic lubricants business ahead of a highly awaited meeting with shareholders in London.
The firm also said it plans to raise proceeds from its Lightsource bp solar business by bringing in a partner.
The Castrol lubricant business could fetch the firm up to $6-8 billion (£4.7 – £6.3bn), analysts have estimated. BP said it would take out a “strategic review” of the business, adding that any proceeds “would be allocated to strengthening BP’s balance sheet”.
All told BP said it wants to sell off business worth $20bn in the next two years.
Ahead of its capital markets day event, BP has announced a number of measures intended to fix the firm’s poor stock performance in recent years as well as fob off any demands from Elliott Investment Management. The activist investor has built an estimated 5% stake in the oil giant.
Key points of the “fundamental reset”:
- increase oil and gas investment to $10bn per year
- grow oil and gas production to 2.3–2.5mmboed in 2030, raising an extra $2bn in revenues.
- cut $5bn from its low carbon business down to just $1bn to $2bn per year – focusing on biogas, biofuels, EV charging but “limiting” hydrogen/CCS investment and taking “capital-light” approach to renewables.
- slash $4–5bn in costs by end 2027 including $1–3bn less capital expenditure than in 2024.
In the statement, chief executive Murray Auchincloss said: “Today we have fundamentally reset bp’s strategy. We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth, and relentlessly pursuing performance improvements and cost efficiency. This is all in service of sustainably growing cash flow and returns.
“We will grow upstream investment and production to allow us to produce high margin energy for years to come. We will focus our downstream on markets where we have leading integrated positions. And we will be very selective in our investment in the transition, including through innovative capital-light platforms. This is a reset bp, with an unwavering focus on growing long-term shareholder value.”
BP chairman Helge Lund added: “The board believes that this is an important strategic reset for BP and is confident that it, together with rigorous performance management, will deliver improved performance and sustainable value for bp’s shareholders.
“Over the past 12 months, we have worked closely with Murray and his team as they have developed the new direction, ensuring it reflects the significant changes we have seen in energy markets and our purpose of delivering energy to the world today and tomorrow. This new direction places free cash flow growth, returns and value at its heart.”
The firm will be broadcasting its capital markets day event from 1pm Wednesday, 26 February.
