UK oil major BP has consented to sell its stakes in US-based shale assets to fund the company Sixth Street.
The owner of the Castrol brand supplying cutting-edge lubricant products is using the deal valued at $1.5 billion to strengthen its balance sheet in a bid to regain confidence from investors.
In a recent statement, BP confirmed that funds managed by Sixth Street would be used to buy non-controlling interests in the Eagle Ford and Permian midstream assets.
CEO for BP, Murray Auchincloss, is following his ongoing initiative of divesting assets to reverse years of poor performance that put the energy giant at odds with Elliott Investment Management, the activist shareholder. Albert Manifold, who replaced Helge Lund recently as BP’s Chairman, commented that the company must urgently act to sell assets, reduce costs and improve its profitability.
The asset disposals include four central processing facilities in the Permian Basin oil field – Grand Slam, Crossroads, Checkmate and Bingo. After the transactions are completed, BPX Energy, BP’s US onshore gas and oil business, will own 51 per cent of the Permian assets, along with 25 per cent of the midstream assets of the Eagle Ford Shale – a key source of oil and gas in the US.
The agreement is part of BP’s pledge to divest assets worth $20 billion by the close of 2027. So far, the company has succeeded in striking a deal to sell off its onshore wind business in the US to LS Power, marking its complete departure from the wind power generation sector. It has also consented to offload its electric vehicle (EV) charging hubs and retail fuel sites in the Netherlands.
