Exclusive-BP in active talks with Stonepeak over Castrol sale, sources say

By Amy-Jo Crowley, David French and Andres Gonzalez LONDON/NEW YORK (Reuters) -BP is in talks with investment firm Stonepeak over the sale of its Castrol lubricants unit, according to two people with knowledge of the situation, in what would be a major step in meeting the energy company's $20 billion divestment goal. The sale process for Castrol began earlier this year after the London-listed oil major said in February it had put the century-old lubricants business under review as part of a broader strategy shift away from renewable energy.  In September, both Stonepeak and private equity firm One Rock submitted bids for the unit, one of the people and a third one said, speaking on condition of anonymity because the matter is private. The sources cautioned a deal may not materialize.  Reuters could not determine whether BP is still in discussions with One Rock or any other parties, and details about the value or structure of Stonepeak's offer also could not be learned. Market expectations, according to RBC analysts, place the value of the Castrol sale at around $8 billion in recent weeks. Representatives for BP, Stonepeak and One Rock declined to comment. BP's U.S.-listed depository receipts jumped 2% after the Reuters report before paring back the gains.  "Some investors have expressed doubts about the ability of the company (BP) to get the deal done quickly given its (Castrol's) size, which will limit the pool of bidders," said Henry Tarr, co-head of energy and environment research at Berenberg.  "If BP can get a deal agreed, at a reasonable valuation, then this will de-risk the divestment plan and have a material positive impact on gearing." BP has vowed to increase profitability and cut costs while re-routing spending to focus on oil and gas. In August the company launched a review of how best to develop and monetise its oil and gas production assets after new Chair Albert Manifold took up his post and called for a deeper reshaping of BP's portfolio to increase profitability. Earlier this month, BP CEO Murray Auchincloss said there was strong interest in Castrol but did not provide further details. The CEO said he expected completed or announced asset sales  to total around $5 billion this year, helped by selling minority stakes in its U.S. onshore pipelines. The sale of Castrol is part of BP's broader effort to streamline operations and boost profitability, particularly as the company faces pressure from investors, including activist hedge fund Elliott.  The energy company reported a smaller-than-expected fall in third-quarter underlying profit earlier this month as a strong performance at all divisions led by refining helped to offset the impact of lower crude prices. New York-based Stonepeak is a significant investor in energy, digital infrastructure, and transport and logistics, with around $80 billion of assets under management, per its website. In May, Stonepeak announced it and a partner would take a 65% stake in Phillips 66's retail fuel business in Germany and Austria.  (Reporting by Amy-Jo Crowley and Andres Gonzalez in London and David French in New York. Additional reporting by Stephanie Kelly and Shadia Nasralla. Editing by Anousha Sakoui and Nick Zieminski)

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