BP Plc (LSE:BP.) traded higher on Monday after revealing a $1.5 billion agreement to divest minority stakes in its U.S. midstream operations to private investment firm Sixth Street — a deal analysts say will reduce leverage slightly and help unlock balance sheet value.
The transaction covers BP’s onshore pipeline and processing assets in the Eagle Ford and Permian basins. This includes four key central facilities in the Permian — Grand Slam, Bingo, Checkmate, and Crossroads — which link production sites to third-party pipeline networks.
The sale will take place in two tranches: roughly $1 billion will be paid at signing, with the balance expected before year-end, pending regulatory approval.
Once completed, BP’s ownership in the Permian midstream system will fall from 100% to 51%, and its stake in the Eagle Ford assets will decline from 75% to 25%. Sixth Street will hold the remaining interests, though BP will continue to operate all assets.
BP expects the deal to boost non-controlling interests on its balance sheet and generate an annual income statement benefit of between $100 million and $200 million. The divestment also advances BP’s goal of securing $20 billion in asset sales by the end of 2027, a target laid out during its February Capital Markets Update.
UBS called the transaction a modest positive, citing the valuation uplift and an implied 1.1% reduction in leverage. The bank noted the estimated earnings contribution values the deal at around 10x earnings — broadly in line with BP’s own fiscal 2026 multiple and slightly below the 10x to 15x range typical for independent operators. UBS also anticipates the full payout to be completed before year-end.
Morgan Stanley & Co. LLC acted as financial adviser to BP, while Hunton Andrews Kurth LLP served as lead legal counsel.
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