In the turbulent state of the global economy, contemplating the sale or divestment of assets is crucial for any company, especially those in the energy sector. It has now emerged that BP, one of the world’s largest and most profitable energy companies, has opted to divest its U.S. onshore midstream holdings to Sixth Street in a deal that is worth $1.5 billion. British Petroleum has become the darling of the international energy market with operations and holdings in substantial assets across the world. Now, the company aims to divest its holdings in several US operations.
BP is looking to bring in some much-needed cash to pay down net debt
BP has become a vestige of the old and more traditional energy sector; however, the company has plans to divest its holdings in several US energy projects across the Permian and Eagle Ford basins in the United States. The company’s midstream subsidiary, BPX, operates the midstream oil and gas assets in the Permian and Eagle Ford basins.
Now, BP has plans to sell off its holdings to Sixth Street to recoup some cash in an attempt to pay off its vast net debt. The deal allows BP to pay an initial fee of $1 billion upon the signing of the deal with Sixth Street, with the rest to be paid incrementally by the end of the year.
Sixth Street will hold a non-operating controlling interest while BPX holds operational rights
The deal enables Sixth Street to purchase a non-operating controlling interest in BP’s vast midstream assets in the Permian and Eagle Ford basins, while BPX will remain the site operator. BPX’s assets, which include pipelines and facilities in the Permian and Eagle Ford basins, are worth significantly large amounts of money, with the deal also including Permian central processing facilities, such as Grand Slam, Bingo, Checkmate, and Crossroads.
BP is hoping to divest more assets by the end of 2027, as the company deals with its mountain of debt
Crucially, once the transaction has been completed, subject to regulatory approval, BPX’s ownership interest in the substantial Permian midstream assets will drop from 100% to a mere 51%, while its ownership interest in the Eagle Ford midstream assets will reduce to 25% from 75%, with Sixth Street holding a non-operating percentage that remains from both sites.
“We are pleased to welcome Sixth Street as a co-owner in our Permian and Eagle Ford midstream assets. We recognized early on that investing in midstream would be an important ingredient to our success in these basins in terms of driving value, flow assurance, and lowering emissions. This transaction reinforces that we are on track to maximize the return on our investment in these basins and allows us to continue operating them safely and efficiently.” – Kyle Koontz, CEO of bpx energy
At BP’s Capital Markets Update in February 2025, the company outlined the need to divest holdings in several projects and has plans to sell off $20 billion of its vast portfolio by the end of 2027. The trend of divesting holdings has become a popular one in recent months, with KKR taking a stake in ADNOC’s gas pipeline, pointing to the broader investment drive for the company.
British Petroleum has seen some strong performances in Q3 of this year
Despite the need to divest its holdings in several U.S operations, BP saw its Q3 numbers in the black, with strong upstream performance. BP has a long and somewhat controversial history in the energy sector. The British energy major has been responsible for several oil spills over its lifetime, leading to significant pushback from environmentalists and the general populace alike. However, due to the current state of the global energy market, BP will surely remain a cornerstone of the international energy market for generations to come.
