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Investing.com -- BP Plc (LON:BP) traded higher on Monday after announcing a $1.5 billion sale of minority interests in its U.S. pipelines to private investor Sixth Street, a move analysts said should modestly cut leverage and unlock balance sheet value.
The energy company said the transaction involves its onshore midstream assets in the Eagle Ford and Permian basins, including four central processing facilities in the Permian, Grand Slam, Bingo, Checkmate and Crossroads, that connect wells to third-party pipeline systems.
The sale is structured in two phases, with about $1 billion paid upon signing and the remainder expected before year-end, subject to regulatory approvals.
Following completion, BP’s ownership in the Permian midstream assets will fall to 51% from 100%, and its stake in the Eagle Ford assets will drop to 25% from 75%.
Sixth Street will hold the remaining non-operating interests, while BP will retain operatorship and control of all assets.
BP said the transaction is expected to increase non-controlling interest on its balance sheet, with an estimated income statement effect of $100 million to $200 million per year.
The sale contributes to the London-headquartered company’s plan to achieve $20 billion in divestments by the end of 2027, announced at its Capital Markets Update in February.
UBS described the deal as a small positive given the sum-of-the-parts unlock and an implied 1.1% reduction in BP’s leverage ratio.
The brokerage said the projected net income impact implies a price-to-earnings multiple of about 10 times at the midpoint, compared with independents trading at 10 to 15 times and BP’s multiple of 11 times for fiscal 2026. UBS expects full payment before year-end.
Morgan Stanley & Co. LLC served as financial adviser to BP, with Hunton Andrews Kurth LLP acting as lead legal adviser.