BP considers sale of Castrol

[Foxtrot08]

BP is generally in bad shape right now. And is being pushed to sell as a whole, probably to RDS.

Castrol’s been in bad shape in the U.S. market as a whole. They have some nice contracts globally, nice OEM business. But their distributor market and DIY market business isn’t strong in the U.S. as a whole.

Right now, a lot of companies are influx. Almost every major brand in the U.S. is going through a shake up of some sort. Chevron is, Mobil is, BP/Castrol is, P66 is, Valvoline is, Citgo is, etc. it’s a very turbulent time in the industry. Between downsizing, mismanagement, bad market conditions, and a changing market.

It will be interesting to see who shakes out on all this. Just when people are pulling back from the lubricants market. Right now, Chevron is driving hard back into it.

 

[SC Maintenance]

BP is generally in bad shape right now. And is being pushed to sell as a whole, probably to RDS.

Castrol’s been in bad shape in the U.S. market as a whole. They have some nice contracts globally, nice OEM business. But their distributor market and DIY market business isn’t strong in the U.S. as a whole.

Right now, a lot of companies are influx. Almost every major brand in the U.S. is going through a shake up of some sort. Chevron is, Mobil is, BP/Castrol is, P66 is, Valvoline is, Citgo is, etc. it’s a very turbulent time in the industry. Between downsizing, mismanagement, bad market conditions, and a changing market.

It will be interesting to see who shakes out on all this. Just when people are pulling back from the lubricants market. Right now, Chevron is driving hard back into it.

I would have to assume 90% of the US market is selling bulk commercially / 10% at retail packaging?

Any idea who controls the commercial sales market. M1 I would guess is big. Shell as well likely from the trucking/ag etc?

Honestly BP is being pushed around by whatever activist shark is trying to take over. On the actual production side, everyone in the industry is suffering from low oil prices. BP is suffering from lower refining margins. Sure, XOM and CVX are doing better, but there US focused, which is the only market in the world doing well in general. I think selling off parts to appease Gordon Gecko is short term thinking.

 

[Foxtrot08]

I would have to assume 90% of the US market is selling bulk commercially / 10% at retail packaging?

Any idea who controls the commercial sales market. M1 I would guess is big. Shell as well likely from the trucking/ag etc?

Honestly BP is being pushed around by whatever activist shark is trying to take over. On the actual production side, everyone in the industry is suffering from low oil prices. BP is suffering from lower refining margins. Sure, XOM and CVX are doing better, but there US focused, which is the only market in the world doing well in general. I think selling off parts to appease Gordon Gecko is short term thinking.

The DIY market is about 25% of the PCEO market. Which, the PCEO market is about 40% or so of the overall lubricants market. And the DIY market is shrinking fast.


The HDEO market is Shell / Chevron / Mobil / Citgo as a distant 4th. Shell & Chevron really have the HDEO market very tied up. Mobil is big in the mining world, which is a lot of gallons. But on road is Shell and Chevron. Off road construction is heavily Chevron.

BP is in bad financial position because of their bets on renewables. Their investment in off shore wind, solar, charging stations, and other “renewable” causes, they’ve spent hundreds of billions with little return. While their North Sea assets and gulf assets are a positive. Their liabilities are letting them get bullied by Elliot - who, was the initial winner of the bid of the citgo auction - then, withdrew from it. Which is why Citgo is getting auctioned again.

My professional opinion:

The Lubricants market has too many players in it. Too many major brands, too many ILMA’s, too much base oil. The only people making money right now is the additive players. Right now, we are going to see some consolidation in the industry. We have already seen extreme consolidation in the marketer world. Between Reladyne, Cadance, Moove, Brenntag. Next will be the ILMA blenders & majors. As, there’s only a handful of large distributors like myself. (remember, only 14 distributors do over 13 million gallons a year in the U.S. and we are one of them.) Those large distributors can’t support the ILMA’s enough to keep the volume split out.

In the major world, companies like Chevron & Mobil - who have base oil, will realize their vertical margins across their entire streams. And it makes the lubricants business more attractive. This is why Aramaco bought Valvoline. They have base oil via Motiva. They can sell it to themselves and not get beat up on price when you have a captive customer.

Castrol had contracts right now. That’s about it. And it’s worth money to someone with base oil. That’s why I think castrol is for sale. And what’s happening in the lubricants market.

 

[dubber09]

What EU market share does it hold? If a significant share then US has a chance to tighten its grip on EU for both political and financial influence if a US based company takes control over.

 

[Foxtrot08]

What EU market share does it hold? If a significant share then US has a chance to tighten its grip on EU for both political and financial influence if a US based company takes control over.

They are a much more significant player globally than in the U.S.

But really, the lubricants divisions of every major oil company, is a tiny fraction of the larger game. Up stream production and light ends is where all the money is. BP has a strong light ends (gasoline, diesel, av gas) imagine, significant refinery capacity and upstream production assets globally. They just got caught investing too heavily in renewables that didn’t pan out.

Them selling off the lubricants market is not a surprise.

I see someone like Moove or Petrobras being interested in it. I’m not sure I see Aramaco being super interested in it right now. They have a lot of internal investments in production growth going on right now in the LNG world.

Of course, VC’s could be interested in it. If Elliot is, maybe couple it with the purchase of Citgo. And they would suddenly be a global player with refineries. That at one point, made base oils but don’t anymore. But I don’t see any of the majors being interested in that sort of investment in the lubricants market right now.

 

[SammyChevelleTypeS3]

Kinda hard to realize with Castrol having such tradition and brand name recognition from early 1900s to later 1960s (winning cars) early motor car racing thru all of Europe. Something does seem to have been off with the brand the last few years.

 

[Sumboodie]

Lubricants is sunset industry if you ask the EV pundits.

Not in my lifetime for sure.

 

[Foxtrot08]

Kinda hard to realize with Castrol having such tradition and brand name recognition from early 1900s to later 1960s (winning cars) early motor car racing thru all of Europe. Something does seem to have been off with the brand the last few years.

It’s been going down hill in the U.S. since the late 90s. I mentioned this in another thread. But everyone who was anyone, left Castrol 20 years ago and started BlueStar. They cloned their entire line and basically took all the business with them.

That company is now owned by DuBois. On the PCEO side, it’s basically down to the DIY market. HDEO wise, they have some traction in the garbage industry with Vecton. But even that is pretty limited to that industry. And mostly because they have Republic services.

Just not a whole lot left there. I’ve said this on here for ages that Castrol is lost.

 

[OilUzer]

Competition is good for the consumer. We don't want to see lots of mergers and acquisitions.
Castrol Euro is often on sale at Wal-Mart ... you don't want to see the end of that.

 

[Sumboodie]

It’s been going down hill in the U.S. since the late 90s. I mentioned this in another thread. But everyone who was anyone, left Castrol 20 years ago and started BlueStar. They cloned their entire line and basically took all the business with them.

That company is now owned by DuBois. On the PCEO side, it’s basically down to the DIY market. HDEO wise, they have some traction in the garbage industry with Vecton. But even that is pretty limited to that industry. And mostly because they have Republic services.

Just not a whole lot left there. I’ve said this on here for ages that Castrol is lost.

We mostly sold it due to supply BP shops with lubes and them requiring it. They were bought out in 2019 and Castrol slowly went away. ~90% Chevron now. The rest P66 and few other oddballs.

 

[Bjornviken]

In my country Castrol have no chance to compete against Shell or ExxonMobil when it comes to prices. Be it car engine oil or industrial lubrication.

 

[addyguy]

I’ve thought for a while that Castrol branding is off - they had a well know product line with the Syntec line in the US; and Edge in the UK. Combining the two to Edge hurt them in the US bc no-one really knew the significance of it.
The idea behind Castrol ‘start up’ was a good one - engine starts cause wear, this oil clings to parts and reduces it; but they never really pushed that angle, and it withered. Then they brought it back as Magnatec, and never pushed its benefits either. Heck, I thought merge this with GTX and make it their entry level oil was a great idea, but it vanished.
I still think it would be a foolish move to sell.

 

[SC Maintenance]

I’ve thought for a while that Castrol branding is off - they had a well know product line with the Syntec line in the US; and Edge in the UK. Combining the two to Edge hurt them in the US bc no-one really knew the significance of it.
The idea behind Castrol ‘start up’ was a good one - engine starts cause wear, this oil clings to parts and reduces it; but they never really pushed that angle, and it withered. Then they brought it back as Magnatec, and never pushed its benefits either. Heck, I thought merge this with GTX and make it their entry level oil was a great idea, but it vanished.
I still think it would be a foolish move to sell.

Yes, I know a fair bit about branding and its clear BP does not. They invest a bunch in a brand, and they dump it and start over?

M1 is still M1, even though its changed 100 times and they have many flavors. When did Penzoil Platinum come out - years ago? Shell Rotella?