Penethamate (PNT) is an ester prodrug of benzylpenicillin which is marketed as dry powder for reconstitution with aqueous vehicle prior to injection. The purpose of this paper was to investigate the chemical stability of PNT in oily formulations to provide a basis for a ready-to-use (RTU) oil-based PNT formulation. The chemical stability of PNT solutions and suspensions in light liquid paraffin (LP), medium chain triglyceride (MIG), ethyl oleate (EO) and sunflower oil (SO) was investigated at 30 °C. Solid state stability of PNT powder and stability of PNT in EO suspensions with different moisture contents were also evaluated. The solubility of PNT in the oils was in order SO > EO > MIG > LP. Degradation of PNT was rapid in oily solutions and less than 10% remained after 7–15 days. Stability of PNT decreased with increase in moisture content in ethyl oleate suspensions. PNT was stable over four weeks in the solid state. Hydrolysis, due to moisture in the oil formulation is not the only degradation mechanism. PNT stability (% drug remaining) in oily suspensions after 3.5 months was in the order LP (96.2%) > MIG (95.4%) > EO (94.1%) > SO (86%). A shelf-life of up to 5.5 years at 30 °C may be achieved for PNT suspension in these oils.