The global expansion in population, economic growth, energy demand, and intensive industrialization have led to the constant depletion of petroleum from conventional crude oil reservoirs. This as a result escalated various research to extract the remaining two-thirds of the trapped original oil in place (OOIP). Tertiary oil recovery methods such as thermal, chemical, and microbial have been researched as a strategy in this regard to scale up and speed up the extraction of unrecovered crude oil. The present study describes elaborately the isolation of a potential biosurfactant-producing and crude oil degrading strain isolated from the petroleum sludge of Guwahati Oil Refinery. A total of seven strains were isolated and their growth in Bushnell Haas agar supplemented with crude oil was studied. One strain S1 was chosen based on the growth profile and surface-active properties. Isolate SN1 reduced the surface tension and interfacial tension to 32.69 ± 0.98 and 1.04 ± 0.13 mN m−1 respectively along with a moderate emulsification index of 45.0%. Morphological analysis of strain SN1 concluded it to be a gram-positive bacillus. The biosurfactant produced from SN1 was chemically identified to be a lipopeptide and characterized using various analytical techniques to establish its suitability for microbial-enhanced oil recovery.