Reports say Shell is talking to advisors about possible acquisitions of rival oil producer BP.
According to a Bloomberg report cited people familiar with the issue, oil companies have been discussing the feasibility and benefits of BP’s acquisition in recent weeks.
If this happens, it will mark one of the biggest deals ever in the oil and gas industry.
As BP’s stocks suffer this year, speculations arise about possible acquisitions. They have fallen more than 30% in the last 12 months as a conversion plan under CEO Murray Autinkoros.
Shell also may wait for BP to reach out to another possible suitor to make the first move, people familiar with the matter told Bloomberg. The report says deliberations are still in the early stages, and Shell can focus on stock buybacks and small-scale acquisitions rather than such a major merger.
The UK’s biggest oil company combination will be one of the biggest deals ever in this sector. The market value of the Shell is £145.6 billion. It’s more than twice the BP, which costs £55.9 billion.
A Shell spokesman told the Guardian: “As I’ve said many times before, we focus on capturing the value of the shell by continuing to focus on performance, discipline and simplification.”
A BP spokesman declined to comment.
In February, Auchincloss promised to “a fundamental reset” BP’s strategy, with the changes expected to include accumulating its climate commitments and the pursuit of new fossil fuel projects to strengthen its market value.
The company’s profits fell almost 50% in the first three months of this year, down from $2.7 billion in the same period last year to $1.4 billion (£1 billion). The flagging stock price aims to the company for New York hedge fund Elliott Management.
The stock has lagged behind other oil and gas companies in recent years after former CEO Bernard Rooney set BP on the course and became a net zero energy company. He suddenly left BP in September 2023 and admitted that he had not fully disclosed his relationship with his female colleagues with the board.
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On Friday, Shell reported an adjusted profit of $5.6 billion in the first quarter, down 28% compared to the same period last year, surpassing what city analysts had expected.
Shell CEO Wael Sawan told the Financial Times that he would like to buy back more of the company’s own shares than launching a BP bid.
“We always see these things, but you also want to see what the alternative is,” he said. “Now, buying a shell for us continues to be an absolute proper alternative.”