Is Shell Sizing Up Oil’s Biggest Power Grab Yet?

BP’s poor performance in the first quarter and its stock lagging behind for the past year have sparked speculation that the UK’s major oil company could be a target for a significant acquisition. Market rumors suggest that Shell, another UK peer, could be the likely buyer. This speculation of a potential merger between Shell and BP has been circulating for over a decade, with recent talk intensifying after activist hedge fund Elliott acquired nearly 5% of BP shares and demanded swift changes. Despite BP’s efforts to improve its performance, including a strategy reset by current CEO Murray Auchincloss, the company continues to underperform compared to other major oil companies like Shell, TotalEnergies, ExxonMobil, and Chevron. Following BP’s weak Q1 results and a reduction in its quarterly share buyback program, the speculation of a Shell-BP megadeal has increased. Although Shell has not confirmed any takeover bid for BP yet, sources familiar with the matter have indicated that Shell is considering such a move depending on BP’s stock performance. While the potential merger between Shell and BP could create the world’s largest investor-owned oil and gas producer, analysts warn of high execution and regulatory risks associated with the deal.