Speculation swirls as Shell denies early-stage talks with BP
BP shares soared more than 10% on Wednesday following a report by The Wall Street Journal that Shell was exploring a potential acquisition of the British oil major. The report, citing unnamed sources, said discussions were in early stages and that a deal was far from guaranteed.
The surge briefly lifted BP stock to a session high of $32.94, its biggest intraday jump in years. However, gains were trimmed after Shell publicly denied that any such talks were taking place. As of late afternoon trading, BP shares were up about 2%.
“This is further market speculation. No talks are taking place,” a Shell spokesperson told CNBC. “We are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification.”
A Mega Deal—or Something Else?
If Shell were to acquire BP in full, it would mark the largest oil and gas merger since Exxon’s $83 billion acquisition of Mobil in the late 1990s. BP’s current market capitalization sits around $80 billion. However, industry sources told CNBC that a full takeover is unlikely. A more probable scenario would involve breaking up BP and selling off assets to multiple buyers.
Market chatter about BP being a takeover target isn’t new. The company has significantly underperformed rivals like Shell and major U.S. oil firms in recent years. BP’s green energy strategy, once seen as a bold pivot, has now become a focal point for investor frustration.
Strategic Reset After Renewable Setbacks
In early 2024, BP announced a strategic shift back toward oil and gas after years of pushing a renewable-first agenda. That earlier pivot to low-carbon investments led to inconsistent returns and mounting pressure from shareholders. The company has since scaled back its renewable energy ambitions and recommitted to fossil fuels as its core business model.
“BP’s attempt to turn an oil company into a renewable company was definitely a huge error,” said Paul Sankey, lead analyst at Sankey Research, on CNBC’s Power Lunch. “It’s two very different costs of capital, and they should have never gone near to it.”
Activist investor Elliott Management disclosed in April that it had acquired more than a 5% stake in BP, further intensifying calls for the company to stay focused on traditional energy.
