Are BP or Shell next in line for big M&A? Report

Insight 01 November 2023

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Report summary

Will Shell and BP respond to ExxonMobil and Chevron with big upstream takeovers of their own? Have the US Majors triggered a wider M&A ‘arms race’ to scale up in advantaged oil? Which Independents are prime acquisition targets? What about a Shell-BP merger? A flavour of the questions we’ve been getting from clients over the past week or so, mirroring the narrative of a predictably excitable media. In this note, we consider whether large-scale upstream acquisitions – think corporate takeovers over US$20 billion – might be on Shell or BP’s radar.

Might Shell or BP make a large upstream acquisition in response to the US Majors’ recent moves?
- 1. It would mean a fundamental U-turn on strategy
- 2. Affordability and potential targets are problematic
- 3. Big M&A is rarely reactive
But, why might Shell or BP consider a large upstream acquisition?
Stay the course
- BPX spin-off an outside bet?
What about a Shell-BP ‘mega-merger’?
Post-script: Consolidation

Tables and charts

This report includes the following images and tables:

Wood Mackenzie oil and gas production forecasts and resource estimates
Evolution of market premium/discount to WoodMac NPV
Market premium/discount to WoodMac NPV (%), bubbles proportional to upstream NPV
Corporate deals in upstream oil & gas, monthly