Call Me Maybe: Were Shell to Buy BP, What Would that Look Like?

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--As Shell plc (NYSE:SHEL) (London, England) and BP (NYSE:BP) (London) are headed in opposite directions on the ladder of success, the larger Shell has been rumored to be looking to buy its struggling neighbor. Shell Chief Executive Officer Wael Sawan told the Financial Times that he would rather continue his company's history of buying back shares than buy BP.

Shell announced a $3.5 billion share buyback on May 2 based on better-than-expected first-quarter 2025 results, making it the 14th consecutive quarter that the company has announced a buyback of $3 billion or more.

On the other hand, BP shrank its buyback plans in 2025 to $1.75 billion, citing lower profits. Indeed, BP's 2024 net income was $370 million, down 98% from 2023, according to its annual report. Revenue was down 10% from 2023, to $187.4 billion. BP shares dropped about 30% over the course of 2024. The company's debt was listed at $71.13 billion, while Shell's debt is listed at $81.5 billion as of first-quarter 2025.

Is anyone else in the running? While Exxon Mobil Corporation (NYSE:XOM) (Spring, Texas) and Chevron Corporation (NYSE:CVX) (Houston, Texas) are the only other companies likely to be big enough to swallow such a large meal, both have recent completed major purchases. Chevron purchased Hess Corporation (NYSE:HES) (New York, New York) for $53 billion, although the rights to some of Hess's offshore Guyana assets are being challenged by ExxonMobil; and the latter recently paid $59 billion for Pioneer Natural Resources and also paid $4.9 billion for Denbury Resources. Both have since been active in shedding non-core assets to pay down debt.

How big would a combined company be? As of this month, BP's market cap is about $80 billion, and Shell's is $197.22 billion. A little math reveals that a combined company would be valued at about $277 billion.

With that number, a merged entity would rank as the world's third-largest oil company, behind Saudi Arabian Oil Company's (Saudi Aramco) (Dhahran, Saudi Arabia) $1.647 trillion and ExxonMobil's $474.6 billion. That would push the current No. 3, Chevron, to No. 4 at $249.10 billion, according to MarketCap.

Industrial Info's database includes more than $169 billion of active projects listing Shell Plc as the plant parent. There are 675 operating plants with Shell as the parent. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project and Plant databases can click here for the project reports and click here for the plant profiles.

For BP, Industrial Info is tracking more than $85 billion in active projects, and 315 operating plants with BP as the parent owner. Subscribers can click here for the project reports and click here for the plant profiles.

Together, they would account for 5 million barrels of oil equivalent per day (BOE/d) and 90 million tonnes of liquefied natural gas (LNG) sales per year, amounting to about 23% of the global market, according to the Times of London.

Offshore production would also be significant. Both are active in the Gulf of Mexico, and BP has a major stake in the North Sea.

The two companies also combine for nearly 200,000 employees, a number that likely would be reduced significantly, especially in administrative departments such as accounting. One estimate is that a more streamlined combo could save $6 billion in such costs over three years.

These kinds of transactions are typically followed by asset sales to pay down debt and to achieve greater savings in efficiency. For BP, a significant spinoff target could be its energy transition investments, most of which have failed to pay off. The company has already begun shedding some of them, at a loss.

What's the holdup? Many analysts see Shell holding off to see if BP's stocks continue to drop beyond the 30% reduction they saw last year. Much like bidding down a used couch at a garage sale, Shell could be bargaining for a better price.

With a combined company rocketing to among the top five oil companies in the world, regulators in both the EU, where Shell's home is, and the U.S., where much of their business would reside, both upstream and downstream, could raise many eyebrows. The review process could take months or years, and conflicting rulings are possible, which would create significant issues.

Investors, on the other hand, especially in BP, could be pleased. Past mergers of Chevron and Texaco, and Exxon and Mobil, have proven to be extremely valuable, which could indicate success for this one as well.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).