BP? Never heard of her…

It appears Shell is “not” trying to buy BP… except, according to every banker with a working phone, they absolutely are. The Wall Street Journal reported that Shell is in early talks to scoop up BP, which would be the biggest oil deal since Exxon and Mobil decided to do the dirty deed (read: merge) back in the 90s. 

(Source: Giphy) 

And yet, is it true? Well, as of right now, Shell immediately called this “market speculation”. BP, meanwhile, is saying nothing, which is probably for the best. The company has spent the last few years trying to convince investors it’s the lovechild of Greta Thunberg and J.R. Ewing… pivoting hard into renewables, talking a big “net zero” game, and then, shocker, watching its stock get absolutely bodied. Turns out, investors didn’t want a moral high ground… they want straight cash homie. Meaning, BP’s $80 billion market cap is now basically a clearance sticker in the oil world, especially compared to Shell’s $200 billion market cap position. 

(Source: Wall Street Journal) 

On the other hand, as BP has mutilated itself with tree hugging energy, Shell just announced it’s lighting cash on fire for sport with another round of buybacks. They’ve rolled back green targets, doubled down on the stuff that actually pays the bills, and are basically telling the ESG crowd to touch grass. Translation: Shell could easily absorb BP… but why would they do it in the first place? 

Look no further than activist investor Elliott Management, which took a 5% stake and immediately started making “arranged marriage” noises. BP’s whole “we’re going green” thing tanked the stock, so now it’s back to pumping oil and selling off anything that doesn’t smell like gasoline. Castrol? On the block. Solar? Guillotined. 

(Source: Giphy) 

For Shell, buying BP it’s not just about bragging rights. Shell would instantly vault into “come at me, bro” territory (think: bulking up in LNG, Gulf of America ops, and global trading), directed straight at Exxon. There’s also the not-so-small matter of British regulators, who would rather see BP go to Shell than to some rando foreign buyer. The integration would be a clown car of culture clashes, asset sales, and regulatory migraines, but it would let Shell spread costs, axe redundancies, and basically become the final boss of European oil.

But then again, Shell is officially denying everything. Under UK takeover rules, a formal denial means no deal for six months, so this is all just oil foreplay. And yet, considering that BP’s not exactly fielding a lot of offers, I’d assume they are doing whatever they can to make a buyout a reality. 

(Source: Giphy) 

In the end though, let’s just assume that Shell wants BP, BP needs someone, and Elliott just wants a fat check. If this goes through, it’ll be the oil industry’s version of a shotgun wedding… messy, expensive, and absolutely no one’s idea of a fairy tale. And yet, it could still print bigly amounts of cash. Case in point: BP shares mooned 7% on the news. Meaning, keep your eyes on this story and place your bets accordingly, friends. Until next time…

At the time of publishing, Stocks.News holds positions in Exxon Mobil as mentioned in the article.