Is a Big Oil Megamerger Brewing? Exxon, Chevron, and Others Are Eyeing This Oil Stock.

Matt DiLallo, The Motley Fool

Sun, May 11, 2025, 12:22 PM 5 min read

• BP's underperformance and strategy shifts person made it a imaginable takeover target.

• Shell, Chevron, Exxon, TotalEnergies, and others person looked into acquiring the lipid company.

• A takeover of BP mightiness beryllium difficult.

• 10 stocks we similar amended than BP ›

A consolidation question has washed implicit the lipid spot successful caller years. ExxonMobil (NYSE: XOM) kicked things disconnected with its $64.5 cardinal woody for Pioneer Natural Resources successful precocious 2023. Chevron (NYSE: CVX) followed with a megadeal of its own, agreeing to bargain Hess for $60 cardinal successful a woody it hopes to adjacent this summer. Several different lipid companies person joined the merger question by making smaller deals.

After a calm successful caller months, a perchance monolithic woody could beryllium brewing. Several lipid companies person tally the numbers connected buying BP (NYSE: BP). Here's wherefore it has go a takeover people and what large lipid companies mightiness bargain the oil stock.

BP has struggled successful caller years. The British lipid elephantine has undergone 2 important strategy shifts. In 2020, the institution pledged to chopped superior spending connected lipid and state projects, which would steadily trim its accumulation by 40%. It aimed to displacement that spending toward rapidly increasing its cleanable vigor businesses.

However, a betterment successful lipid prices and years of underperformance led the lipid elephantine to displacement gears connected its strategy again earlier this year. It's slashing spending connected renewables from a program to put $5 cardinal annually to a $1.5 cardinal to $2 cardinal yearly level.

Meanwhile, it's boosting its lipid and state superior concern program to $10 cardinal per year. As a result, BP volition turn its renewable concern overmuch much dilatory portion increasing its wide lipid and state output to an mean of 2.5 cardinal barrels of lipid equivalent (BOE) per time by 2030, up from little than 2.4 cardinal BOE past year.

BP's abrupt strategy shifts person it searching for an identity. It stands successful stark contrast to U.S. lipid giants Exxon and Chevron, which person well-defined multiyear strategies for increasing shareholder value. For example, Exxon plans to put $140 cardinal successful developing its advantaged assets (lower outgo and higher margin) portion stripping retired billions of structural costs. This program has the lipid elephantine connected way to adhd an incremental $20 cardinal successful net and $30 cardinal successful escaped currency travel by 2030.

Meanwhile, Chevron is besides investing heavy successful increasing its advantaged assets, which volition drive industry-leading free-cash-flow maturation of arsenic overmuch arsenic $10 cardinal by 2026. Both lipid companies are besides investing strategically to turn their lower-carbon vigor platforms, focusing connected investments that tin gain charismatic returns, similar carbon seizure and storage, biofuels, and hydrogen.