ENB Pub Note: As Michael has brought this up in the podcast, this is a timely note from EuropeOffshore. Here are some of the details that were left out of the article. There are two big questions. Will they merge, then move to the U.S.? Or will BP just get listed on the NYSE so it would be easier for an American company to buy them out? It is clear, just like in California, they have no place in future plans in the UK government and net-zero policies. The windfall profit taxes alone have been disastrous, let alone the horrific energy policies of the UK.
Shell’s Q1 2025 adjusted earnings were a robust $5.6 billion, based on strong performance across its business units. This beat analyst expectations of $5.08 billion.
Based on its strong results, the company announced another $3.5 billion share buyback program, which it expects to complete over the next three months.
Following years of mucking around with allocations of significant capital to wind and solar investments, CEO Wael Sawan’s moving hard back to oil and gas, prioritizing upstream and high-value product sales, much like ExxonMobil and Chevron. But Shell’s European exposure makes it more sensitive to Brent price swings and trade war jitters.
Its 2020 dividend cut still haunts, leaving investors wary of its reliability compared to U.S. rivals. Shell’s operational tweaks—cost cuts and divestments—are keeping it afloat, but it’s playing catch-up with its American peers. The pivot from renewables reflects shareholder pressure for profits over promises, yet it risks leaving Shell flat-footed if globalists in the U.S. and Europe force a restart in energy transition subsidization efforts.
BP is clearly the laggard of this bunch, and no one is really surprised. The company posted what it refers to as underlying replacement cost profits of $1.4 billion, a sharp drop year-over-year, and below expectations of $1.6 billion.
Somehow, embattled CEO Murray Auchincloss classified this as “a great start” in his efforts to re-jigger the company’s strategic approach after activist investor Elliott took a big position in BP stock early in the year.
“We had a great operational quarter. We had our highest upstream operating efficiency in history. Our refineries in the first quarter ran at the best they’ve run in 24 years. We had six exploration discoveries in a row, which is really unusual and we started out three major projects,” Auchincloss said.
Weak refining margins, low natural gas prices, and rising net debt are squeezing BP, and its European base amplifies the pain from Brent’s slide. Following years of renewables investing folly and boondoggles invoked by his predecessor, Bernard Looney, Auchincloss is doubling down on oil and gas, targeting 400,000 BOE/D in the Gulf of Mexico by decade’s end, with new finds like Far South in the southern Gulf of America adding promise.
BP’s shares have lagged the Big Oil pack since 2020, and its sensitivity to oil price dips exposes a shaky core. Its U.S. assets are a bright spot, but without a major shake-up, BP’s stuck in the slow lane. The tariff and trade wars crashing Brent to the low $60s didn’t help, wiping out gains from Auchincloss’s strategy reset.
BP’s fighting to stay relevant, but it’s got the most to prove, and with a current market cap less than half of Shell’s and less than 1/5th that of ExxonMobil, the once-proud British giant is barely hanging on to its “major” status.
UK supermajor Shell and its advisers have been considering a potential takeover of rival energy major BP, which could set up one of the largest deals in the history of the oil and gas industry.
According to reports from Bloomberg, which cited people close to the matter, Shell may wait for BP to reach out for another possible buyer before playing its hand. The feasibility of this move, the sources claimed, has been discussed within Shell ranks for several weeks now.
The report added that everything is allegedly still in its infancy, and Shell could perhaps decide to focus on share buybacks and smaller acquisitions rather than such a big merger.
The deal between the two could be one of the largest oil and gas deals ever seen. Shell’s market value of £145.6bn ($193.2bn) is way above BP’s £55.9bn ($74.2bn), and a combination of the two would create a firm with a market value of over $267bn.
BP CEO Murray Auchincloss said at the start of the year that he would reset BP’s strategy, with the company firmly backing fossil fuels again. However, the plan did not result in much as the profits for the first quarter of the year dropped to $1.4bn, a far cry from the $2.7bn from the same period last year. This was all accompanied by shares dropping over 30% within the past year.
Shell also reported a lower profit than in the first quarter of 2024, but its adjusted profits of $5.6bn were still higher than analysts expected.
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