BP CEO Shake-Up Reopens Talk of a Shell Megadeal

The appointment of Meg O’Neill as BP's chief executive officer, replacing Murray Auchincloss, is a momentous milestone in the oil industry. When O’Neill takes over on April 1, 2026, she will become the first woman ever to lead a Big Oil company.But O’Neill’s arrival at BP could turn out to be even more momentous for the industry, as it could lead to the biggest merger deal in decades.Hours after BP announced that Auchincloss is stepping down effective immediately and O’Neill of Woodside Energy would become BP’s next CEO, analysts returned to speculating that the leadership shake-up could lead to a blockbuster merger deal involving the UK supermajor.Reuters energy columnist Ron Bousso and Forbes contributor Tim Treadgold speculate that the arrival of O’Neill could make a Shell-BP megadeal closer than ever before.O’Neill’s career history, the timing of the BP leadership change, and the UK supermajor’s struggles in recent years to please investors, including activist hedge fund Elliott, give credence to renewed market chatter that the company could move on to considering a merger with Shell.In the previous period of intense speculation about a megadeal, Shell addressed the topic in June, following months of market chatter that BP, weaker than the other supermajors, could be a prime target of a takeover bid from Shell, or even the U.S. giants, ExxonMobil or Chevron.Under UK market rules, Shell confirmed on June 26 it has no intention of making an offer for BP, and by confirming this, Shell was bound by the restrictions in the rules not to make an offer for BP in the following six months.This period expires on December 26.A week before Boxing Day, BP this week announced the arrival of new CEO O’Neill, a U.S. citizen, who had spent 23 years in leadership roles at ExxonMobil before joining Woodside Energy in 2018. At Woodside, O’Neill was appointed CEO in 2021, and since then, she has grown Woodside Energy into the largest energy company listed on the Australian Securities Exchange. O’Neill steered the merger of BHP’s petroleum business into Woodside in 2022.BHP’s former CEO from 2013 to 2019 was Sir Andrew Mackenzie, who is now chair of Shell. Prior to executive roles in BHP and another mining giant, Rio Tinto, Mackenzie spent 22 years with BP in senior and executive positions, mostly in exploration and production and petrochemicals, including as Chief Reservoir Engineer and Chief Technology Officer.Sir Andrew Mackenzie was reportedly interested earlier this year in the pitch of then Shell’s head of M&A, Greg Gut, that the weak share performance of BP could be an opportunity for Shell to add significant oil and gas assets via an acquisition, the Financial Times reported this week, quoting sources familiar with the situation.Shell CEO Wael Sawan and CFO Sinead Gorman reportedly blocked the pitch, arguing that Shell’s strategy would be derailed by the challenge of executing such a massive deal, according to FT’s sources in a report that was published a day before BP announced on December 17 the CEO shake-up.Greg Gut left Shell after failing to convince the top executives of the merits of a BP acquisition, FT’s sources said.BP’s weak first-quarter results and stock underperformance over the past year rekindled speculation in early 2025 that the supermajor could be a target of a blockbuster acquisition.Speculation about another oil giant taking over BP is not new—such rumors have been swirling for over a decade, particularly ones suggesting that Shell could be the bidder for a merger with BP.Shell’s CEO Wael Sawan told analysts on the Q1 earnings call in early May that “before we ever look at a sizable inorganic, we have to have our own house in order.”“I’ve said in the past we want to be value hunters. Today, value hunting, in my view, is buying back more Shell,” Sawan said.Shell’s hands will be untied on December 26 to potentially approach BP again. Under UK takeover rules, Shell’s June 26 statement prevented it from making an offer for BP for six months ending December 26.The shake-up in BP’s leadership with the appointment of a CEO who has recently overseen a major merger deal at Woodside is rekindling speculation that a blockbuster deal may be on its way.By Tsvetana Paraskova for Oilprice.com