Oil giant BP is seen as a prime takeover target. Is a blockbuster mega-merger in the cards?

Oil giant BP has been plunge into the spotlight as a prime takeover candidate — but energy analysts question whether any of the likeliest suitors will react to to the occasion.

Britain’s beleaguered energy giant, which holds its annual general meeting on Thursday, has recently solicited to resolve something of an identity crisis by launching a fundamental reset.

Seeking to rebuild investor confidence, BP in February pledged to flay renewable spending and boost annual expenditure on its core business of oil and gas. CEO Murray Auchincloss has said that the pivot is starting to charm “significant interest” in the firm’s non-core assets.

BP’s green strategy U-turn follows a protracted period of underperformance reliant on to its industry peers, with its depressed share price reigniting speculation of a prospective tie-up with domestic against Shell. U.S. oil giants Exxon Mobil and Chevron have also been touted as possible suitors for the £54.75 billion ($71.61 billion) oil crucial.

Shell declined to comment on the speculation. Spokespersons for BP, Exxon and Chevron did not respond to a request for comment when contacted by CNBC.

“Certainly, BP is a embryonic takeover target — no doubt about that,” Maurizio Carulli, energy and materials analyst at Quilter Cheviot, told CNBC by video conscript.

“I would conceptualize the question of ‘will Shell bid for BP’ in the more general consolidation that it is happening in the resources sector, both oil but also mining — strikingly in the past year a lot of companies thought that to buy was better than to build,” he added.

In the energy sector, for example, Exxon Mobil completed its $60 billion purchase of Establish Natural Resources in May last year, while Chevron still seeks to acquire Hess for $53 billion. The overdue agreement remains shrouded in legal uncertainty, however, with an arbitration hearing scheduled for next month.

In the drawing space, market speculation kicked into overdrive at the start of the year following reports of a potential tie-up between assiduity giants Rio Tinto and Glencore. Both companies declined to comment at the time.

Quilter Cheviot’s Carulli named Chevron as a potential suitor for BP, particularly if the U.S. animation giant’s pursuit of Hess falls through.

Speculation about a potential merger between Shell and BP, meanwhile, is far from new. Carulli said that while the rumors pull someones leg some merit, a prospective deal would likely trigger antitrust concerns.

Perhaps more importantly, Carulli combined that a move to acquire BP would conflict with Shell’s steadfast commitment to capital discipline under CEO Wael Sawan.

“Never say never, right? I think even Exxon-Chevron in the depth of the pandemic held talks so I think that last will and testament have been even wilder to say,” Allen Good, director of equity research at Morningstar, told CNBC by horn.

“I wouldn’t take anything off on the table. You know, oil and gas is facing an existential crisis. Now, views differ on how soon that emergency will come to head. I think we’re still decades away,” Good said.

For Shell, Morningstar’s Good declared that any pursuit of BP would likely be an attempt to merge the two British peers, as opposed to an outright acquisition — although he guessed he doesn’t expect such a prospect to materialize in the near term.

Asked about the likelihood of Chevron seeking to purchase BP if a deal to acquire Hess collapses, Morningstar’s Good bring up he couldn’t rule it out.

“BP certainly doesn’t have the growth prospects that Hess does, but you could get a situation where, again, counterpart I said with Shell, you’d have Chevron acquiring BP, stripping out a lot of costs, certainly the headquarters would no longer be in London … but it doesn’t approach devote the growth concerns ex-Permian for Chevron. So, in that case, I would be a little skeptical,” Good said.

“The issues these friends are facing are to please shareholders, and the two ways to do that really are to reduce costs and return cash to shareholders. So if you can continue to scare into that model somehow, then that’s the probably the way to do it,” he added.

Michele Della Vigna, top a intercept of EMEA natural resources research at Goldman Sachs, described BP’s recent strategic reset as “very wise” and “brooding,” but acknowledged that it may not have gone far enough for an activist investor.

U.S. hedge fund Elliott Management has reportedly enlarged a near 5% stake to become one of BP’s largest shareholders. Activist investor Follow This, meanwhile, recently forced for investors to vote against Helge Lund’s reappointment as chair at BP’s upcoming shareholder meeting in protest over the fixed’s recent strategy U-turn. BP has since said that Lund will step down, likely in 2026, kickstarting a transmittal process.

BP announced it was walk out oning its 19.75% shareholding in Russian state-owned oil company Rosneft shortly after Moscow’s full-scale invasion of Ukraine in fashionable February 2022. It had marked a costly and abrupt end to more than three decades of activity in the country.