The international oil and gas M&A market is quietly cooling down, as energy majors shift toward strategic realignment and industry reshuffling.

Saudi oil and gas drilling contractor ADES announced it would acquire UAE-based major offshore drilling contractor Shelf Drilling for USD 379.3 million in cash. The merged company will operate 83 jack-up drilling rigs and serve 14 countries across the Middle East, North Africa, Europe, South Asia, Southeast Asia, West Africa, and the North Sea—aiming to build the world’s largest shallow-water drilling fleet. This wave of vertical integration reflects the deep structural adjustment underway across the oil and gas industry, as companies seek to enhance risk resilience and market competitiveness through vertical integration. 04 Looking ahead: competing for critical mineral resources Driven by sustainability goals and forward-looking strategy, metal and mineral resources remain a focal point of international oil and gas M&A activity. International oil companies (IOCs) are actively securing key resources for the future energy landscape. On June 17, U.S.-based Chevron announced the acquisition of approximately 125,000 acres of oilfield acreage straddling northeastern Texas and southwestern Arkansas. These areas host the lithium-rich Smackover Formation—marking Chevron’s formal entry into lithium production and its strategic push into the lithium industry. In 2023, ExxonMobil acquired extraction rights to 120,000 acres in southern Arkansas and pledged to scale output by 2030 to meet the annual lithium demand of one million electric vehicles. In 2024, Equinor acquired a 45% stake in two U.S.-based lithium projects—located in Texas and Arkansas—owned by Canadian firm Standard Lithium. Meanwhile, Occidental Petroleum and Berkshire Hathaway Energy (BHE), led by Warren Buffett, announced the formation of a joint venture dedicated to lithium extraction. These moves signal that IOCs are proactively responding to the energy transition challenge by expanding into critical new-energy materials such as battery-grade lithium—seeking new growth engines for future business development. 05 Asset divestitures: IOCs optimize investment portfolios Facing financial pressure from prior M&A activities and falling oil prices, international oil companies continue to divest non-core oil and gas assets—a trend especially pronounced in the first half of this year. ExxonMobil sold its stake in French subsidiary Esso Sustainable Aviation Fuels to a Canadian energy group; and exited Singapore’s retail fuel market entirely by selling its extensive network of 58 fully operational service stations there for USD 1 billion. Shell transferred its onshore Nigerian asset SPDC, its Indonesian retail fuel business, and its equity interests in Singapore’s energy and chemical industrial park—and is considering selling its chemical assets in Europe and the U.S. BP divested its refining and chemical assets in Germany’s Ruhr industrial region; sold its natural gas pipeline stake to Apollo Funds for USD 1 billion; plans to sell its Austrian mobility and convenience store business; and is weighing a USD 10 billion sale of Castrol, its lubricants division. Chevron sold natural gas assets in eastern Texas for USD 500 million. It should be noted that IOCs are not simply selling off assets indiscriminately. While divesting non-core assets, they are also selectively acquiring core oil and gas assets—and deepwater exploration and production assets—that can generate synergies with their existing portfolios. 06 Strategic recalibration: new developments in the renewable energy sector

Shell acquires BP—potentially the largest M&A deal of the year.

Shell holds a strong position in the negotiations, with its stock price significantly outperforming BP’s in recent years. Like BP, Shell is headquartered in the UK but operates globally, with a market capitalization exceeding USD 200 billion. BP has lagged behind its peer oil majors due to its aggressive, arguably premature, pivot away from fossil fuels toward renewables—compounded by years of management turbulence and operational disasters. Elliott Investment Management, an activist investor holding over 5% of BP’s shares, has been pushing for corporate transformation since at least February this year—highlighting the heightened risk that BP may face a takeover bid from a rival. In response, BP has taken several measures to appease investors. Earlier this year, the company announced plans to increase oil and gas production while substantially cutting back on clean energy investments. BP is also attempting to sell its Castrol-branded lubricants business and has indicated it may divest at least part of its solar subsidiary Lightsource. Most recently, BP announced that Helge Lund—Chairman and chief architect of the company’s low-carbon strategy—plans to step down. Meanwhile, Shell has focused on its most profitable businesses, pledging to boost oil and gas output while scaling back its green energy targets. Shell CEO Wael Sawan recently stated publicly that the company’s threshold for large-scale transactions remains high. In May, Shell announced a multi-billion-dollar share buyback program—the latest installment of its long-term, large-scale buyback initiative. According to a prior report by The Wall Street Journal, Shell has been working with banks to plan the sale of its chemical assets in Europe and the U.S. For Shell, acquiring BP would entail a multi-year integration process complicated by cultural clashes and the likely need to divest overlapping assets. Yet the deal could broaden Shell’s global trading footprint and strengthen its dominance in liquefied natural gas (LNG) and other sectors. Analysts and investors also note strong complementarity between the two companies’ operations in the Gulf of Mexico. The acquisition would offer Shell opportunities to spread costs across a larger operational base—and effectively eliminate a key competitor. Moreover, Shell is politically more acceptable to UK regulators—who might oppose a foreign buyer acquiring BP, a century-old company whose origins trace back to British imperial oil exploration in Persia at the height of the British Empire.

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