Shell Plc is reportedly exploring a potential acquisition of BP Plc, as the oil giant monitors declining BP stock prices and fluctuating oil markets, sources familiar with the matter said.

The decision, currently under evaluation by Shell’s advisers, hinges on BP’s stock continuing to slide. BP shares have dropped nearly 30% in the past year, exacerbated by a lackluster turnaround plan and falling oil prices.

“A successful combination of Shell and BP would be one of the largest-ever takeovers in the oil industry,” one source noted.Shell, which has also been cutting costs and focusing on fossil fuels under CEO Wael Sawan, is weighing the feasibility of a BP acquisition but may opt for smaller-scale investments like share buybacks.

Sawan recently stated, “We want to be value hunters… the bar is high,” emphasizing that any significant deal would need to align with Shell’s goal of boosting free cash flow.

BP’s struggles, partly due to its net-zero strategy under former CEO Bernard Looney, have drawn attention from activist investors. “Elliott views BP’s plan as lacking ambition… and believes it could expose the company to a takeover,” a Bloomberg report highlighted.

Should Shell move forward with the deal, it would regain significant exposure to the US oil market after its 2021 sale of Permian Basin assets to ConocoPhillips.