Shell reportedly in talks to acquire LLOG in US Gulf expansion

Supermajor Shell is reported to be in talks to acquire LLOG Exploration Offshore, one of the largest privately held oil and gas producers in the US Gulf of Mexico.

Citing two sources familiar with the matter, Reuters described Shell’s talks as advanced in a December 9 report and said a deal could be worth more than $3bn. One of the sources added that a deal could be finalised by the end of 2025.

Neither Shell nor LLOG have commented on the report – as is typical for companies engaged in confidential merger and acquisition (M&A) discussions. However, news of a possible deal comes after Reuters reported in October that LLOG was exploring a potential sale. At the time, the news service cited people familiar with the matter as saying that LLOG was working with Guggenheim Securities on this and that a limited number of parties had been contacted to gauge buyer interest. Those sources also valued a potential sale of LLOG at more than $3bn including debt.

The latest news also aligns with analyst expectations that Shell could seek out M&A in an effort to pursue upstream growth. Indeed, Reuters quoted an HSBC energy analyst, Kim Fustier, as saying in a note in October in the wake of Shell's third-quarter results that North American gas or deepwater oil assets would be good additions to the supermajor’s portfolio.

Shell is already one of the largest producers in the Gulf. Over the course of this year, the company has started up its Whale platform in the region, brought the Dover subsea tieback to the Appomattox production hub online and increased its stake in the Ursa platform. Shell is working to bring further projects online in the Gulf, including the Phase 3 Silvertip project, which is targeted for 2026, and the Sparta development, which is due to enter service in 2028. Sparta will mark the supermajor’s first development in the Gulf to produce from reservoirs with pressures of up to 20,000 pounds per square inch (psi).

LLOG, meanwhile, started production from its Salamanca floating production unit (FPU) in September. Reuters cited consultancy Welligence’s CEO, Ross Lubetkin, as saying LLOG produces around 30,000 barrels of oil equivalent per day (boepd) but that its production was expected to grow considerably by the end of the decade.