LONDON -- The British oil and gas producer BG Group said Tuesday that it was in advanced discussions with Royal Dutch Shell over a potential sale. A deal, if completed, could top $50 billion.
BG Group said there could be no certainty that an offer would ultimately be made by Shell. Still, two people briefed on the matter said that an agreement could be announced soon.
A Shell spokesman, Andy Norman, declined to comment.
BG has a market value of about $46 billion. Its shares rose about 6.7 percent in London trading Tuesday.
The company, which was once part of British Gas, would be attractive to Shell because it is a major player in liquefied natural gas, or LNG -- a fuel whose use is growing fast though prices have recently slumped. Shell has invested heavily in the LNG business.
If completed, a deal would be a rare bright spot for energy deal-makers, as oil and gas companies have largely hunkered down while petroleum prices plunged. Potential sellers have been leery of selling during what they consider a temporary dip, creating an often unbridgeable gap with interested buyers. Many companies have instead turned to the stock markets to raise cash and bolster their balance sheets.
That calculus could change if there is a tie-up by Shell and BG. A deal of this size could inspire some wavering would-be sellers to pursue deals. Advisers say that they expect merger activity to pick up later this year, though in large part when oil prices show more signs of stability. Consolidation could allow oil companies to cut costs and bulk up their presence in attractive sources of oil and gas.
A deal for BG would be the biggest energy company acquisition since Exxon Mobil's $31 billion deal for XTO Energy more than five years ago. And BG would be Shell's biggest deal ever, by far. The company's largest acquisition to date was its purchase of a 22 percent stake in Shell Canada that it did not already own for about $7 billion.
Shell has plenty of resources to strike a deal: It had $21.6 billion in cash and short-term investments on hand as of year's end.
BG has long been rumored to be a takeover candidate but recent troubles may have made it vulnerable. The company has recently been unable to fulfill its export commitments for liquefied natural gas from Egypt because the Egyptian government has taken too much gas for domestic consumption. It is also heavily committed to developing oil fields in Brazil, where the state oil company, Petrobras, is deeply enmeshed in a corruption scandal.
For 2014, BG reported a $1 billion loss, largely because of write-offs as a result of lower oil and gas prices.
BG has also recently experienced leadership turmoil. Last year, the company's chief executive, Chris Finlayson, was forced out. He was replaced in February after an interregnum by Helge Lund, who had been chief executive of the Norwegian state-controlled major, Statoil.
Shell also has a fairly new chief executive. Ben van Beurden, who became CEO of Shell in 2014, has been selling assets and cutting costs after a series of poor performances. The company is also gearing up for an expensive and controversial campaign to drill off Alaska.
Last year the company reported income of about $15 billion, a decline of about 8 percent compared with a year earlier. Van Beurden has clearly identified LNG, which makes a strong contribution to Shell's earnings, as a business he wants to bolster.
News of the discussions between BG and Shell were reported earlier by The Wall Street Journal.
Stanley Reed reported from London and Michael J. de la Merced reported from San Francisco.