(Reuters) -Shell Plc ( SHEL ) is working with advisers to evaluate a potential acquisition of rival BP Plc, though it is waiting for further stock and oil price declines before deciding whether to pursue a bid, Bloomberg News reported on Saturday citing people familiar with the matter.

The oil major has been more seriously discussing the feasibility and merits of a takeover with its advisers in recent weeks, the report said, adding that any final decision will likely depend on whether the rival's stock continues to slide.

For several years, BP and Shell were almost equal in size, but over the past few years Shell has grown to almost twice the size of BP, with a market value of about 149 billion pounds.

On Friday, when asked about a possible takeover bid for BP, Shell's, Chief Executive Wael Sawan told the Financial Times he would rather buy back more Shell stock. A Shell spokesperson confirmed the comments.

When asked on an earnings call about Shell's capacity to launch sizable acquisitions, he said "we have to have our own house in order" and have "more work to do" despite progress over the last couple of years.

A takeover of its cross-town London rival would make Shell an even bigger force in the global energy industry, giving it scale to rival the likes of Exxon and Chevron. A merger would also likely certainly invite regulatory scrutiny, considering the size of the deal.

Shell this week reported strong first-quarter results surpassing profit expectations and launched a $3.5 billion share buyback.

Shell may also wait for BP to reach out or for another suitor to make a first move, and its current work could help it get prepared for such a scenario, some of the people told Bloomberg News.

Deliberations are in the early stages and Shell may opt to focus on share buybacks and bolt-on acquisitions rather than a megamerger, the report added. 

"As we have said many times before we are sharply focused on capturing the value in Shell through continuing to focus on performance, discipline and simplification," a Shell spokesperson said when asked about the report. BP declined to comment.

Under pressure to improve profitability and cut costs, BP chief Murray Auchincloss has announced plans to sell $20 billion of assets through to 2027, reduced spending and share buybacks. It also announced the departure of its strategy chief as it tries to shore up investor confidence.

Activist investor Elliott Investment Management had wanted a change of strategy chief as it seeks higher free cash flow through deeper cuts to spending and costs, sources familiar with the matter told Reuters.

It has increased its stake in BP to just over 5%, placing it between top shareholders BlackRock and Vanguard, according to a regulatory filing.

($1 = 0.7535 pounds)