A report suggesting multinational oil company Shell is in early talks to acquire fellow gas giant BP sent shockwaves through Houston's energy industry Tuesday—but Shell is firmly denying any such discussions are underway.

Shell is holding early-stage talks to acquire rival BP in what would be the largest oil deal in a generation, people familiar with the matter said. Talks between company representatives are active, the people said,

BP shares jumped as much as 10% after the Wall Street Journal reported that rival Shell is in early talks to acquire the British oil company. Shares of BP jumped $3.11, or 10%, to $32.94 in early afternoon trading. U.S.-listed shares of Shell, which is also U.K.-based, meanwhile, slid 3%.