The Shell gas station logo is displayed on February 13, 2025 in Austin, Texas.
Brandon Bell | Getty Images News | Getty Images
British oil major Shell on Monday said it agreed a deal to buy Canadian energy company ARC Resources in an output-boosting deal valued at $16.4 billion.
The transaction will add roughly 370,000 barrels of oil equivalent per day to Shell’s portfolio and is designed to increase the London-listed firm’s long-term oil and gas production.
Shell CEO Wael Sawan described ARC Resources, which is focused on the Montney shale basin in British Columbia and Alberta, Canada, as “a high-quality, low-cost and top quartile low carbon intensity producer” that will strengthen the firm’s resource base for decades.
“We are accessing uniquely positioned assets and welcoming colleagues that bring deep expertise which, combined with Shell’s strong basin level performance, provides a compelling proposition for shareholders,” Sawan said in a statement.
ARC Resources president and CEO Terry Anderson welcomed the announcement, saying that the firm’s assets and staff “will play an important role in helping Shell to further strengthen Canada’s resource landscape whilst also providing the secure energy that the world needs.”
Shell said the deal would generate double-digit returns and boost free cash flow per share from 2027. The company is expected to pay ARC Resources’ shareholders 8.20 Canadian dollars ($6.03) in cash and 0.40247 ordinary shares for each ARC Resources share.
Shares of Shell were last seen trading 0.3% lower on the news. The stock is up around 20% year-to-date, lagging some of its biggest industry rivals.
Shell said the equity value of the ARC Resources deal equates to approximately $13.6 billion, with an additional $2.8 billion in net debt and leases taking the transaction to a total of $16.4 billion.
The announcement comes as energy supermajors seek to bolster their hydrocarbon resources at a time when they are doubling down on their core business of oil and gas.
Asked earlier in the year about the prospect of acquisitions to build up long-term production, Shell’s Sawan said the company had spent about $2 billion buying assets in 2025 that added roughly 40,000 barrels per day worth of new production for 2030.
“Of course, we are always looking at opportunities but the beautiful thing about it is, for the next five years, we are not in a rush,” Sawan told CNBC’s “Squawk Box Europe” on Feb. 5.
“We have the space and the time to make sure that any investments we make in M&A are value accretive for our shareholders,” he added.
