Oil giant Shell has finalized a $22 billion agreement to purchase ARC Resources Ltd., uniting the lead partner in Canada’s first operational liquefied natural gas project with a major producer in a highly profitable shale region on the continent. Wael Sawan, the CEO of the U.K.-based global energy behemoth, stated on Monday that the deal “strengthens Canada as a core area for Shell,” which had previously reduced its significant presence in the oilsands. Sawan emphasized that the acquisition gives Shell access to strategically positioned assets and experienced personnel, enhancing shareholder value through a combination of expertise and performance.
ARC Resources focuses on the Montney, a shale formation spanning parts of northeastern British Columbia and northwestern Alberta. ARC’s CEO, Terry Anderson, expressed enthusiasm about the transaction, highlighting the opportunity to unlock substantial value by joining forces with a dynamic global energy leader like Shell.
Last year, ARC achieved a daily production of 374,000 barrels of oil equivalent before royalties, with operations adjacent to Shell’s Montney holdings in both provinces. This acquisition underscores the Montney’s status as a top-tier resource play, according to Tom Pavic, the president of Sayer Energy Advisors in Calgary, who anticipates increased merger and acquisition activity in the region.
Under the terms of the proposal, ARC shareholders will receive 0.40247 Shell shares and $8.20 in cash for each ARC share, valuing the offer at $32.80 per ARC share based on the closing prices of Shell shares and exchange rates. The total value of the deal amounts to $22 billion, including the assumption of debt.
Shell, along with four Asian partners, owns the LNG Canada plant in Kitimat, B.C., which commenced operations last summer. The plant processes natural gas from Montney and other western Canadian fields for exportation. The consortium is contemplating doubling the plant’s capacity, signaling a probable positive final investment decision following the recent acquisition. ARC’s involvement in the LNG sector through supply contracts with LNG Canada and Cedar LNG positions it as a key player in Canada’s evolving energy landscape.
Having divested its oilsands holdings in early 2025, Shell has redirected its Canadian focus towards gas production, oil refining, and retail operations. Analysts like Andrew Dittmar from Enverus Intelligence Research view Canada as an attractive investment destination due to its high-quality gas and crude resources, with the Montney play offering a competitive edge in the global gas market.
The Shell-ARC deal is the latest in a series of acquisitions targeting Western Canadian shale gas. Enbridge Inc. has also shown optimism in the Canadian natural gas sector, with plans to invest $4 billion in expanding its Westcoast pipeline, recently approved by the federal government. The completion of the Shell-ARC transaction is contingent on shareholder and court approvals, as well as regulatory clearance under the Investment Canada Act, with an expected closure in the second half of the year.