Oil giant Shell has finalized a $22 billion agreement to purchase ARC Resources Ltd., uniting the key player in Canada’s initial operational liquefied natural gas venture with a major producer in one of North America’s most lucrative shale regions. Wael Sawan, CEO of the UK-based global energy powerhouse, stated on Monday that the deal “establishes Canada as a core area for Shell,” after the company had previously divested its substantial presence in the oilsands. Sawan emphasized that the acquisition includes strategically positioned assets and experienced personnel from ARC, which, when combined with Shell’s strong operational performance, offers an attractive proposition for shareholders.
ARC Resources specializes in the Montney, a shale formation spanning northeastern British Columbia and northwestern Alberta. ARC’s CEO, Terry Anderson, expressed enthusiasm about the acquisition, highlighting the opportunity to unlock significant value and contribute to Canada’s promising energy future. Last year, ARC achieved a daily production of 374,000 barrels of oil equivalent prior to royalties, with operations adjacent to Shell’s Montney holdings in both provinces. Tom Pavic, president of Sayer Energy Advisors in Calgary, praised the deal, underscoring the Montney’s status as a top-tier resource play likely to attract further merger and acquisition activity.
The proposed transaction offers ARC shareholders 0.40247 Shell shares and $8.20 in cash for each ARC share, valuing the deal at $32.80 per ARC share based on the closing prices of Shell shares and exchange rates as of April 24. The total deal, including assumed debt, amounts to $22 billion. Shell, in partnership with four Asian firms, owns the LNG Canada plant in Kitimat, B.C., which commenced operations last year. The plant processes natural gas from Montney fields and other locations in western Canada for export to global markets after liquefaction.
The consortium is contemplating expanding the plant’s capacity in a second phase, with indications from Pavic suggesting a positive investment decision is probable following the recent acquisition. ARC’s involvement in the LNG sector, through long-term supply agreements including with LNG Canada, aligns with its strategic position. The deal follows Shell’s exit from Alberta’s oilsands in early 2025, shifting its focus to gas production, oil refining, and retail operations in Canada.
The acquisition of ARC Resources by Shell exemplifies the growing interest in western Canadian shale gas, with recent deals involving Ovintiv Inc. acquiring NuVista Energy Ltd. for $3.8 billion and Cygnet Energy Ltd. purchasing Kiwetinohk Energy Corp. for $1.4 billion. Enbridge Inc., a major pipeline operator, has also demonstrated optimism in Canadian natural gas by investing $4 billion in expanding its Westcoast pipeline in B.C., gaining federal approval for the project last week.
In addition to shareholder and court approvals, the Shell-ARC deal is subject to regulatory clearance, including under the Investment Canada Act. The transaction is anticipated to be finalized in the latter half of this year, marking a significant move in the energy sector landscape.