The Shell gas station logo is displayed in Austin, Texas on February 13, 2025.
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British oil major shell announced Monday that it has agreed to acquire Canadian energy company ARC Resources in a production expansion deal worth $16.4 billion.
The transaction will add approximately 370,000 barrels of oil equivalent per day to Shell’s portfolio and is aimed at increasing the London-listed company’s long-term oil and gas production.
Shell CEO Wael Sawan said ARC Resources, which focuses on the Monny Shale Basin in British Columbia and Alberta, Canada, is a “high-quality, low-cost, top-quartile, low-carbon-intensive producer” that will strengthen the company’s resource base for decades.
“We welcome colleagues who bring access to uniquely positioned assets and deep expertise. This, combined with Shell’s strong basin-level performance, provides a compelling proposition for our shareholders,” Sawan said in a statement.
Terry Anderson, president and CEO of ARC Resources, welcomed the announcement, saying the company’s assets and staff “will play a critical role in helping Shell further strengthen Canada’s resource landscape, while providing the secure energy the world needs.”
Shell said the deal would generate double-digit profits from 2027 and be accretive to free cash flow per share. The company plans to pay ARC Resources shareholders C$8.20 ($6.03) in cash and 0.40247 common shares for each ARC Resources share.
Shell shares were last trading 0.3% lower on the news. The company’s stock has risen about 20% since the beginning of the year, lagging some of its biggest industry rivals.
Shell said the transaction with ARC Resources has an equity value of approximately $13.6 billion, with an additional $2.8 billion in net debt and leases, bringing the total transaction value to $16.4 billion.
The announcement comes as the energy giant seeks to strengthen its hydrocarbon resources as it doubles down on its core oil and gas business.
Asked earlier this year about the prospects for acquisitions to build its long-term production capabilities, Shell’s Sawant said the company would spend about $2 billion on asset purchases in 2025, adding about 40,000 barrels per day worth of new production into 2030.
“Obviously, we’re always looking for opportunities, but the great thing is, we’re not in a hurry for the next five years,” Sawan said on CNBC’s “Squawk Box Europe” on Feb. 5.
“We have the space and time to ensure that our M&A investments create value for our shareholders,” he added.
