Shell has agreed to buy Canadian producer ARC Resources for $13.6 billion, its biggest deal in more than a decade, as it seeks to bolster its fossil fuel reserves.
ARC shares soared, while Shell fell.
ARC has a high-quality, low-cost shale gas and liquids base that complements Shell’s existing operations in Canada, the London-based company said in a statement.
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With no major acquisitions since Chief Executive Wael Sawan took the helm, Shell’s efforts to replenish its long-term reserve base have faced increasing scrutiny. Like several of its big energy rivals, the company has been refocusing on its core oil and gas businesses in a strategy to boost shareholder returns.
“This establishes Canada as a key market for Shell, while advancing our strategy to deliver more value with fewer emissions,” Sawan said in the statement. The ARC acquisition “strengthens our resource base for decades to come.”
The ARC deal will be Shell’s biggest acquisition since its purchase of BG Group in 2015, according to data compiled by Bloomberg. The transaction will be paid for approximately 25% in cash and 75% in shares, at a 20% premium over ARC’s 30-day weighted average price.
ARC shares rose up to 24%. Shell’s fell 1.8%, to 3,247 pence, at 3:13 pm in London.
Since taking over the company three years ago, Sawan’s focus has been on repairing the balance sheet, cutting costs and divesting low-returning assets.
The deal increases Shell’s annual free cash flow and its compound annual growth rate, Sawan said on a conference call with the press.
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According to the statement, the operation also reinforces Shell’s goal of maintaining relevant production of liquid hydrocarbons at around 1.4 million barrels per day until 2030 and beyond. The agreement will also support production at the LNG Canada liquefied natural gas plant, of which Shell holds 40%.
A phase two expansion of LNG Canada was already expected, but Sawan said this deal has no impact on that decision. The LNG terminal’s focus is on continuing to increase and sustain production.
ARC’s operations are located in the same region as Shell’s Groundbirch asset in British Columbia, which supplies LNG Canada, and the Gold Creek project in neighboring Alberta, according to the release. The acquisition also gives Shell exposure to another LNG export project, through ARC’s supply agreement with Cedar LNG, a smaller facility under construction near Shell’s own plant.
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The purchase of ARC marks a turnaround for Shell’s North American operations, after the company largely sold its oil sands position in 2017 to CNQ. The London-based company also sold its US shale assets in the Permian Basin to ConocoPhillips in 2021.
This is the largest oil and gas deal in Canada since 2012, when CNOOC. bought oil sands producer Nexen for $15.1 billion at the time.
The boards of directors of both companies unanimously supported the deal, according to the statement. Completion is expected in the second half of 2026, subject to shareholder, court and regulatory approvals.
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