By Bill Pan
Shell is set to buy ARC Resources in a move that would expand the British oil major’s production in western Canada.
The two companies announced on April 27 that the transaction, which includes assumed net debt and leases, is valued at C$22 billion, or about US$16.4 billion.
The acquisition integrates ARC’s assets in British Columbia and Alberta Provinces with Shell’s existing assets there. ARC’s assets are concentrated in the Montney region, near Shell’s existing operations and close to infrastructure tied to LNG Canada, the liquefied natural gas export project in which Shell is a key partner.
Shell expects the deal to add approximately 370,000 barrels of oil equivalent per day to its production and 2 billion barrels in reserves. It projects the transaction will deliver double-digit returns and increase free cash flow per share starting in 2027.
“This establishes Canada as a heartland for Shell while furthering our strategy to deliver more value with less emissions,” Shell CEO Wael Sawan said in a statement.
The consideration is structured as roughly 25 percent cash and 75 percent shares. Under the terms of the deal, ARC shareholders will receive C$8.20 (about $6) in cash and 0.40247 of a Shell share for each ARC share held. This represents a 27 percent premium over ARC’s closing price on the Toronto Stock Exchange as of April 24.
Both companies’ boards have unanimously approved the transaction, which is still pending approval from ARC shareholders, the Alberta court, and Canadian competition and investment regulators. The deal is expected to close in the second half of 2026.
The planned takeover comes as Canada seeks to expand its energy export capacity and reduce its heavy dependence on the United States market.
Last week, Ottawa approved Enbridge’s C$4 billion (about $2.9 billion) Sunrise Expansion project, which is expected to add up to 300 million cubic feet of daily transportation capacity to British Columbia’s primary natural gas-transmission system. The Canadian government stated the project aligns with the nation’s trade diversification strategy by allowing more natural gas shipments to Asian markets.
At the same time, the Alberta and federal governments are advancing plans for a new pipeline designed to transport hundreds of thousands of barrels per day of bitumen from Alberta to the British Columbia coast for exports to Asia. Bitumen is a dense, super-heavy form of crude oil primarily found in Canada’s oil sands.
“Alberta and Canada will work together to achieve the shared objective of establishing Canada as a global energy superpower,” the governments said in a memorandum.
Canadian Prime Minister Mark Carney, who has pledged to expand exports to markets beyond the United States and back major infrastructure and resource projects, has framed such efforts as a response to the new realities in Canada’s relationship with its southern neighbor. He said Canada’s longstanding reliance on the U.S. market for 95 percent of its energy exports, once considered a strength, “is now a weakness.”
“The global economy is rapidly changing,” Carney said last November. “As the United States transforms all of its trading relationships, many of our strengths—based on those close ties to America—have become our vulnerabilities.”
