Oil company Shell has finalized a $22 billion agreement to purchase ARC Resources Ltd., uniting the primary player in Canada’s initial operational liquefied natural gas project with a significant producer in one of North America’s most lucrative shale regions.
Wael Sawan, CEO of the U.K.-based global energy behemoth, announced on Monday that the deal “establishes Canada as a core focus for Shell,” which had previously reduced its substantial presence in the oilsands.
“We are gaining access to strategically positioned assets and embracing skilled colleagues who offer profound expertise. When combined with Shell’s robust performance at the basin level, this creates a compelling proposition for shareholders,” Sawan stated.
ARC Resources concentrates on the Montney, a shale formation spanning parts of northeastern British Columbia and northwestern Alberta. ARC’s CEO, Terry Anderson, expressed in a statement, “Through this acquisition, we will unlock significant value and join a dynamic global energy leader capable of maximizing our business’s full potential and contributing to Canada’s promising energy future.”
Last year, ARC achieved a daily production of 374,000 barrels of oil equivalent before royalties. Its operations are near Shell’s Montney holdings in both provinces.
Tom Pavic, president of Sayer Energy Advisors in Calgary, remarked on the proposed takeover, stating, “It underscores the Montney’s status as a world-class resource play. I anticipate seeing more merger and acquisition activity in the Montney region.”
Under the terms of the deal, ARC shareholders will receive 0.40247 of a Shell share and $8.20 in cash for each ARC share. The offer values each ARC share at $32.80, based on the closing prices of Shell shares and exchange rates on April 24, when ARC shares ended at $25.77.
Shell, alongside four Asian firms, owns the LNG Canada plant in Kitimat, B.C., which commenced operations last summer. The plant processes natural gas from Montney fields and other locations in western Canada, converting it into a liquid form for export via specialized tankers across the Pacific.
The consortium is contemplating doubling the plant’s capacity in a second phase. Pavic indicated that Monday’s agreement suggests a positive final investment decision for the expansion is probable.
ARC is involved in the LNG sector through long-term supplier contracts, including agreements with LNG Canada. Additionally, it signed a long-term liquefaction tolling services deal with Cedar LNG, a plant being constructed in Kitimat in partnership with Pembina Pipeline and the Haisla Nation.
Shell, previously a major player in Alberta’s oilsands, divested its final holdings in that sector in early 2025 through an asset-swap with Canadian Natural Resources Ltd. Since then, Shell’s Canadian operations have been focused on gas production and export, oil refining, and managing a network of Shell-branded retail outlets.
Andrew Dittmar, principal analyst at Enverus Intelligence Research, noted the scarcity of attractive, long-term acquisition opportunities for energy majors like Shell. He highlighted Canada as a compelling prospect due to its high-quality gas resources in the Montney and crude resources in the oilsands.
The announced acquisition is the latest in a series of deals centered on western Canadian shale gas. In recent months, there have been significant acquisitions, including Ovintiv Inc.’s plan to purchase NuVista Energy Ltd. for $3.8 billion and Cygnet Energy Ltd.’s agreement to acquire Kiwetinohk Energy Corp. for $1.4 billion.
Enbridge Inc., a pipeline operator, is also optimistic about Canadian natural gas, with a $4 billion project to expand its Westcoast pipeline in B.C. The expansion received federal government approval to add new pipelines, enhancing gas delivery from northern B.C. and southern Alberta to the Canada-U.S. border.
In addition to shareholder and court approvals, the Shell-ARC deal is subject to regulatory clearance under the Investment Canada Act. The transaction is anticipated to be finalized in the second half of this year.