Shell has agreed to buy Calgary-based Canadian energy company ARC Resources in a deal valued at $16.4 billion, including debt, which the British oil and gas major said on Monday would boost its output by 370,000 barrels of oil equivalent per day.
Analysts and the company had forecast Shell needed an acquisition or exploration breakthrough to make up for an expected production shortage of 350,000 to 800,000 boed (barrels of oil equivalent per day) roughly by the middle of the next decade due to maturing fields unable to meet its output targets, Reuters previously reported.
London-listed Shell said in a statement it will pay ARC shareholders 8.20 Canadian dollar in cash and 0.40247 shares of Shell for each ARC share, or around 25% cash and 75% shares at a 20% premium to ARC’s average share price over the last 30 days.
“Shell will take on approximately $2.8 billion in net debt and leases resulting in an enterprise value of approximately $16.4 billion.
The equity value of $13.6 billion will be funded via $3.4 billion in cash and $10.2 billion in Shell shares,” Shell said.
The deal will give Shell 2 billion barrels of reserves and would generate double-digit returns and boost free cash flow per share from 2027 without affecting its investment budget of $20 billion to $22 billion through to 2028, it added.
Shell’s “reserve life”, or how long its proven reserves can sustain current output levels, was equivalent to less than eight years of production as of 2025 — the company’s lowest level since 2021.
The deal allows Shell to raise its compound annual production growth target for the decade from 1% to 4% compared to 2025.
ARC’s senior leadership team will be hosting a conference call to discuss the Company’s first quarter 2026 results on Wednesday.
Shell shares were down slightly in early trading on Monday.
