Shell plc has agreed to buy ARC Resources Ltd. in a $16.4 billion deal, combining equity and debt. The acquisition will add about 370,000 barrels of oil equivalent per day to Shell’s production, making it one of the company’s biggest moves since its purchase of BG Group in 2016. The deal is to improve Shell’s long-term oil and gas output as it leans into its core business.
Why Shell wants ARC Resources
ARC Resources operates in the Montney shale basin in Canada, a region known for high-quality and relatively low-cost energy production. Shell CEO Wael Sawan called it “a high-quality, low-cost and top quartile low carbon intensity producer” and said the assets would support the company for decades. He added, “We are accessing uniquely positioned assets and welcoming colleagues that bring deep expertise which, combined with Shell’s strong basin level performance, provides a compelling proposition for shareholders.”
The acquisition also comes as Shell faces ageing oil fields and a shrinking reserve life, which had dropped to less than eight years as of 2025. Buying ARC helps replenish reserves and secure future output.
What shareholders and the deal structure look like
The transaction values ARC’s equity at $13.6 billion, with an additional $2.8 billion in net debt and leases. ARC shareholders will receive 8.20 Canadian dollars in cash and 0.40247 Shell shares for each share they own. Shell expects the deal to generate double-digit returns and increase free cash flow per share starting in 2027. Importantly, the company says this will not change its planned annual investment budget of $20–22 billion through 2028.
Shell’s strategy and industry trend
Shell has already spent about $2 billion in 2025 on smaller acquisitions, adding around 40,000 barrels per day for future production. Sawan had earlier said, “Of course, we are always looking at opportunities but the beautiful thing about it is, for the next five years, we are not in a rush.” He added, “We have the space and the time to make sure that any investments we make in M&A are value accretive for our shareholders.” With this acquisition, Shell now plans to raise its production growth target for the decade from 1% to 4%, indicating a stronger push to expand output even as the energy transition continues globally.
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