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Summary
- Shell says it will take on $2.8 billion in net debt
- Analysts said Shell needed exploration success or a deal
- ARC acquisition to boost Shell’s output by 370,000 boed
LONDON, April 27 (Reuters) – Shell has agreed to buy Canadian energy company ARC Resources in a $16.4 billion deal which the British oil and gas major said on Monday would boost its output by 370,000 barrels of oil equivalent per day.
ARC is Shell’s biggest acquisition since it bought gas giant BG in 2016 and comes after analysts and the company had forecast it needed an acquisition or exploration breakthrough because of its ageing fields, Reuters previously reported.
ARC’s production lies near Shell’s existing Canadian fields which feed into the LNG Canada plant, in which Shell holds a 40% share and whose liquefied natural gas can reach Asian buyers more quickly than most other North American LNG.
ARC has said it produced a record 374,000 boed on average in 2025, of which 59% was natural gas and 41% crude oil and liquids, while Shell’s oil and gas production was 2.8 million boed at the end of 2025.
20% PREMIUM TO ARC SHARES OVER LAST MONTH
London-listed Shell said in a statement it will pay ARC shareholders C$8.20 in cash and 0.40247 Shell shares for each 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, referring to U.S. dollars.
Shell has bought back about a quarter of its stock in the last four years, or about $60 billion – including $14 billion in 2025, LSEG data shows.
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 said.
SHELL INCREASES OUTPUT TARGETS
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, from nine a year earlier, which was its lowest since 2021.
Shell’s reserves hit their lowest at least since 2013 in 2025 at 8.1 billion barrels of oil equivalent.
The deal allows Shell to raise its compound annual production growth target for the decade from 1% to 4% compared to 2025. It plans to keep its liquids production of 1.4 million barrels per day towards 2030 and beyond.
Shell shares were down 0.1% by 1243 GMT, against a broader index of European energy companies trading up 0.4%.
The deal is dwarfed by U.S. major Chevron’s $55 billion purchase of Hess, which closed in 2025.
Reporting by Shadia Nasralla, Stephanie Kelly and Raechel Thankam Job in Bengaluru; Editing by Vijay Kishore and Alexander Smith
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