Shell to acquire Canada's ARC in output-boosting $16.4 billion deal

Shell has agreed to buy Canadian energy company ARC Resources in a $16.4 billion deal, paid for mostly with shares, the UK firm said on Monday.

ARC will boost Shell’s output of 2.8 million barrels of oil equivalent per day by 370,000 boed.

The acquisition is the company’s biggest since it bought gas giant ​BG in 2016. It was announced after analysts and the company had forecast Shell needed an acquisition or exploration breakthrough because ​of its ageing fields.

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’s output is around 60% natural gas and 40% oil liquids.

SHELL TO PAY 20% PREMIUM

London-listed Shell ​said in a statement it will pay ARC shareholders C$8.20 in cash and 0.40247 of its 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 shares,” Shell said, referring to U.S. dollars.

The company 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. It has flagged that its gearing, or debt to equity ratio, which stood at around 21% at the end of 2025, was already set to rise due to energy price fluctuations from the Iran war.

COMFORTABLE FINANCIAL FRAMEWORK

“We are very comfortable with what this (deal) does for our financial framework,” CEO Wael Sawan ​told reporters, reiterating Shell’s plan ​to pay out 40% to ⁠50% of its operating cash flow to shareholders.

The deal will give Shell 2 billion barrels of reserves and bring savings of around $250 million within a year of closing, without affecting its investment ​budget of $20 billion to $22 billion through to 2028, it said.

It also will bring Shell $1.5 billion in ​free cash flow ⁠per year.

SHELL INCREASES OUTPUT TARGETS

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 2.1% ​by 1452 GMT, against a 1.1% drop in a broader index of European energy ​companies. Shares of ARC were up 22.2% on the Toronto Stock Exchange.

The deal is dwarfed by U.S. major Chevron’s $55 billion purchase of Hess, which closed in 2025.