Shell plc has agreed to acquire Canadian energy company ARC Resources for $16.4 billion, a move designed to address a projected future production shortfall.
The deal, which includes debt, is set to increase Shell's output by 370,000 barrels of oil equivalent per day. Analysts had anticipated Shell would need a significant acquisition or exploration success to compensate for an expected production decline of 350,000 to 800,000 boed by mid-next decade from maturing fields.
ARC's production is situated near Shell's existing Canadian operations, feeding into the critical LNG Canada plant where Shell holds a 40% stake. This strategic location enhances access to Asian markets.
In 2025, ARC Resources reported an average production of 374,000 boed, comprising 59% natural gas and 41% crude oil and liquids. Shell's own production stood at 2.8 million boed at the close of 2025.
Shell will offer ARC shareholders C$8.20 in cash and 0.40247 Shell shares per ARC share. This transaction, representing a 20% premium to ARC's 30-day average share price, will add approximately US$2.8 billion in net debt and leases to Shell, establishing an enterprise value of roughly US$16.4 billion.
The acquisition is projected to add 2 billion barrels of reserves, yielding double-digit returns and increasing free cash flow per share from 2027, without impacting Shell's US$20-22 billion investment budget through 2028. This deal elevates Shell's compound annual production growth target for the decade to 4%, up from 1%.
