-- Shell (SHEL) has agreed to acquire Canadian energy firm ARC Resources in a transaction valued at about $16.4 billion, including debt, in a deal that is set to deepen its exposure to Canada's Montney shale basin, the companies said Monday.
The acquisition will give Shell immediate production of about 370,000 barrels of oil equivalent per day and lift its expected output growth to about 4% per year through 2030, up from a previously outlined 1%.
The deal also adds about 2 billion boe/d in proved and probable reserves.
Shell will pay ARC shareholders a mix of cash and stock under the terms of the agreement, offering CA$8.20 ($6.02) in cash and 0.40247 Shell shares per ARC share.
The consideration implies a value of about CA$32.80 per share, representing a 20% premium to the company's 30-day volume-weighted average price.
The equity portion of the deal is valued at about $13.6 billion, with Shell assuming an additional $2.8 billion in net debt.
Wael Sawan, the CEO of Shell, said the acquisition strengthens Shell's position in Canada's Montney shale basin, describing ARC as a "high-quality, low-cost" producer with low-carbon-intensity assets that complement the company's existing footprint.
The combined company will control a significant acreage position in the Montney formation, with ARC contributing more than 1.5 million net acres alongside Shell's existing holdings of about 440,000 acres.
The assets are expected to support Shell's expanding LNG operations in Canada, including supply to the LNG Canada facility, in which Shell holds a 40% stake.
Shell said the deal is projected to generate double-digit returns and become accretive to free cash flow per share from 2027, while delivering about $250 million in annual savings within a year of completion.
The energy firm said it expects to fund the cash portion of the deal, about $3.4 billion, within its existing capital expenditure framework, maintaining its planned annual spending range of $20 billion to $22 billion for 2027 and 2028.
Price: $87.89, Change: $-1.24, Percent Change: -1.39%